Relevant international and domestic law

International anti-corruption conventions

To which international anti-corruption conventions is your country a signatory?

Russia is a signatory to the following international anti-corruption conventions:

  • Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime of 8 November 1990 (ratified by Federal Law 62-FZ dated 28 May 2001, entered into force on 31 May 2001);
  • International Convention for the Suppression of the Financing of Terrorism adopted by the General Assembly of the United Nations on 9 December 1999 (ratified by Federal Law 88-FZ dated 10 July 2002, entered into force on 24 July 2002);
  • United Nations Convention against Transnational Organised Crime of 15 November 2000 (ratified by Federal Law 26-FZ dated 26 April 2004, entered into force on 29 April 2004);
  • United Nations Convention against Corruption of 31 October 2003 (ratified by Federal Law 40-FZ dated 8 March 2006, entered into force on 21 March 2006;
  • Council of Europe Criminal Law Convention on Corruption of 27 January 1999 (ratified by Federal Law 125-FZ dated 25 July 2006, entered into force on 28 July 2006);
  • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 21 November 1997 (ratified by Federal Law 3-FZ dated 1 February 2012, entered into force on 13 February 2012); and
  • Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on Financing of Terrorism of 16 May 2005 (ratified by Federal Law 183-FZ dated 26 July 2017, entered into force on 6 August 2017).
Foreign and domestic bribery laws

Identify and describe your national laws and regulations prohibiting bribery of foreign public officials (foreign bribery laws) and domestic public officials (domestic bribery laws).

The Russian domestic bribery laws mainly consist of the following inter-related blocks.

Anti-corruption laws - in particular, the National Anti-Corruption Plan (adopted every two years by the Russian President; coordinates the 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 Combating Corruption of 25 December 2008 (the Anti-Corruption Law; sets out the legal and organisational framework for the prevention and combating of corruption as well as the mitigation and remediation of the consequences of corruption).

Antitrust regulation - in particular, Federal Law 135-FZ On Protection of Competition dated 26 July 2006 (eg, article 17 regulates antitrust requirements applicable to public tenders; article 18 sets out rules for the selection of financial organisations by the state).

Public procurement regulation - in particular, Federal Law 44-FZ ‘On the Contract System in State and Municipal Procurement of Goods, Works and Services’ dated 5 April 2013 (adopted to prevent corruption and other violations in the area of public procurement; aims to ensure the efficiency and transparency of decision-making, equal access of bidders, as well as control over the procurement process), and Federal Law 223-FZ On Procurement of Goods, Works and Services by Certain Types of Legal Entities, dated 18 July 2011 (establishes specific procurement procedures for Russian legal entities, such as state corporations and state companies).

Administrative Offences Code - establishes administrative liability for violations of anti-corruption laws, antitrust and public procurement regulation.

Criminal Code - establishes criminal liability for violations of anti-corruption laws, antitrust and public procurement regulation.

The Anti-Corruption Law, the Administrative Offences Code and the Criminal Code also prohibit bribery of foreign public officials.

Successor liability

Can a successor entity be held liable for violations of foreign and domestic bribery laws by the target entity that occurred prior to the merger or acquisition?

If the bribery of foreign or domestic officials occurred prior to a ‘reorganisation’ of the target entity, the following successor entities can be held liable according to article 2.10 of the Administrative Offences Code:

  • the newly arising entity in a merger of several entities;
  • the reorganised entity in accession by one entity to another;
  • in a division or spin-off, the entity to which, according to the division or spin-off balance sheet, the rights and obligations relating to the transaction or property involved in the bribery are transferred; and
  • the newly arising entity in a transformation of an entity of one type into an entity of another type.
Civil and criminal enforcement

Is there civil and criminal enforcement of your country’s foreign and domestic bribery laws?

There is criminal and administrative enforcement of Russia’s anti-bribery laws. The concept of civil enforcement of bribery laws is foreign to the Russian legal system.

Dispute resolution and leniency

Can enforcement matters involving foreign or domestic bribery be resolved through plea agreements, settlement agreements, prosecutorial discretion or similar means without a trial? Is there a mechanism for companies to disclose violations of domestic and foreign bribery laws in exchange for lesser penalties?

