A new Russian law, which went into effect on January 1, 2013, affirmatively requires companies to establish compliance programs.
The law, which was added as Article 13.3 of a broader 2008 Law on Combatting Corruption, is entitled “The Requirement of Organizations to Take Measures to Prevent Corruption” and provides that organizations are required to develop and implement measures to prevent corruption and states that such measures may include the following:
(1) designating departments and officers responsible for preventing bribery and related offenses;
(2) developing mechanisms for cooperation with law enforcement authorities;
(3) developing and implementing standards and procedures designed to ensure ethical business conduct;
(4) adopting a code of ethics and professional conduct for all employees;
(5) establishing means for identifying, preventing and resolving conflicts of interest; (6) preventing the creation and use of false and altered documents.
Other provisions of Russian law provide that companies can be held liable for corruption offenses committed on their behalf or in their interests and for failing to take all measures under their control to prevent corruption.
Although Russia does not have corporate criminal liability, its Code of Administrative Violations provides for fines of up to 100 times the amount of any bribe offered, promised or given by, on behalf of, or in the interests of a legal entity.
Putting all this together, if an employee or a third party acting on behalf of the company pays a bribe and the company does not have all the recommended Article 13.3 measures in place, it has arguably not done everything possible to prevent an act of corruption and faces the possibility of a massive administrative fine.
Thus, Russian law now appears to have gone beyond the FCPA and the UK Bribery Act. As under the UKBA, companies can be held liable for failing to prevent bribery by third parties but there is no “adequate procedures” defense. Moreover, nothing in the law limits its application to commercial organizations or to purely Russian organizations.
All companies operating in Russia should evaluate their local compliance policies and make sure that they satisfy Article 13.3. Such attention to compliance is especially important in light of attempts by both the Russian government and the political opposition to seize the anti-corruption mantle by exposing corruption wherever they find it.
Thomas Firestone, pictured above, is a senior counsel in the Moscow office of Baker & McKenzie. His practice focuses on corruption risks in Russia, including transactional due diligence and internal investigations. He was previously an Assistant US Attorney in the Eastern District of New York and Resident Legal Adviser at the U.S. Embassy in Moscow. He can be contacted here.