Anti-Corruption and Bribery in Russia

Anti-Corruption and Bribery in Russia

Trends and climate

Trends

Have there been any recent changes in the enforcement of anti-corruption regulations?

On July 15 2016 legislative changes aimed at closing the gaps in the criminal liability for bribery were introduced by Federal Law 324-FZ on Introducing Amendments to the Criminal Code (July 3 2016). In particular, the new law extends the criminal liability for bribery to cases where the bribe is paid not to the bribe taker, but rather to a third party (an individual or legal entity) named by the bribe taker. Further, the new law introduces Article 204.1 to the Civil Code, which prohibits mediation in bribery in commercial and other organisations. Previously, such mediation in bribery was punishable only in cases of the bribery of civil servants or state officials (Article 291.1 of the Criminal Code).
Legislative activity

Are there plans for any changes to the law in this area?

At present, under Russian law only individuals can bear criminal liability, including liability for bribery and corruption (Article 19 of the Criminal Code). Therefore, organisations can be held liable only under the Administrative Offences Code. However, the Russian State Duma is now considering a draft law extending criminal liability to legal entities (Draft Federal Law 750443-6 (March 23 2015)). However, it is not yet known when – or even whether – the draft law will enter into force.
Legal framework
Authorities

Which authorities are responsible for investigating bribery and corruption in your jurisdiction?

Bribery and corruption offences under the Administrative Offences Code and the Criminal Code are generally investigated by the Public Prosecutor's Office. Additional law enforcement authorities may be competent to deal with anti-corruption investigations in specific sectors – for example, bribery and corruption related to public procurement on a federal level are also investigated by the Federal Anti-monopoly Service.
Domestic law

What are the key legislative and regulatory provisions relating to bribery and corruption in your jurisdiction?

The relevant Russian legislation mainly consists of the following:
• anti-corruption laws – in particular:
◦ the National Anti-corruption Plan, which is adopted every two years by the president, coordinates efforts to combat corruption in Russia and lists the specific anti-corruption measures to be taken by the Russian state; and
◦ Federal Law 273-FZ on Combatting Corruption (December 25 2008), which sets out the legal and organisational framework for the prevention and combat of corruption and the mitigation and remediation of the consequences of corruption;
• antitrust regulation – in particular, Federal Law 135-FZ on the Protection of Competition (July 26 2006), of which Article 17 regulates antitrust requirements applicable to public tenders and Article 18 sets out rules for selecting financial organisations;
• public procurement regulation – in particular, Federal Law 94-FZ on Placing Orders for State and Municipal Needs (July 21 2005), which was adopted to prevent corruption and other violations in the area of public procurement and to ensure:
◦ the efficiency and transparency of the decision-making process;
◦ equal access of bidders; and
◦ control over the procurement process;
• the Administrative Offences Code, which establishes administrative liability for violations of anti-corruption laws and antitrust and public procurement regulation; and
• the Criminal Code, which establishes criminal liability for violations of anti-corruption laws and antitrust and public procurement regulations.
International conventions

What international anti-corruption conventions apply in your jurisdiction?

The following conventions apply:
• The United Nations Convention against Corruption of October 31 2003, ratified by Federal Law 40-FZ (March 8 2006, entered into force on March 21 2006).
• The Council of Europe Criminal Law Convention on Corruption of January 27 1999, ratified by Federal Law 125-FZ (July 25 2006, entered into force on July 28 2006).
• The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime of November 8 1990, ratified by Federal Law 62-FZ (May 28 2001, entered into force on May 31 2001).
• The United Nations Convention against Transnational Organised Crime of November 15 2000, ratified by Federal Law 26-FZ (April 26 2004, entered into force on April 29 2004).
• The International Convention for the Suppression of the Financing of Terrorism adopted by the General Assembly of the United Nations on December 9 1999, ratified by Federal Law 88-FZ (July 10 2002, entered into force on July 13 2002).
Specific offences and restrictions
Offences

What are the key corruption and bribery offences in your jurisdiction?