Since 14 August 2018, companies operating in Russia have been able to exclude themselves from liability for bribery according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) by way of self-reporting to the Russian law enforcement agencies. The new self-reporting rules do not apply to the bribery of foreign public officials. The Russian legislature has chosen to exclude such bribery from the self-reporting rules so as not to deviate from the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions, which was acceded to by Russia and does not provide for comparable rules.

According to the new self-reporting rules, companies are released from liability for domestic bribery if they have enabled the:

  • uncovering of the relevant violation (by the company);
  • conducting of an administrative investigation (into the company); and/or
  • uncovering, disclosure and investigation of the related criminal offence (committed by individuals).

The self-reporting releases the company from penalty payments under article 19.28 of the Administrative Offences Code. In contrast to other jurisdictions, this release includes 100 per cent of the penalties and is mandatory; it is not subject to the discretion of the law enforcement agencies or courts. 2019’s court practice, including a decision of the Supreme Court of the Russian Federation, confirms that, in practice, companies can be excluded from liability based on these rules.

The benefits of the self-reporting described above are limited to the reporting company itself. The individuals who made the bribe payments in the interest of the company continue to face prosecution under the relevant provisions of the Criminal Code. These individuals may, however, separately self-report under the leniency provisions of, for example, articles 204 (commercial bribery) and 291 (bribe giving to a public official) of the Criminal Code.

Further, since 2009, the Criminal Procedural Code has allowed ‘pretrial cooperation agreements’ with the suspects in criminal investigations (Chapter 40.1), including for bribery and corruption offences. They are particularly relevant for individuals who committed offences about which they cannot self-report to be excluded from liability, such as article 290 of the Criminal Code (bribe-taking by a public official).

Under such a pretrial cooperation agreement, the defendant undertakes to assist in the investigation of other individuals who participated in the relevant offence. If all statutory requirements are met, the defendant’s sentence will be reduced to not more than half the maximum punishment for the relevant offence under the Criminal Code.

Foreign bribery

Legal framework

Describe the elements of the law prohibiting bribery of a foreign public official.

Article19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) prohibits the bribery of foreign public officials by legal entities. This offence punishes the illegal transfer, offering or promise of money, securities or other property, valuable services or other property rights to a foreign public official on behalf, or in the interest of a legal entity, in return for the foreign public official using his or her authority to act in favour of the legal entity.

The bribery of foreign public officials by individuals is prohibited by article291 of the Criminal Code (bribe giving). According to the applicable court practice this offence punishes bribe payments in return for (i) a foreign public official using his or her authority to act in favour of the bribe giver or the persons represented by him or her, (ii) the foreign public official enabling another public official to take such actions, (iii) general patronage or (iv) general connivance.

Further, article291.1 of the Criminal Code (Mediation in bribery) punishes individuals for the direct transfer of bribes to foreign public officials on a considerable scale (ie, exceeding 25,000 roubles) on instructions by the bribe giver or bribe taker, as well as promises and proposals of such transfers.

Smaller bribery offences committed by individuals (those involving bribe payments to foreign public officials not exceeding 10,000 roubles) are punishable according to article 291.2 of the Criminal Code (small-scale bribery).

Bribery committed outside Russia

Since March 2016, Russian law enforcement authorities may also prosecute domestic and foreign legal entities for bribery offences committed outside Russia. Such extraterritorial prosecution requires additional justification - the offence must be directed against the interests of the Russian Federation or such possibility must be established by international agreements acceded to by the Russian Federation (article 1.8(3) of the Administrative Offences Code).

Definition of a foreign public official

How does your law define a foreign public official, and does that definition include employees of state-owned or state-controlled companies?

Both the Administrative Offences Code and the Criminal Code define a foreign public official as any appointed or elected person holding any position in a legislative, executive, administrative or judicial body of a foreign state, and any person performing any public duties for a foreign state, including for a public authority or public enterprise.

Gifts, travel and entertainment

To what extent do your anti-bribery laws restrict providing foreign officials with gifts, travel expenses, meals or entertainment?

