Penal Protection of Checks,

Its Negative Impact &

Remedial Proposals for Encountering it

Allah the Almighty says:

"And if the debtor is in a hard time (has no money), then grant him time till its easy for him to repay, but if you remit it by way of charity, that is better for you if you did but know" (Al-Baqarah Sura (the Cow), Verse: 280)

Prophet Mohamed (Pbuh) says:

"He who wants to be under the shade of Allah on the day of judgement when there is no shade but that of Allah, he shall try to help the one who is in a hard time to get out of it or relieve him totally from this burden."

True was Prophet Mohamed (Pbuh)

Famous sayings by His Royal Highness, Prince of Kuwait:

"Kuwait needs stronger guarding from us, guarding that is not limited only to weapons, soldiers and watching the borders; it extends to every Kuwaiti self with awareness, alertness, caution and watchfulness."

Introduction:

Dealing with the phenomenon of the constant increase in the crimes of checks without balance, its considerably negative and dangerous impacts on the individual, family and society in such a way that threatens the social structure of this society, its security and stability, we find ourselves before a number of main axes on which this phenomenon depends. In other words, the legislative and legal reality in the crimes of checks which depends upon Article 237 of the Penal Code and Article 554 of the Trade Law and within the framework of pursuing to put an end to this negative phenomenon and avoiding its negative impacts reflected on social and economic life, which did not only threaten the lives of the persons involved therein but also extended to include the families of those persons and the future of their children who represent the aspirations of society and ambitions to achieve progress and prosperity. Therefore, we were careful to review the reasons which necessitate reconsidering the issue of incriminating the check and lifting the penal protection on it is related to the legislative and legal reasons, the economic and social reasons related to the individuals and their families. In the light of the study conducted by the Kuwait Social Work Group and the painful reality, revealed by the study, of those involved persons whose families live with them as well as the enormous burdens borne by the State, which causes exhausts the budget of the State in the light of the legal stipulation regarding the incrimination of the check.

The legislative and legal reality in the crimes of check:

The legal stipulations that proposed to be nullified and which incriminate issuing a check without balance:

First: Article 237 of Law no. 16 for the 1960 regarding enacting the Penal Code amended with Law no. 15 for the year 1978 which stipulates that:

An imprisonment punishment, not exceeding five years and with a fine not exceeding five hundred dinars or either punishment, shall be enforced on a person who, with bad intention, commits one of the following acts:

A-     issues a check without a payment consideration and cashable.

B-     If he tells the drawee not to cash the check.

C-     If he regains, after issuing the check, all or some of the consideration in such a way that the remaining amount becomes insufficient for paying the amount thereof.

D-     If he deliberately issues the check or signs it in such a way that prevents it from being cashed.

E-      If he endorses for others or delivers a payable bearer check, despite knowing that the check has no sufficient consideration for the value thereof or that it is not cashable.

If the perpetrator repeats any of the crimes within five years as from the date of sentencing him in any of them, the punishment shall be imprisonment for a term not exceeding seven year and a fine not exceeding seven hundred dinars.

The court may exempt the perpetrator from the punishment if it has been proved to the court that the perpetrator has paid the amount of the check before issuing the final ruling. Whereas if it has been proved to the court that he paid the amount of the check after issuing the final ruling, the court, which issued the ruling, may order for the suspension of the ruled punishment as per the request of the sentenced person or the representative thereof. And in such case, the punishment shall be considered as if it has been enforced and the application shall be submitted to the court issued the ruling within three days as from the date of submitting the application.

"Article 237 amended in Law no. 15 for the year 1978, which stipulation before amendment is:

An imprisonment punishment, not exceeding three years and with a fine not exceeding three thousand rupees dinars or either punishment, shall be enforced on a person who, with bad intention, issues a check without a payment consideration or with consideration less than the value of the check, every one who withdrew with bad intention, after giving the check, all or some of the balance in such a way that the remaining amount is not sufficient for the value of the check, or told, with bad intentions, the drawee not to pay the amount of the check. The last Clause of this article is amended in Law no. 3 for the year 1994 and its stipulation, before amendment, is:

"And in all cases, except if the perpetrator has proved to have paid the value of the check, the judge shall not abstain from pronouncing the punishment ruling or the order of enforcing the ruling.

Second: Article 554 of the Decree of Law 68 for the year 1980 regarding the enactment of the Trade Law:

1-       If a criminal suit is filed against the drawer for one of the check crimes, the check bearer, who claimed the civil right, may ask from the criminal court to rule for him an amount equivalent to the unpaid amount of the check value and the legal interests of that amount, calculated as from the date of submitting the check for payment as well as the complementary compensations as necessary.

