A Transparency International-Russia report published in January assessed the efficacy of the anti-corruption programs of over 200 Russian companies, who together generate more than 70 percent of Russia’s national income.
While the report mainly calls for the majority of the companies named to implement remedial measures, it is worth noting and commending the highest-scoring companies, who provide exemplary models for their counterparts in the anti-corruption space.
The report identifies a number of best practices of the highest scoring anti-corruption programs, recommending that the lower-scoring companies emulate or adopt them. To that end, the report praises Russian companies that have disclosed the names, ownership interests, registration countries, and countries of operation for their subsidiaries. These types of voluntary disclosures, the report contends, are a powerful signal of a company’s commitment to anti-corruption compliance.
Indeed, Russian regulations obligate many of Russia’s non-governmental publicly traded companies to release comprehensive lists of their subsidiaries and the countries in which their subsidiaries operate. (See Federal Law on Joint Stock Companies No. 208-FZ of December 16, 1995; Federal Law on Securities Market; Regulations of the Bank of Russia No. 454-P of December 30, 2014 on Information Disclosure by the Issuer of Issue-Grade Securities.)
In addition, for Russian entities that do business in the United States either directly or through subsidiaries, FCPA liability can extend to parent companies if any of their subsidiaries act in furtherance of a corrupt payment. A subsidiary can easily trigger FCPA liability by a mere phone call, email, or text message that happens to be routed through U.S. servers, even if the subsidiary is not located in the United States.
Despite the risk of liability both at home and abroad, less than 10 percent of the companies named in the TI-Russia regularly conduct anti-corruption training for their employees and upper-level executives. In contrast, the highest-scoring companies not only provide anti-corruption training for their employees and executives, they also provide anti-corruption training for the employees and upper-level executives of their subsidiaries.
Russian companies looking to shield themselves from corruption-related penalties and convictions, or even the mere perception of corruption, should consider the example of the highest-scoring companies in the TI-Russia report. That means implementing strategic disclosure initiatives and comprehensive anti-corruption training programs for their employees and managers, at both the parent company and its subsidiaries.
Alec Puig, pictured above, is a Miami attorney in Holland & Knight’s Litigation and Dispute Resolution Practice. He’s also a member of the firm’s Global Compliance and Investigations Team. During law school, he served as a review editor for the Harvard Latino Law Review and as a training director for the Harvard Prison Legal Assistance Project. He can be contacted here.