Russian legislation generally prohibits the receipt of any remuneration by domestic public officials in connection with the performance of their duties from individuals or legal entities, including gifts, travel expenses, meals or entertainment. However, these rules do not extend to foreign public officials. Therefore, Russian anti-bribery laws prohibit providing foreign officials with gifts, travel expenses, etc, only to the extent that these actions qualify as bribery under the Administrative Offences Code or Criminal Code.

Facilitating payments

Do the laws and regulations permit facilitating or ‘grease’ payments to foreign officials?

There are no specific rules regulating facilitation payments. Therefore, such payments are subject to the prohibition of bribery under the Administrative Offences Code and Criminal Code.

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to foreign public officials?

Legislative changes that entered into force on 17February2019 have extended the scope of liability of legal entities for bribery according to article19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) to payments through any intermediaries or third parties.

Previously, this offence only covered cases of bribery by the company’s representatives in the name or in the interest of the company itself. Under the amendments, bribery offences committed by the company’s representatives in the interest of its related companies are also be punishable. Since the term ‘related’ is not defined under Russian law, any type of relation between the favoured and the bribing company may suffice to constitute the latter’s liability. Further, the changes clarified that bribe payments to the bribe taker include payments to any person (individual or legal entity) who has been designated by the bribe taker to receive the bribe.

The purpose of these changes was to harmonise corporate liability with the liability of individuals under the Criminal Code. Article291 of the Criminal Code (bribe giving) punishes the payment of bribes through any intermediaries, including cases where, upon instruction of the foreign public official, the bribe is handed over to another individual or a legal entity.

Individual and corporate liability

Can both individuals and companies be held liable for bribery of a foreign official?

Yes, individuals can be held liable for bribery of a foreign public official under the Criminal Code according to its articles 291 (bribe giving), 291.1 (mediation in bribery) and 291.2 (small-scale bribery). Companies can be punished according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity).

Private commercial bribery

To what extent do your foreign anti-bribery laws also prohibit private commercial bribery?

The same provisions of the Administrative Offences Code and the Criminal Code prohibit the bribery of domestic commercial organisations also prohibit the bribery of foreign commercial organisations. Since March 2016, Russian law enforcement authorities may prosecute domestic and foreign legal entities for bribery offences committed outside Russia, including private commercial bribery, if they are directed against the interests of the Russian Federation.

Defences

What defences and exemptions are available to those accused of foreign bribery violations?

Under the Administrative Offences Code, a legal entity will be guilty of an administrative offence, including foreign bribery, 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 to take anti-corruption measures to be exempt from administrative liability. In 2018, the Supreme Court of the Russian Federation for the first time expressly referred to the requirements of article 13.3 of the Anti-Corruption Law in a decision convicting an organisation of bribery. According to available court practice, some of the lower courts have also referred to article 13.3 of the Anti-Corruption Law in their decisions.

However, even though a legal entity’s anti-corruption efforts seem to play an increasingly important role in the Russian enforcement practice, available court practice still gives no guidance on the proper implementation of the anti-corruption measures to avoid liability under article 19.28 of the Administrative Offences Code.

Agency enforcement

What government agencies enforce the foreign bribery laws and regulations?

Bribery and corruption offences under the Administrative Offences Code (committed by legal entities) and the Criminal Code (committed by individuals) are generally investigated and prosecuted by the Prosecutor’s Office of the Russian Federation.

In addition, the Investigative Committee of the Russian Federation - a federal authority previously part of the Prosecutor’s Office, but since 2011 separate and subordinated to the President of the Russian Federation - performs pre-investigative reviews of notifications of offences as well as preliminary investigations into individuals for bribery and corruption offences under the Criminal Code.

The competences of the Prosecutor’s Office and the Investigative Committee extend to foreign bribery laws and regulations.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the foreign bribery rules.

According to publicly available information, to date no Russian or foreign company has been convicted for bribery of foreign public officials.

However, legislative changes effective from 13 December 2019 provide for an extension of the term of investigation for corporate bribery under article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) from two to 12 months in cases where judicial assistance is required. The explanatory comments to the bill explain these changes by the need to obtain judicial assistance in foreign states when prosecuting foreign legal entities for domestic or foreign bribery that is directed against the interests of the Russian Federation. This may be an indication that in future, Russia intends to prosecute foreign companies for foreign bribery.

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for foreign bribery?