The following are the key corruption and bribery offences in Russia:
• Unlawful remuneration on behalf of a legal entity – Article 19.28 of the Administrative Offences Code prohibits the bribery of Russian or foreign civil servants or state officials or executives of commercial or other organisations to induce them to use their authority to act in favour of a legal entity.
• Bribery in commercial organisations – Article 204 of the Criminal Code prohibits the giving to and taking of bribes by executives of commercial or other organisations in connection with their positions in these organisations.
• Mediation in bribery in commercial organisations – Article 204.1 of the Criminal Code prohibits the direct transfer of bribes to executives of commercial or other organisations on a considerable scale (ie, exceeding Rb25,000, approximately $400) on instructions by the bribe giver or bribe taker.
• Bribe taking by civil servants – Article 290 of the Criminal Code prohibits the taking of bribes by Russian or foreign civil servants or state officials to induce them to use their authority to act in favour of the bribe giver.
• Bribe giving to civil servants – Article 291 of the Criminal Code prohibits the giving of bribes to Russian or foreign civil servants or state officials.
• Mediation in bribery of civil servants – Article 291.1 of the Criminal Code prohibits the direct transfer of bribes to Russian or foreign civil servants or state officials on a considerable scale (ie, exceeding Rb25,000, approximately $400) on instructions by the bribe giver or bribe taker.
Hospitality restrictions
Are specific restrictions in place regarding the provision of hospitality (eg, gifts, travel expenses, meals and entertainment)? If so, what are the details?
Article 575(1) of the Civil Code prohibits any gifts – except for common gifts with a value of up to Rb3,000 (approximately $50) – to civil servants or state officials and in relations between commercial organisations. Since under Russian law any benefits transferred to the donee qualify as a gift (Article 572(1) of the Civil Code), this prohibition also extends to travel expenses, meals, entertainment and other hospitality costs.
Transactions performed in violation of Article 575(1) of the Civil Code are generally considered to be void. Thus, the received benefits must be returned or compensated by the donee (Article 167(2) of the Civil Code). In practice, the prohibition on gifts with a value of more than Rb3,000 is reflected in the Russian companies’ compliance regulations.
Even if the transfer of the gift does not violate Article 575(1) of the Civil Code (ie, the gift is common and its value does not exceed Rb3,000), such transaction may still be subject to liability under the Criminal Code if it was performed with criminal intent.
Facilitation payments

What are the rules relating to facilitation payments?

There are no specific rules under Russian law regulating facilitation payments. Such payments are therefore subject to the general rule on the prohibition of gifts whose value exceeds Rb3,000 (approximately $50) and the penalties for unlawful remuneration and bribery under the Administrative Offences Code and the Criminal Code.
Liability
Scope of liability

Can both individuals and companies be held liable under anti-corruption rules in your jurisdiction?

Under the Administrative Offences Code, both individuals and companies can be held liable for administrative offences (Articles 1.4(1) and 2.10).
Under the Criminal Code, only individuals can bear criminal liability (Article 19). However, a draft law extending criminal liability to legal entities is under consideration by the Russian State Duma.

Can agents or facilitating parties be held liable for bribery offences and if so, under what circumstances?

No specific rules under Russian law regulate the administrative or criminal liability of agents or facilitating parties. These agents are therefore held liable for bribery offences under the Administrative Offences Code (in particular, unlawful remuneration on behalf of a legal entity according to Article 19.28) and the Criminal Code.
Foreign companies

Can foreign companies be prosecuted for corruption in your jurisdiction?

Under the Administrative Offences Code, foreign companies bear administrative liability for administrative offences committed in Russia. Administrative offences under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of legal entity) which were committed outside Russia can be prosecuted:
• if they are directed against the interests of Russia; or
• in cases provided for by international treaties which Russia has signed if the foreign companies have not been held liable in the relevant foreign states (Article 1.8(3) of the Administrative Offences Code).
Under the Criminal Code, companies – including foreign companies – cannot bear criminal liability (Article 19). However, the Russian State Duma is considering a draft law to extend criminal liability to legal entities, which would impose criminal liability on foreign companies based on principles identical to those of the Administrative Offences Code.
Whistleblowing and self-reporting
Whistleblowing

Are whistleblowers protected in your jurisdiction?

Russian law contains only one provision on the protection of whistleblowers. Article 9(4) of the Anti-corruption Law states that civil servants or state officials who report on corruption violations will enjoy state protection. However, this protection is afforded only in accordance with the general Russian legal provisions granting protection to participants in criminal cases (in particular, the Criminal Procedure Code and Federal Law 119-FZ on State Protection of Victims, Witnesses and Other Participants in Criminal Proceedings (August 20 2004).
In 2015 a draft law containing specific protection measures for whistleblowers who report corruption violations by civil servants or state officials to the police or the media was prepared by the Federal Labour Ministry. This draft law proposes, among other things, monetary penalties against employers which have punished whistleblowers through dismissal. However, it has yet to be introduced to the State Duma.
Self-reporting

Is it common for leniency to be shown to organisations that self-report and/or cooperate with authorities? If so, what process must be followed?

