In April 2013, FCPA Update reported on the adoption of the new Article 13.3 to the Russian Anti-Corruption Law,1 which requires all companies in Russia to develop and adopt measures aimed at preventing corruption.2 Although Article 13.3 lists six broadly defined measures that companies may develop and adopt, it does not elaborate on the steps companies should take to implement those measures. In the April 2013 article, we recommended that, in deciding how to implement the Article 13.3 measures, companies should use anticorruption policies established to comply with the FCPA and the UKBA as a guide, and provided specific advice on doing so.
This recommendation receives support in the recently issued guidance of the Russian Ministry of Labor and Social Protection of the Russian Federation (“Ministry of Labor”). On November 8, 2013, the Ministry of Labor, in close cooperation with the Chamber of Commerce and Industry and various business associations, adopted Recommendations on the Development and Adoption by Organizations of Measures Aimed at Counteracting Corruption (the “Recommendations”).
The 77 pages of the Recommendations set forth a list of policies, procedures, and control measures that companies may consider implementing to comply with Article 13.3, and introduce to the Russian legal landscape anticorruption compliance concepts that will be familiar to companies subject to the FCPA and the UKBA. Specifically, the Recommendations focus on the following aspects of a robust anticorruption compliance program:
- “Tone at the top” or, to use the language of the Recommendations, “the principle of personal example of the management,” including the key role of the management in creation of a “culture of intolerance of corruption”;
- Tailoring of anticorruption procedures to the level of corruption risk in a particular company or business division or process of that company;
- Disciplinary consequences for violation of anticorruption policies, regardless of the seniority of the relevant employee; and
- Continuous internal control over, and regular monitoring of, the effectiveness of compliance standards and procedures and their implementation.
The Recommendations go beyond these general principles and provide a detailed, step-by-step guide to their implementation and testing. For example, the Recommendations advise that a company’s compliance officers (or other individuals responsible for anticorruption compliance) be given sufficient authority within the organization to be able to enforce compliance policies among the company’s senior management. They also provide a comprehensive list of anticorruption procedures that a company may undertake, including various types of anticorruption training for employees (depending on their roles within the company) and internal and external audits of anticorruption policies.
The Recommendations – which also include advice on corruption risk assessment and third-party due diligence – provide a welcome clarification of Article 13.3, and have been called a “self-help guide on anti-corruption” for companies operating in Russia. Companies also subject to the FCPA and the UKBA will be relieved to learn that they need not significantly alter their approach to anticorruption compliance to comply with the Russian law, although they should make sure they follow all the formal procedural steps set out in the Recommendations and elsewhere in applicable Russian laws.3
Although the Recommendations do not specifically refer to foreign anticorruption regimes as a model, the similarity between the Recommendations’ advice and that articulated by the U.S. and U.K. governments is not accidental. As the Russian Minister of Labor stated, the Recommendations were based on the “best foreign and Russian corporate practices.”4 In fact, the Recommendations are the first official confirmation from the Russian government that explicitly states that companies operating in Russia can be subject to foreign anticorruption laws, including the FCPA and the UKBA specifically. This further emphasizes the trend, on which we reported earlier,5 of the harmonization of the Russian anticorruption legal regime with that of other countries.
How (and if) the Russian anticorruption regime, including Article 13.3, will be enforced remains to be seen, given that there have been no cases to date invoking the Article. Recent signals from the Russian government, however, suggest that it intends to step up its anticorruption enforcement6 and focus on alleged bribe-givers in particular. In fact, the number of cases against bribegivers, as opposed to government officials accused of taking bribes, increased by 45% in 2013.7 Further, on October 30, 2013, in anticipation of the issuance of the Recommendations, President Putin emphasized the applicability of the Russian Anti-Corruption Law to commercial organizations, noting that “the business … in some cases … incite[s] authorities to corrupt practices in an attempt to resolve its own business interests.”8
Like the six anticorruption measures listed in Article 13.3, the Recommendations are not legally binding, and the Russian Minister of Labor emphasized that they should be right-sized depending on the size and nature of a particular business.9 Nevertheless, given that companies seeking to defend against administrative liability must prove that they undertook “all possible measures” to ensure compliance10 and in light of the recent emphasis on enforcement against bribe-givers, it would be prudent for companies subject to Russian Anti- Corruption Law carefully to review the Recommendations and follow them to the extent reasonable and practicable.