2-       The Public Prosecution shall publish the name of the persons against whom rulings of convict are issued in one of the check crimes in the official newspapers as well as indicating their doctrines, residence and the punishment term they are sentenced to serve.

The guarantee of right guarantees the civil right so the beneficiaries of the check:

Article 510 of the Decree of Law no. 68 for the year 1980 regarding the enactment of Trade Law:

"Except for the rulings mentioned in such part, the provisions of the bill of exchange shall be enforced on the check in such a way that does not contradict with the identity thereof."

Reasons of the amendment:

If we go back to Penal Code no. 16 for the year 1960, we find that the legislator, in the check crimes, has stated for it the punishment of a misdemeanor then this article was amended with Law no. 15 for the year 1978 which considered the crimes of check as a felony and applied the punishment thereof to minimize it and deter the committer thereof. However, the legislator's aim was not achieved; rather, the crimes of check considerably increased and society has become in the face of a dangerous phenomenon, which is the constant increase in the cases of checks without balance. Therefore, reality reveals the need to necessarily reconsider Article 237 for the following essential reasons:

Legal and Legislative Reasons:

1-       Applying stricter punishment in the check crimes has not achieved the legislative objective the legislator has longed for. This is confirmed by the official statistics of the check crimes and the volume these crimes occupy in comparison to the other crimes. This is in addition to the fact that despite applying stricter punishment, the crimes of check has remained in a constant state of increase. This means that minimizing the check crimes or the reduction of the rates thereof is not related to commuting the punishment or making it strict but it is related to other matter that should be taken into consideration and we are examining the reasons of this phenomenon and the increase in the rates thereof.

2-       The legislator's right is preserved in amending the applicable laws and legislations or nullifying some of the stipulations thereof in such a way that keeps up with the social and economic changes and what is revealed by practice so as to achieve the security, stability of society and keeping its structure and economy intact. This is in addition to the fact that the check, in our present age, is no longer the only mode of payment of financial commitments. There are no several cards for payment, which replace the check in addition to developed means and modes of payment, which, when using them, do not result  in any crime (neither at the level of the misdemeanor nor at the level of the felony as it is now in the incrimination of the check).

3-       It is known that the check is a mode of paying rights and financial commitments towards the beneficiary. However, the popularity of using the check as a mode guarantee and the penal and legal protection added by the legislator made the misuse of check in such a way as a means of blackmail and threat for the person who issued it. Thus, the misuse of check has made the check be out of the purpose it was issued for as a mode of payment because of the beneficiary's bad intention. This beneficiary knows that at the time of withdrawing the check there is no balance for the check at the drawee bank. However, some companies resorted to accepting it and kept to it as a guarantee for the items they sell for their customers in installments, which is in compensation for the bill of exchange or the binding contracts. The incidents of granting loans with usury have increased with the guarantee of the checks (usury is an act incriminated by law); this is in addition to following several double-dealing methods to which the person involved in the crimes of checks are involved. This necessitates nullifying the penal and legal protection of checks to put an end to their negative impacts resulting from exploiting this protection to cause harm to the issuer of the check from the part of the beneficiary thereof.

4-       Providing the penal protection for the check by applying a stricter punishment gets the legislative renaissance achieved by the State of Kuwait to lag behind because applying the imprisonment punishment in check crimes (from 5 – 7 years) goes back with the legislative system to applying the punishments of physical coercion for the necessity of civil and commercial rights. This is what was disapproved of by the contemporary legislation even the constitutions of some stipulated that it shall be expressly prohibited and incriminating (and this is what was referred to by the study that included the opinion of the Kuwaiti Banks Union regarding the punishment of the check crimes).

5-       Nullifying the penal protection of the check will lead the beneficiary to activate the contemporary tools and modes of payment such as the automated teller machine (ATM) which are cards of payment, and credit cards and other modes in such a way that minimizes and reduces the misuse of check or making it be used out of the function it was set for. In addition, this will put an end to the risks of exploiting it from the part of the beneficiary and consequently this will strike the balance between the interest of the drawer and that of the beneficiary without wasting the rights related to any of them.

Economic Reasons:

1-       To put an end to operations of fraud and trickery and cheating in financial and financial transactions practiced by brokers and usurers against their involved victims.

2-       Nullifying the incrimination of the checks by nullifying the penal protection provided by Article 237 will lead the companies dealing with installments to develop the ways and mechanisms of selling for installments, and to rationalize these ways to minimize the involvement of individuals in buying goods and merchandise and cashing them or selling them for very low prices and consequently minimize exposing those persons to financial crises and not to be exposed to blackmail.