Under the Administrative Offences Code, foreign companies bear administrative liability for any administrative offences committed in Russia. Administrative offences under article 19.28 of the code (ie, unlawful remuneration on behalf of a legal entity) that were committed outside Russia can be prosecuted if they are directed against the interests of Russia (articles 2.6(2.1) and 1.8(3) of the Code).

Since the term ‘interests of the Russian Federation’ is not defined under Russian law, theoretically any foreign bribery offence involving a Russian element may be subject to administrative proceedings in Russia. However, the risk of unfounded investigations is limited to a certain extent by the express prohibition of double jeopardy - Russian jurisdiction arises only if the legal entity has not been held liable in a foreign state.

Sanctions

What are the sanctions for individuals and companies violating the foreign bribery rules?

Individuals may be held liable for violating the foreign bribery rules under the Criminal Code as follows:

  • Bribe-giving to a public official (article 291): depending on the bribe sum and other circumstances, up to: (i) a penalty of (a) 2 million to 4 million roubles, (b) two to four years’ salary, or (c) 70 to 90 times the bribe sum, and an occupational ban from certain professions for up to 10 years; or (ii) imprisonment from eight to 15 years, a penalty in the amount up to 70 times of the bribe sum, and an occupational ban from certain professions for up to 10 years.
  • Mediation in bribery of a public official (article 291.1): depending on the bribe sum and other circumstances, up to: (i) a penalty of (a) 1.5 million to 3 million roubles, (b) two to three years’ salary, or (c) 60 to 80 times the bribe sum, and an occupational ban from certain professions for up to seven years; or (ii) imprisonment from seven to 12 years, a penalty in the amount of up to 70 times the bribe sum, and an occupational ban from certain professions for up to seven years.
  • Small-scale bribery (article 291.2): depending on whether the bribe giver has already been convicted for bribery of a public official: (i) a penalty of up to 1 million roubles or one year’s salary; (ii) forced labour for up to three years; (iii) restriction of liberty for up to four years; or (iv) imprisonment for up to three years.

For the commission of offences under article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity), the following penalties may be imposed on legal entities:

  • minimum: penalty of up to triple the amount of the bribe sum, but not less than 1 million roubles;
  • large-scale bribery: if the bribe sum exceeds 1 million roubles, penalty of up to 30-fold amount of the bribe sum, but not less than 20 million roubles; and
  • extra-large-scale bribery: if the bribe sum exceeds 20 million roubles, penalty of up to 100-fold of the bribe sum, but not less than 100 million roubles.

Companies convicted of bribery are included in a public register of offenders. As an additional sanction, they are prohibited from bidding in state procurement tenders for a period of two years from the date of conviction.

Recent decisions and investigations

Identify and summarise recent landmark decisions or investigations involving foreign bribery.

According to publicly available information, to date no Russian or foreign company has been convicted for bribery of foreign public officials.

Financial record-keeping and reporting

Laws and regulations

What legal rules require accurate corporate books and records, effective internal company controls, periodic financial statements or external auditing?

The general requirements with respect to financial statements of Russian companies are provided by Federal Law 402-FZ on Accounting. In particular, article 13(1) of the Law requires that financial statements must give a reliable picture of the company’s financial situation as of the reporting date, the financial results of its activity and the cash flow for the reporting period, which is necessary for users of these statements to take commercial decisions.

The cases where external auditing of Russian companies is required are listed in Federal Law 307-FZ on audit activity. For instance, this obligation applies to banks, insurance companies and companies whose annual turnover exceeds 400 million roubles (without VAT) or whose assets exceed 60 million roubles.

Disclosure of violations or irregularities

To what extent must companies disclose violations of anti-bribery laws or associated accounting irregularities?

Russian law does not provide for a specific obligation of companies to disclose violations of anti-bribery laws or associated accounting irregularities. In certain cases, companies are able to exclude themselves from liability for bribery according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) by way of self-reporting to the Russian law enforcement agencies.

Prosecution under financial record-keeping legislation

Are such laws used to prosecute domestic or foreign bribery?

No, the purpose of the provisions of Federal Law 402-FZ on accounting is not to prosecute domestic or foreign bribery but to ensure that a reliable picture of the company’s financial position is given.

