Editors

Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Bill Steinman
Contributing Editor

A look behind Russia’s corporate bribery enforcement statistics

On March 21, the Russian general prosecutor’s office published the official year-end statistics for corporate bribery enforcement in 2018, which are once again aimed at demonstrating the country’s tough stance on fighting corruption.

Russian law enforcement authorities opened 487 investigations against legal entities for bribery (based on Article 19.28 of the Administrative Offences Code, i.e. Unlawful remuneration on behalf of a legal entity). These investigations resulted in the conviction of 439 entities and total penalty payments of RUB 691 million ($10.7 million).

More than 300 new entities have been included in the public register of offenders on the general prosecutor’s office website, which now lists more than 1,700 entities in total.

All entities convicted of bribery are prohibited from bidding in state procurement tenders for a period of two years from the date of conviction (though not including tenders of state-owned companies).

While these figures are impressive, the prosecutors’ press releases for around one-third of these cases reveal a peculiarity of the Russian enforcement practice — that it is targeting almost exclusively small and mid-scale bribery in day-to-day business:

  • In the public sector, most bribes were paid to low-ranking public officials to avoid the payment of administrative fines, or to receive state licences or accelerate registration procedures. In some cases, the companies paid bribes to public officials to win municipal tenders. 
  • Commercial bribes to state-owned entities were given mostly to obtain supply contracts (quite often with hospitals), or to conceal administrative violations. Executives of private companies were usually paid to manipulate smaller tenders or otherwise favour the bribing company’s business. 
  • The bribe sums ranged from RUB 5,000 ($80) to RUB 5 million ($80,000). Most bribes were in the five or six digit rouble range. Only in a few cases did the amount of the bribe exceed RUB 1 million ($15,500).
  • The maximum penalty was RUB 30.5 million ($500,000). In three cases, penalties of RUB 20 million ($310,000) were imposed. In most cases, however, only the statutory minimum penalty of RUB 1 million ($15,500) was imposed. Often, this minimum amount was further reduced to RUB 500,000 or RUB 400,000 ($7,500 and $6,200).

A new trend is that public prosecutors assess whether companies have implemented the anti-corruption measures of Article 13.3 of the Russian Anti-corruption Law (appointment of a compliance officer, adoption of a compliance code, prevention of conflicts of interest, cooperation with law enforcement authorities etc.) when prosecuting them for corporate bribery.

Companies exposed to liability risks in Russia can draw three conclusions from these statistics: First, the enforcement risks are the highest in case of small and mid-scale bribery which is the most prevalent in practice. Second, the main liability risk is not the penalty payment (the amount of which depends on the bribe sum) but being exposed in the public register of offenders. Third, taking anti-corruption measures can be a defense against liability for corporate bribery.

Further information on enforcement and developments in Russia in 2018/19 can be found in this report.

_____

Hannes Lubitzsch, pictured above, is a partner in the Moscow office of Noerr and heading the Russian compliance & investigations practice. He can be contacted here

Share this post

LinkedIn
Facebook
Twitter

1 Comment

  1. The term "low hanging fruit" clearly applies to both the report and the enforcement of anti-corruption laws. To believe that these statistics are even valid is a stretch but even more disconcerting is that the government actually believes it is legitimating its enforcement apparatus. Clearly, these bureaucrats and party apparachiks are delusionary. Surely, the propogandized public knows that the levels of corruption in government and business are systemic and pervasive. Until and unless the "rule of law" is applied in a manner that is both perceived and is impartial, these self-serving government reports are meaningless. Except, of course, they demonstrate the feeble and feckless approach to government and business corruption.


Comments are closed for this article!