3-       Putting an end to the phenomenon of misuse of check as a mode of guarantee and not a mode of payment, consequently putting an end to the beneficiaries' exploitation of the legal protection enjoyed by the check, keeping the credibility of the check in facilitating transaction, paying the rights, not making the check be out of its real function, rationalizing its use in such a way that does not harm the seller or buyer, the check issuer or the beneficiary thereof and consequently not harming the economic growth or the hindering commercial activity within the territories.

4-       Putting an end to the phenomenon of some individuals getting involved in withdrawing checks for the benefit of third parties and as a result putting an end to one of the misuses of the check as a mode of guarantee and not as a mode of payment through nullifying the penal protection of the check.

5-       Minimizing the activity of the usurers who achieve high usurious interests under the veil of writing checks due to the protection enjoyed by the checks, providing opportunities for banks and financial institutions which practice their activities in the field of lending according to the law and to the censorship they are subject to, which censorship achieves the interest of economy, its growth, prosperity and protects borrowers from the prejudicing penal conditions and the double-dealing ways that harm their financial interests.

6-       Nullifying the penal protection of the check will lead banks and financial institutions, which provide financial services and facilities in the field of lending their customers, to set an information linking system among them in such a way that keeps the rights of these financial sources, not wasting them from the part of the beneficiary individuals and as a result not wasting the rights of banks and financial institutions after the imprisonment of those who are unable to repay the debt.

Social Reasons:

A- Reasons related to individuals:

1- The persons involved in cases of checks can not be stigmatized as criminals and are not counted as crime-loving persons. They do not belong to the crime community except as stipulated by Article 237 of the Penal Code. Their classification shall not exceed the limits of the incidental because of the blackmail they were subject to and the exploitation of their hard financial conditions which led them to sign a check with high usurious interests.

2- The legislator's tendency to apply stricter punishment in cases of checks has led the involved persons to retire early, sell a share of early pension, resign, sell their houses and properties for very low prices or mortgaging them to keep their social rank and avoid the enforcement of imprisonment sentences issued against them.

3- The persons who serve imprisonment sentences in such case were fired from their work and penal sentences were registered in their certificate of police record. This makes them unable to join work; as a result, the State's authorities lose national cadres and experiences because of applying stricter punishment in check crimes.

4- The persons imprisoned because of these cases were morally harmed because of publishing these rulings in the official newspaper against them, which stigmatized them as criminals. They lost their good reputation and social rank and they were exposed to very bad social and psychological pressures. Their social relations were exposed to confusion and their wives claimed their right for divorce from them; they were exposed to disapproval, contempt and refusal from all the surrounding individuals in the society. This imposed compulsory social alienation on them after they went out of prison.

5- The persons sentenced in these cases, despite their bad financial conditions and inability to pay, have become bearing new financial burdens added to their debts to pay the fees of lawyers to defend them.

6- A great number of those sentenced with imprisonment in such cases were afflicted with physical diseases such as high blood pressure, stomach ulcer, heart diseases and other disease due to tension and excitement. All these are diseases that incur considerable financial burdens on the State to spend on their remedy.

7- A great number of the person sentenced in such cases were subject to psychological disease such as anxiety, obsessions, depression, pessimism and loss of other-confidence because of shocks crises they were exposed to.

8- The phenomenon of checks without balance, which increased in its rates despite applying stricter punishments and the increase in the number of involved persons, has become a dangerous axis in the emergence of other social problems such as divorce, wine and drug taking, trafficking in illicit substances, school retardation and failure among students, juvenile deviation, etc, and these are problems in which the State bears considerable burdens to encounter this phenomenon.

9- Other numbers of people have escaped from homeland to other countries escaping from the enforcement of imprisonment sentences issued against them. This has negative impacts that require reconsidering Article 237 of Penal Code.

B- Reasons related to the families of the sentenced persons:

1- The phenomenon of increase in the check cases has led to the turbulence in the budgets of the sentenced person's families, which became unable to pay for the necessary requirements to meet the needs of their children.

2- The sentenced persons' families suffer from bad social and psychological pressures because of imprisoning the family provider. This means that the impact and influence Article 237, which incriminates the check, has extended to the incrimination and punishment of the wife whose husband was incriminated and his children. These are one of the social side effects of the punishment and its bad impacts on the Kuwaiti family.

3- The sentenced person's children have become overwhelmed by a feeling of inferiority (i.e. they are inferior to others) and such is a punishment to which the children were exposed because of stigmatizing their father as a criminal.