Sanctions for accounting violations

What are the sanctions for violations of the accounting rules associated with the payment of bribes?

There are no specific sanctions for violations of the accounting rules associated with the payment of bribes.

Russian law provides only for general sanctions for violations of accounting rules. In particular, article 15.11(1) of the Administrative Offences Code establishes administrative liability in the form of a fine of up to 10,000 roubles for directors and accountants for a material violation of the financial accounting requirements. A material violation includes, in particular:

  • understatement of payable taxes by at least 10 per cent; and
  • understatement of a financial reporting value by at least 10 per cent.

In the case of a significant tax underpayment (ie, higher than 5 million roubles) provided that the tax underpayment is more than 25 per cent of the total tax liability or 15 million roubles, the company’s officials can be also subject to criminal liability (article 199 of the Criminal Code).

Tax-deductibility of domestic or foreign bribes

Do your country’s tax laws prohibit the deductibility of domestic or foreign bribes?

Under Russian law, tax deductible expenses must be properly documented and economically justified (article 252(1) of the Tax Code). Since domestic or foreign bribes cannot be recognised as economically justified, they cannot be tax deducted by Russian taxpayers.

This position is also reflected in the clarifications given by the Information Letter of the Russian Ministry of Finance of 3 September 2012 on Accounting for Tax Purposes the Amount of Bribes to Officials of Foreign Countries according to which expenses incurred in connection with committing offences (including bribery of public officials and commercial bribery) cannot be recognised for tax purposes.

Domestic bribery

Legal framework

Describe the individual elements of the law prohibiting bribery of a domestic public official.

Article19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) prohibits the bribery of domestic public officials by legal entities. This offence punishes the illegal transfer, offering or promise of money, securities or other property, valuable services or other property rights to a domestic public official on behalf, or in the interest of a legal entity, in return for the domestic public official using his or her authority to act in favour of the legal entity.

Bribery of domestic public officials by individuals is prohibited by article291 of the Criminal Code (Bribe giving). According to the applicable court practice, this offence entails bribe payments in return for (i) a domestic public official using his or her authority to act in favour of the bribe giver or the persons represented by him or her, (ii) the domestic public official enabling another public official to take such actions, (iii) general patronage or (iv) general connivance.

Further, article291.1 of the Criminal Code (Mediation in bribery) punishes individuals for the direct transfer of bribes to domestic public officials on a considerable scale (ie, exceeding 25,000 roubles) on instructions by the bribe giver or bribe taker, as well as promises and proposals of such transfers.

Smaller bribery offences committed by individuals (those involving bribe payments to foreign public officials not exceeding 10,000 roubles are punishable according to article 291.2 of the Criminal Code (Small-scale bribery).

Scope of prohibitions

Does the law prohibit both the paying and receiving of a bribe?

Yes, article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) and articles 204 (commercial bribery), 204.2 (small-scale commercial bribery), 291 (bribe giving to a public official) and 291.2 (small-scale bribery of a public official) of the Criminal Code prohibit the paying of a bribe.

The receiving of a bribe is prohibited by articles 204 (commercial bribery), 204.2 (small-scale commercial bribery), 290 (Bribe taking by a public official) and 291.2 (small-scale bribery of a public official) of the Criminal Code.

Definition of a domestic public official

How does your law define a domestic public official, and does that definition include employees of state-owned or state-controlled companies?

Legal entities are punished for bribery according to article 19.28 of the Administrative Offences Code (Unlawful remuneration on behalf of a legal entity), which defines a domestic public official as a person who permanently, temporarily or according to special powers exercises state functions. This definition does not include employees of state-owned or state-controlled companies.

A broader definition of a domestic public official is provided by the Criminal Code, which is the basis for the punishment of individuals. The Criminal Code also defines a domestic official as a person who permanently, temporarily or according to special powers exercises state functions, but expressly includes employees of state corporations, state companies and joint-stock companies in which the state is the controlling shareholder.

State corporations and state companies are non-commercial organisations that are set up by Russia under federal law (articles 7.1 and 7.2 of the Law on Non-commercial Organisations). Examples of state corporations are Vnesheconombank, Rostec, Roscosmos, and Rosatom. Examples of joint-stock companies controlled by the state are Gazprom Public Joint Stock Company and Rosneft Oil Company.