Under Article 4.2(3) of the Administrative Offences Code, the voluntary disclosure of an offence to the competent law enforcement authority qualifies as an extenuating circumstance. This means that the amount of the fine imposed for violation of Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) will be reduced. However, the court has sole discretion as to the scope of reduction of the fine.
Following the adoption of proposed legislative changes, if criminal liability is extended to legal entities then organisations that self-report may benefit from the leniency provisions of Articles 204 (bribery in a commercial organisation), 204.1 (mediation in bribery in a commercial organisation), 291 (bribe taking by a civil servant) or 291.1 (mediation in bribery of a civil servant) of the Criminal Code. Under these provisions, the bribe giver is released from criminal liability if he or she:
• actively enabled the discovery or investigation of the crime;
• was subject to blackmailing by the bribe taker; or
• following commission of the crime, voluntarily informed the competent law enforcement authority of the bribe taking.
Dispute resolution and risk management
Pre-court settlements

Is it possible for anti-corruption cases to be settled before trial by means of plea bargaining or settlement agreements?

Since 2009, Chapter 41 of the Criminal Procedural Code has allowed plea bargaining agreements to be entered into in criminal proceedings, including proceedings regarding bribery offences.
Under a plea bargaining agreement, the defendant undertakes to provide information and to cooperate in the investigation of crimes committed by other persons (disclosure of his or her own crimes does not suffice). If the defendant fulfils these obligations, the sentence for his or her own crimes will not exceed half of the maximum punishment provided for such types of crime by the Criminal Code. The court has discretion to show further leniency.
Defences

Are any types of payment procedure exempt from liability under the corruption regulations in your jurisdiction?

Russian law does not provide for such concept.

What other defences are available and who can qualify?

Under the Administrative Offences Code, a legal entity will be guilty of an administrative offence if it can be established that it did not take all necessary measures to ensure compliance with the violated regulations and this violation constitutes the relevant administrative offence (Article 2.1 (2)). That means that a legal entity accused of an offence according to Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) may claim that it has taken all measures necessary to prevent such bribery committed by its employees or agents.
In particular, the legal entity may arguably claim that it fully complied with its obligations under Article 13.3 of the Anti-corruption Law in order to be exempt from administrative liability.
Risk management

What compliance procedures and policies can a company put in place to assist in the creation of safe harbours?

Article 13.3 of the Anti-corruption Law obliges organisations to develop and implement measures to prevent corruption. According to the law these measures can include:
• designating departments and officers responsible for preventing bribery and other violations of law;
• cooperating with law enforcement authorities;
• developing and implementing policies and procedures designed to ensure ethical business conduct;
• adopting a code of ethics and professional behaviour for employees;
• identifying and regulating conflicts of interest; and
• preventing the creation of false accounts and the use of forged documents.
The general obligation under the Anti-corruption Law to develop and implement anti-corruption measures is further elaborated by the Methodical Recommendations for the Development and Adoption of Anti-Corruption Measures of the Federal Labour Ministry (April 16 2014). This document lists in detail the specific steps which are recommended to be taken by organisations in order to comply fully with their obligation under the Anti-corruption Law.
The Anti-corruption Law does not provide for penalties where an organisation fails to implement the required anti-corruption measures. However, such failure may lead to liability under the Administrative Offences Code if the organisation is unable to demonstrate that it has taken all measures necessary to prevent bribery committed by its employees or agents.
Record keeping and reporting
Record keeping and accounting

What legislation governs the requirements for record keeping and accounting in your jurisdiction?

General accounting principles are regulated by the Federal Law 402-FZ on Accounting (December 6 2011). The requirements for financial reporting are set out in the Federal Law 129-FZ on State Registration of Legal Entities (August 8 2001). The consolidation of financial reporting is regulated by the Federal Law 208-FZ on Consolidation of Financial Reporting (July 27 2010). The requirements under these federal laws are further specified by:
• regulations on accounting, issued by the Federal Finance Ministry;
• charts of accounts and instructions on their application, issued by the Bank of Russia and the Federal Finance Ministry;
• accounting standards for specific sectors issued by the Bank of Russia;
• main methodical instructions and recommendations issued by the Federal Finance Ministry; and
• summaries of practice of application of legislation, prepared by the Federal Finance Ministry.

