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Coming Soon: Russia’s FCPA?

Assistant Attorney General Lanny Breuer (left) of the DOJ’s Criminal Division spoke today in Moscow at the 3rd Russia and Commonwealth of Independent States Summit on Anti-corruption. 

Some highlights:

  • Russia’s corruption problem. On Transparency International’s 2010 Corruption Perceptions Index, Russia ranks tied for 154th out of 178 countries. Russia also ranks 22nd out of 22 countries on TI’s 2008 Bribe Payers Index, which periodically ranks top exporting countries according to how likely their firms are to pay bribes abroad.
  • The U.S. enforcement record. The FCPA didn’t become a strong enforcement mechanism overnight. “Indeed, in the first decades immediately following the law’s enactment, many saw the FCPA as a slumbering statute.” In 2004, the DOJ charged two individuals under the FCPA and collected around $11 million in criminal fines. In 2005, it charged five individuals and collected around $16.5 million. By contrast, in 2009 and 2010 combined, the DOJ charged over 50 individuals and collected nearly $2 billion.
  • Russia joins the international anti-corruption community. Russia has ratified the United Nations Convention against Corruption, a comprehensive anti-corruption pact that seeks to ensure that State Parties take steps to prevent corruption within their public and private sectors. In addition, U.S. and Russian law enforcement have been coordinating closely in international corruption investigations, including the DOJ’s FCPA investigation of Daimler AG and its Russian subsidiary.
  • Russia’s FCPA? Last month, President Medvedev introduced antibribery legislation to the Duma. Last week the legislation passed its first reading there. If it becomes law, the president’s antibribery bill would significantly strengthen the law against corruption in Russia by, among other things, criminalizing foreign bribery, and increasing penalties for all forms of bribery. The law would support Russia’s bid to accede to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This week in Paris, the OECD Working Group on Bribery is debating Russia’s accession to the Convention.

The full text of Mr. Breuer’s speech can be viewed here.

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1 Comment

  1. The question is: will therel be "Russian FCPA."? the answer to the question is most likely, no. And here are some reasons why that will likely be the case:

    1. The Russian Prosecutor General's Office (PGO) will not enforce anti-bribery laws as actively as the DOJ – not in the foreseeable future, at least.

    a. The PGO does not have a team large enough to dedicate the necessary man-hours to anti-bribery enforcement. And there is no evidence to suggest that a team (with the requisite expertise) will emerge from the existing enforcement units any time soon.

    b. The legal instruments at PGO's disposal are not conducive to active enforcement, and are not on par with those available to the DOJ.

    · The “Effective regret” doctrine (as described above) provides a fairly easy liability escape route for culpable individuals (outright immunity), and is markedly different from “voluntary disclosure” under the DOJ’s guidelines, with the latter only offering mitigation benefits to disclosing parties and does not preclude prosecution.

    · Russian criminal procedural norms do not permit the PGO to enter into non-prosecution or deferred prosecution agreements – the practice that allows DOJ to save precious time and resources and concentrate on further expanding its pipeline of cases.

    c. Russian substantive criminal norms impose, perhaps, the most significant constraint on the PGO's ability to prosecute: i.e., Russian Criminal Code does not provide for criminal liability for legal entities. This is the most critical difference between what PGO and DOJ can or cannot do in terms of anti-bribery enforcement. For DOJ, it is the ability to pursue criminal enforcement against legal entities that has made U.S. enforcement infamous in terms of enforcement metrics. Company prosecutions, in turn, have lead to individual prosecutions. PGO, on the other hand, has its hands tied. It is unlikely that the situation will change any time soon, as the Russian Government has resisted calls from the Group of States Against Corruption (GRECO) to amend Russian criminal norms.

    d. Last, but not least, PGO (in contrast with DOJ) has not been active in using interstate information gathering instruments, such as Mutual Legal Assistance Treaties (MLATs) – the instruments that can be crucial in collecting information for investigative purposes. For example, the PGO did not pursue leads against Daimler in 2010, even though publicly available information revealed extensive bribes involving Russian interests.

    There are several added reasons why there will likely not be a “Russian FCPA”.

    2. The Russian Government does not have any experience, resources or tools (aside from declaratory intentions) to pursue corruption charges against individuals for bribery outside Russia.

    It is unlikely that PGO will develop the expertise or adequate instruments in the near future.

    3. The Russian Government is simply not interested in a comprehensive effort to combat corruption domestically, because in fighting corruption, the Government will be fighting itself.

    Admittedly, this argument is susceptible to criticism on the grounds that it smacks of an overgeneralization and, more than anything else, resembles subjective opinion rather than a conclusion founded on solid facts. Nevertheless, it is difficult to deny that corruption is pervasive within the government bureaucracy, as it runs from the top to its very bottom. The Russian Government relies on bureaucracy in running its day-to-day operations. Therefore, for the Government to confront bureaucracy with all its systemic failures and sins will be akin to shooting itself in both legs.

    4. Finally, and critically, it will be almost self-defeating for the Russian Government to pursue the policy of prosecuting private parties for paying bribes.

    If such policy is actively implemented, the message from the private sector will be as follows: If you (the Government) are helpless against the corrupt environment that we (business people) are forced to operate in, at least have the decency to not force us to pay twice for your own failings. The Russian President or Prime Minister cannot disregard the message; if they do, they stand to lose major popular support in the upcoming elections.

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