Gifts, travel and entertainment

Describe any restrictions on providing domestic officials with gifts, travel expenses, meals or entertainment. Do the restrictions apply to both the providing and the receiving of such benefits?

Russian legislation setting out the regulatory framework of public service also generally prohibits the receipt by domestic public officials of any remuneration in connection with the performance of their duties from individuals or legal entities, including entertainment costs, meals and travel expenses.

The general prohibition on accepting gifts does not apply to gifts received by Russian public officials in connection with protocol events, business trips and other official events. However, gifts received at such occasions are deemed to be state property and subject to transfer to the relevant state body (eg, article 17 (1)(6) of Federal Law 79-FZ on Public Service of the Russian Federation).

According to article 349.1, Part 4 of the Labour Code and Governmental Order 841 dated 21 August 2012, the general prohibition on receiving benefits is extended to certain positions in state corporations and state companies.

A legislative initiative provided by the National Anti-Corruption Plan for 2018 to 2020 according to which the general prohibition on receiving gifts may not apply in certain cases of force majeure currently seems to be on hold.

There is no express prohibition on providing such benefits. The violation of the above-listed restrictions by the person providing the benefit does not entail any administrative or criminal liability. Such liability would require the existence of additional elements of an administrative or criminal offence - in particular, an action in return for the benefit.

Facilitating payments

Have the domestic bribery laws been enforced with respect to facilitating or ‘grease’ payments?

There are no specific rules regulating facilitation payments. Therefore, such payments are subject to the prohibitions of unlawful remuneration and bribery under the Administrative Offences Code and the Criminal Code.

Publicly available information reveals that Russian enforcement actions are focused on small and mid-scale bribery in the day-to-day operations of Russian companies. In many cases, companies have been convicted for bribe payments to low-ranking domestic public officials to avoid the payment of administrative fines, or to receive state licences or accelerate registration proceedings.

Public official participation in commercial activities

What are the restrictions on a domestic public official participating in commercial activities while in office?

Russian legislation setting out the regulatory framework of public service generally prohibits domestic public officials from engaging in commercial activities (eg, article 17(1)(3) of Federal Law 79-FZ on Public Service of the Russian Federation).

According to article 349.1, Part 4 of the Labour Code and Governmental Order841 dated 21 August 2012, this prohibition is extended to certain positions in state corporations and state companies.

Payments through intermediaries or third parties

In what circumstances do the laws prohibit payments through intermediaries or third parties to domestic public officials?

As in the case of bribery of foreign public officials, legislative changes that entered into force on 17 February 2019 have extended the scope of liability of legal entities for bribery according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) to payments to domestic public officials through any intermediaries or third parties. The purpose of these changes was to harmonise corporate liability with the liability of individuals under the Criminal Code (eg, under article 291 of the Criminal Code (bribe giving to public official)) (see previous questions).

Individual and corporate liability

Can both individuals and companies be held liable for violating the domestic bribery rules?

Yes, individuals can be held liable for bribery of a domestic public official under the Criminal Code according to its article 291 (bribe giving), 291.1 (mediation in bribery) and 291.2 (small-scale bribery). Companies can be punished according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity).

Private commercial bribery

To what extent does your country’s domestic anti-bribery law also prohibit private commercial bribery?

Article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) prohibits the bribery of persons performing executive functions in commercial or other organisations by legal entities. This offence punishes the illegal transfer, offering or promise of money, securities or other property, valuable services or other property rights to the executive on behalf, or in the interest of a legal entity, in return for the executive using his authority to act in favour of the legal entity.

Articles 204 (commercial bribery) and 204.2 (small-scale commercial bribery) of the Criminal Code punish individuals for the giving of bribes to, and the taking of bribes by, executives of commercial or other organisations in connection with their role in these organisations.

Further, article 204.1 of the Criminal Code (mediation in commercial bribery) prohibits the direct transfer of bribes to executives of commercial or other organisations on a considerable scale (ie, exceeding 25,000 roubles) on instructions by the bribe giver or bribe taker, as well as promises and proposals of such transfers.

Defences

What defences and exemptions are available to those accused of domestic bribery violations?

