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Russia: Courts are ordering companies to adopt compliance programs

Corruption is one of the most problematic factors for doing business in Russia. It’s clear the country must take decisive steps to combat this plague. While there’s plenty to do and progress has been slow, there are also some signs of progress.

For example, on January 01, 2013 the amendments to the Federal Law 273 “On Corruption Counteraction” came into the force. Among other things, the amendments obligate legal entities to have an anti-corruption policy.

Article 13.3 of the new provisions requires legal entities to implement and develop measures to prevent corruption. These anti-corruption measures may include: 

1) identifying the departments and employees in legal entities responsible for the prevention of corruption and other offenses

2) collaboration with law enforcement agencies

3) creating and implementing standards and procedures to ensure a good faith (bona fide) business activity

4) implementing a code of conduct and a policy for good conduct of employees

5) measures for preventing and solving conflicts of interests, and

6) prohibition of off-the-books accounting and using forged documents.

Although the act is binding, Russian legal entities haven’t rushed to comply with it. However, after recent court cases, that could change.

The Russian Law on Prosecution Service (1992) gives a prosecutor has the right to bring a suit before a court of general jurisdiction to force a violator to take some action to obey law. Courts can order defendants to take specific action or face penalties.

Under this procedure, regional departments of the Prosecution Service of the Russian Federation have brought suits against some violators who failed to implement anti-corruption measures. The courts ordered the defendants to develop and to apply anticorruption programs in accordance with the requirements.

The courts set out a specific time period to comply with the judgment. Generally, the time given for a defendant to be comply with a court judgment is only one month (See: The judgment of the court of the Moscow district of Nizhny Novgorod dated June 17, 2014. Case 2-1477/2014 in Russian).

Although still a small step, these cases could eventually change the way companies is Russia view their obligations to develop and apply effective anti-corruption compliance programs.

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Kristina Furlet serves as compliance specialist in a Russian subsidiary of a global provider of telecom services.

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1 Comment

  1. In an openly-corrupt society ruled by oligarchs grown rich through corruption, everyday anti-corruption laws serve as a tool for the very worst elements of society to guard their wealth and punish adversaries. In a corrupt society, everyone has broken the law at one time or another, and is therefore be subject to imprisonment — any time prosecutors are ordered to pursue them.

    Thus advocates that cheer these anti-corruption reforms unwittingly become tools of the oligarchs. At the very least, stories like the one here on Russia's anti-corruption laws should point out their hypocrisy. A similar process is at work in China, as Party insiders pursue corruption by their political rivals.


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