What are the requirements for record keeping?

The general accounting requirements are as follows:
• Accounting must be maintained without interruption from the date of the organisation's state registration until the date it ceases its activity due to reorganisation or liquidation.
• Accounting must be maintained according to a general system or a simplified system.
• Maintaining accounting and record keeping must be organised by the organisation's chief executive.
• Accounting must be maintained based on an accounting policy adopted each year.
• All commercial facts must be documented by primary accounting documents on paper or in electronic form.
• Information reflected in the primary accounting documents is subject to timely registration and storage in the accounting registers.
• Assets and liabilities are subject to inventarisation.
• Accounting items are to be recorded in Russian roubles.
Reporting

What are the requirements for companies regarding disclosure of potential violations of anti-corruption regulations?

Under Russian law, companies are not specifically obliged to disclose potential violations of anti-corruption regulations. However, the voluntary disclosure of such violations may be part of the measures taken by organisations in order to comply with their obligations under the Anti-corruption Law to develop and implement anti-corruption measures.
Penalties
Individuals

What penalties are available to the courts for violations of corruption laws by individuals?

Individuals may be held liable for committing the following anti-corruption offences under the Criminal Code:
• Bribery in a commercial organisation – Article 204 provides for either:
◦ a penalty of:
▪ up to Rb2 million (approximately $35,000) to Rb5 million (approximately $85,000);
▪ two to five years' salary; or
▪ 50 to 90 times the bribe sum; and
▪ an occupational ban from certain professions for up to six years; or
◦ imprisonment from seven to 12 years, a penalty of up to 50 times the bribe sum and an occupational ban from certain professions for up to six years.
• Mediation in bribery in a commercial organisation – Article 204.1 provides for either:
◦ a penalty of:
▪ up to Rb1.5 million (approximately $25,000);
▪ 18 months’ salary; or
▪ 40 to 70 times the bribe sum; and
▪ an occupational ban from certain professions for up to six years; or
◦ imprisonment for up to seven years, a penalty of up to 40 times the bribe sum and an occupational ban from certain professions for up to six years.
• Bribe taking by a civil servant – Article 290 provides for either:
◦ a penalty of:
▪ up to Rb3 million (approximately $50,000) to Rb5 million (approximately $85,000);
▪ three to five years' salary; or
▪ 80 to 100 times the bribe sum; and
▪ an occupational ban from certain professions for up to 15 years; or
◦ imprisonment from eight to 15 years, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to 15 years.
• Bribe giving to a civil servant – Article 291 provides for either:
◦ a penalty of:
▪ up to Rb2 million (approximately $35,000) to Rb4 million (approximately $70,000);
▪ two to four years' salary; or
▪ 70 to 90 times the bribe sum; and
▪ an occupational ban from certain professions for up to 10 years; or
◦ imprisonment from eight to 15 years, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to 10years.
• Mediation in bribery of a civil servant – Article 291.1 provides for either:
◦ a penalty of:
▪ up to Rb1.5 million (approximately $25,000) to Rb3 million (approximately $50,000);
▪ two to three years' salary; or
▪ 60 to 80 times the bribe sum; and
▪ an occupational ban from certain professions for up to seven years; or
◦ imprisonment from seven to 12 years, a penalty of up to 70 times the bribe sum and an occupational ban from certain professions for up to seven years.
Companies or organisations

What penalties are available to the courts for violations of corruption laws by companies or organisations?

A legal entity which commits an offence under Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) may face the following penalties:
• Bribery – a penalty of three times the bribe sum but not less than Rb1 million (approximately $17,000).
• Large-scale bribery – if the bribe sum exceeds Rb1 million (approximately $17,000), a penalty of 30 times the bribe sum but not less than Rb20 million (approximately $350,000).
• Extra-large scale bribery – if the bribe sum exceeds Rb20 million (approximately $350,000), a penalty of 100 times the bribe sum but not less than Rb100 million (approximately $1.7 million)

Source: http://www.lexology.com/r.ashx?i=6150742&l=7VB3BG4