The same defences that are available to those accused of foreign bribery violations are also available to those accused of domestic bribery violations. In particular, a company may arguably claim that it fully complied with its obligations under article 13.3 of the Anti-Corruption Law to take anti-corruption measures to be exempt from administrative liability under article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of a legal entity) (see previous questions).

Agency enforcement

What government agencies enforce the domestic bribery laws and regulations?

Bribery and corruption offences under the Administrative Offences Code (committed by legal entities) and the Criminal Code (committed by individuals) are generally investigated and prosecuted by the Prosecutor’s Office of the Russian Federation.

In addition, the Investigative Committee of the Russian Federation - a federal authority previously part of the Prosecutor’s Office, but since 2011 separate and subordinated to the President of the Russian Federation - performs pre-investigative reviews of notifications of offences as well as preliminary investigations into individuals for bribery and corruption offences under the Criminal Code.

Patterns in enforcement

Describe any recent shifts in the patterns of enforcement of the domestic bribery rules.

In 2018, the Russian law enforcement authorities opened 487 investigations into legal entities for bribery. These investigations resulted in the conviction of 439 legal entities in accordance with article 19.28 of the Russian Administrative Offences Code (unlawful remuneration on behalf of a legal entity). More than 300 legal entities have been added to the public register of offenders. The published information for 2018 shows that the Russian enforcement actions targeted almost exclusively small and medium-sized companies with Russian beneficiaries (many in the construction and transportation sectors). No major Russian company was held liable in 2018.

Preliminary enforcement statistics for 2019 indicate that the number of convictions of legal entities for bribery in 2019 can be expected to be comparable to that of 2018. At the same time, these statistics seem to demonstrate increased efforts by the Russian law enforcement authorities to prosecute more serious bribery offences as well. To date, 10 cases with penalty payments of 20 million roubles or more for commercial bribery or the bribery of public officials have already been disclosed - compared to only four cases in 2018. While the disclosed maximum penalty in 2018 was 30.5 million roubles, the current year has already seen one penalty payment of 50 million roubles for commercial bribery. The conviction of AO Russian Standard Bank, which is one of Russia’s largest banks, to pay a penalty of 26.5 million roubles may indicate that major Russian companies are no longer excluded in practice from the prosecution of corporate bribery.

Recently, public prosecutors and courts have started to assess whether companies have implemented the anti-corruption measures of article 13.3 of the Russian Anti-Corruption Law when prosecuting them for corporate bribery. However, court practice still gives no guidance on the proper implementation of these measures to avoid the company’s liability for bribery.

Since August 2018, the Prosecutor’s Office opening the investigation into a legal entity for violation of article 19.28 of the Administrative Offences Code may freeze its assets based on a court decision in order to secure the penalty payment. According to publicly available information, in the first half of 2019, the Prosecutor’s Offices have applied for such an asset freeze in almost every investigation.

Prosecution of foreign companies

In what circumstances can foreign companies be prosecuted for domestic bribery?

Under the Administrative Offences Code, foreign companies bear administrative liability for any administrative offences committed in Russia, including for domestic bribery under article 19.28 of the Code (unlawful remuneration on behalf of a legal entity).

Sanctions

What are the sanctions for individuals and companies that violate the domestic bribery rules?

Individuals may be held liable for violating the domestic bribery rules under the Criminal Code as follows.