4- The sentenced persons' families were exposed to disintegration after their provider was imprisoned. This led to raising the rates of divorce among the sentenced person and their wives, the homelessness of their children who lose security, care and stability. This means that one article in law (Article 237) can play a dangerous role in the family disintegration in such a way that threatens the intact social structure, security and stability of society. Therefore, there are social prerequisites that necessitates from the legislator to reconsider the issue of incriminating the check.

5- Kuwaiti family, because of imprisoning their providers in such cases, is threatened in terms of their dignity, structure and the future of its children.

Studying the phenomenon of the constant increase in the cases of checks without balance:

The First Study:

Kuwait Social Work Group has conducted a field study for the phenomenon, which included the family of the persons sentenced in the cases of checks without balance in the Public Prison (Talha Prison), the Central Prison, and Women Prison. The study included 468 male and female prisoners. It also included a great number of the families of the persons sentenced in such cases. The study took nine months and the aim behind conducting it was to get acquainted with the reasons of such a phenomenon and its increase despite applying stricter punishment in the cases of checks and to know the negative impacts which were reflected on the lives of the sentenced person, their families and children and their social and economic life. This study revealed very important reasons and findings that should be taken into consideration due to the results such a study might have in achieving security, stability and keeping the society's structure intact.

The Second Study:

It is a study about the opinion of Kuwaiti Bank Union about commuting the stipulated punishment of the crime of issuing checks without balance from a felony into a misdemeanor in its memorandum in regards thereof, dated 5/5/2002. This memorandum has addressed the importance of the check as a mode of payment and not as a mode of guarantee. It also addressed the main function of the check in addition to the other modern billing modes. It also referred to an important and essential point, which is that the criminal protection with which the legislator surrounded the check was based on the fact that the check is a mode of payment not guarantee. The memorandum also referred to the misuse of checks as a mode of credit, in such a way that constitutes a deviation in the use of check out of the function it was issued for, which is as a mode of payment only. The credit check appeared in most conditions of selling in installments or when some financial institutions gave loans to be repaid in installments. Instead that the sellers or lenders study the financial conditions of their customers to make sure their customers are able pay for their commitments, they make them write blank checks or checks with deferred dates for the value of the deferred installments. Obviously, this means that they have misused the check by making it a mode of guarantee and not a mode of payment and they used it out of its function, exploiting the criminal punishment of the check without balance and the protection with which the legislator surrounded the check on the basis that it is a mode of payment. This is the axis of the outbreak and widespread of the phenomenon of the constant increase in the cases of checks without balance.

The memorandum has referred, in an important aspect, to the negative effects of using the check as a mode of credit (guarantee) including going back with legislation and law to the system of physical coercion for the necessity of civil and commercial rights and this is what is disapproved by most of the contemporary legislations and even the constitutions of some countries prohibit it. In addition, the memorandum referred to the modern modes of payment such as credit cards (ATMs) and the explanation thereof. The memorandum also included some recommendations and suggestions representing the opinion of local banks and mentioned in the opinion of Kuwait Bank Union and the conclusion which the memorandum has reached.

Commenting on both studies about the phenomenon:

First: Kuwait Social Work Group study:

1-      The study conducted by Kuwait Social Work Group was well prepared for being conducted and was planned for implementation according to the rules of the objective scientific method in an attempt to reach the real reasons behind the constant increase in the cases of checks related to the persons involved in such cases, studying their conditions in the field reality, studying the conditions of their families, the negative effects of the increase  of this phenomena reflected on the involved persons, their families and children, their social and economic life. This is in addition to the suffering experienced by those individuals, their families and the problems created by this phenomenon in the Kuwaiti society as well as the burdens borne by the State in encountering such problems and negative effects.

2-      The study conducted by Kuwait Social Work Group did not interpret the phenomenon in the framework of the single factor; rather, it depended on interpreting the phenomenon, getting acquainted with its reasons from several aspects and within the framework of scientific hypotheses and questions answered by the study in attempt to reach the reason that led to the occurrence of such a negative phenomenon.

3-      This study has used some tools for collecting information that was rationalized and checked for credibility before applying it to achieve the highest rates of validity and reliability in the results thereof which we have addressed with objective and scientific analysis and interpretation.

4-      The techniques used before applying the questionnaires including preparing the imprisoned persons for the objectives of the study, the effort made by male and female researchers including reading a thesis oriented for such purposes, made the individuals feel secure towards researcher and led them to give the required information about the phenomenon without feeling afraid of any legal consequences that might cause harm to them. Therefore, their answers were given with high rates of reliability and this confirmed some technical elements that were set in the questions of the questionnaire to make sure of the reliability of the examined person.

Second: Kuwait Bank Union study:

1-       The study submitted by Kuwait Bank Union handled the opinion of local banks from nearly one perspective in terms of that it focused on the importance and function of the check and the penal protection of the check as a mode of payment as stipulated by Article 237 of the Penal Code.

2-       This study has referred to some misuses of the check as a mode of credit (guarantee) and not as a mode of payment and the negative effects of misusing the check from a legal perspective only without reference to the other negative effects revealed by the study conducted by Kuwait Social Work Group which indicated these negative impacts on the individual, family, society, economic condition, security authorities and judicial authorities as well as the burdens borne by the State for encountering such a phenomenon.

3-       Among the disadvantages of Kuwait Bank Union study is that it clearly referred to the misuse of checks as a mode of guarantee and the negative impacts resulting from this; however, it did not suggest or recommend lifting the criminal protection on the check and considering it like any other modern mode of payment that is not subject to such protection nor to prohibition as the check is subject to incrimination.

4-       Kuwait Bank Union submitted proposals and recommendations for putting an end to this negative phenomenon. However, the disadvantage it has is that these proposals and recommendations need  a long period of time for being implemented, while Kuwait Social Work Group concluded that a radical, quick and decisive solution shall be set in the framework of early intervention for protecting individuals from being involved cases of checks without balance to protect the entity involved persons' families against being involved in cases of checks without balance to protect the entity of family against disintegration and minimizing the other social and economic problems resulting from this phenomenon.

5-       The study submitted by Kuwait Bank Union did not handle at all the considerable burdens borne by the State because of the widespread of this negative phenomenon. This was taken into consideration by Kuwait Social Work Group which highlights these burdens which could be spent in what is more useful for achieving growth rates for the good of citizens.

The burdens borne by the State in encountering the constant increase in the cases of checks without balance:

In the framework of the State's responsibility for keeping security and stability, enforcing laws and achieving social adjustment in society, the State bears all the financial and human burdens resulting from enforcing such judicial rulings issued against the involved persons.

Here we are going to review the financial burdens borne by the ministries of the State for enforcing the rulings issued in the cases of checks and resulting from the enforcement of the provisions of Article 237 of the Penal Code in regards of incriminating the check and the criminal protection surrounding it, which necessitates reconsideration and lifting such protection and considering the check like any of the traditional or modern modes of payment.

Authority	Monthly Cost	Annual Cost	Total Cost calculated on the average of imprisonment years
Financial burdens borne by the Ministry of Interior	168,480	2,021,760	26,391,680
Financial burdens borne by the Ministry of Social Affairs and Labor in cashing aids for the imprisoned persons' families	14,100	169,200	3,045,600
Financial burdens borne by the Ministry of Health	33,380	279,360	5,028,480
Financial burdens borne by the Ministry of Education because of repeated failure of the imprisoned persons' sons and daughters	3083	37,000	74,000
Total division of financial burdens	235,943	2,507,320	44,469,760

The real volume of the phenomenon:

Official statistics issued by the Ministry of Interior confirms that the total number of person, against whom imprisonment sentences have been issued in crimes of checks without balance for the year 2001, has reached 4614 persons of which 237 of women and 4377 of men. The total of those, against whom issued sentences were enforced, reached 1302. Whereas those were sentenced but the sentences were not enforced, their number reached 3312.

Here, would like to indicate the following facts:

1-       Those persons, who were subject to study and sentenced to serve imprisonment punishments in cases of checks, do not represent the real volume of the phenomenon.

2-       The persons who did not serve the sentences issued against them represent three times the number of those who served the sentences issued against them. This means that they are invisible or left their homeland escaping from serving the punishment stipulated by law and as a result the citizens of the nation get scattered and this has its negative effects.

3-       Given that all the persons sentenced in cases of checks without balance have served the sentences issued against them, this means that the State will be in need of building new prisons, which will double financial burdens borne by the State. It will also result in negative effects on their families, which will constitute a threat for the social structure of this society. In addition, the society will not keep up with the contemporary trends in that it goes back to the system of physical coercion for the necessity of rights. This is because the contemporary trend is to replace the imprisonment punishment for other penal methods that are more civilized and more humane especially as most of the world countries do not incriminate the check or surround it with criminal protection as it is the situation in the Kuwaiti Penal Code. Among the developing countries which do not surround the check with criminal protection are the USA, the UK, France, Germany and the countries of the European Community in general.

Anyway, the nullification of Article 237 of the Penal Code and Article 554 of the Trade Law has become a necessary requirement for the good of the individual and society to help the Kuwaiti family avoid all the side effects it suffers from. This is in addition to alleviating financial and humane burdens borne by the State, keeping the resources of the State and directing them for the good of the processes of development in several fields.