  • Bribe-giving to a domestic public official (article 291): depending on the bribe sum and other circumstances, up to:
    • a penalty of (i) 2 million to 4 million roubles, (ii) two to four years’ salary, or (iii) 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 in the amount up to 70 times the bribe sum, and an occupational ban from certain professions for up to 10 years.
  • Mediation in bribery of a domestic public official (article 291.1): depending on the bribe sum and other circumstances, up to:
    • a penalty of (i) 1.5 million to 3 million roubles (ii) two to three years’ salary, or (iii) 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 in the amount up to 70 times the bribe sum, and an occupational ban from certain professions for up to seven years.
  • Small-scale bribery of a domestic public official (article 291.2): depending on whether the bribe giver has already been convicted for bribery:
    • a penalty of up to 1 million roubles or one year’s salary;
    • forced labour for up to three years;
    • restriction of liberty for up to four years; or
    • imprisonment for up to three years.
  • Commercial bribery (article 204): depending on the bribe sum and other circumstances, up to:
    • a penalty of (i) 2 million to 5 million roubles, (ii) two to five years’ salary, or (iii) 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 in the amount of up to 50-fold of the bribe sum, and an occupational ban from certain professions for up to six years.
  • Mediation in commercial bribery (article 204.1): depending on the bribe sum and other circumstances, up to:
    • a penalty of (i) 1.5 million roubles, (ii) one and a half years’ salary, or (iii) 40 to 70 times the bribe amount, and an occupational ban from certain professions for up to six years; or
    • imprisonment from three to seven years, a penalty of up to 40 times the bribe amount, and an occupational ban from certain professions for up to six years.
  • Small-scale commercial bribery (article 204.2): depending on whether the individual has already been convicted for commercial bribery:
    • a penalty of up to 500,000 roubes or six months’ salary;
    • forced labour for up to one year;
    • restriction of liberty for up to two years; or
    • imprisonment for up to one year.

For the commission of offences under article 19.28 of the Administrative Offences Code (Unlawful remuneration on behalf of a legal entity), the following penalties may be imposed on legal entities:

  • minimum: penalty of up to three times the amount of the bribe sum, but not less than 1 million roubles;
  • large-scale bribery: if the bribe sum exceeds 1 million roubles, penalty of up to 30 times the bribe sum, but not less than 20 million roubles; and
  • extra-large-scale bribery: if the bribe sum exceeds 20 million roubles, penalty of up to 100fold of the bribe sum, but not less than 100 million roubles.

Companies convicted of bribery are included in a public register of offenders. As an additional sanction, they are prohibited from bidding in state procurement tenders for a period of two years from the date of conviction.

Recent decisions and investigations

Identify and summarise recent landmark decisions and investigations involving domestic bribery laws, including any investigations or decisions involving foreign companies.

In April 2019, a court in Sakhalin Oblast imposed on a Russian company a fine of 50 million roubles for paying a bribe of 55 million roubles to the executive of a customer under a works contract to receive payments for unaccepted works and advance payments. To date, this is the highest disclosed penalty payment for corporate bribery according to article 19.28 of the Administrative Offences Code (unlawful remuneration on behalf of legal entity).

In July 2019, AO Russian Standard Bank, which is among Russia’s 200 largest companies according to Forbes Russia, had to pay a penalty of 26.5 million roubles for bribing bailiffs in Crimea ito speed up enforcement proceedings against defaulted debtors. This is the first time that a large Russian bank has been convicted of bribery in Russia.

Foreign companies have mostly been exempted from prosecution for bribery. In 2018, only one foreign company was convicted for bribery (a Polish company active in the mining industry). To date, no conviction has been published for 2019.

Update and trends

Key developments of the past year

Please highlight any recent significant events or trends related to your national anti-corruption laws.

Key developments of the past year39 Please highlight any recent significant events or trends related to your national anti-corruption laws.Extended term for investigations into foreign companies

As a general rule, the Prosecutor’s Office must complete an investigation for corporate bribery under article 19.28 of the Administrative Offences Code (onlawful remuneration on behalf of a legal entity) within a maximum of two months of the case being opened. Legislative changes effective from 13 December 2019 provide for an option to extend this term to up to 12 months in cases where judicial assistance by a foreign state is required. The express purpose of this extension is to prosecute foreign companies for bribery. The question arises whether this is only a symbolic reaction to foreign enforcement actions against Russian companies (eg, the punishment of MTS by US authorities) or whether foreign companies will now indeed be targeted by domestic investigations.

Sanctions for violation of data localisation requirements

On 2 December 2019, legislative changes introduced severe fines for non-compliance with Russian data localisation rules. The new fines for violations of the data localisation rules by legal entities are up to 6 million roubles for the first offence and 18 million roubles for repeated offences. These fines could also apply to the processing of Russian personal data when operating cross-border whistle-blower hotlines or conducting corporate investigations. In these cases, foreign companies that have integrated their Russian subsidiaries into group-wide compliance procedures may now face additional difficulties.

Criminal liability for transfer of information relating to sanctioned persons

A draft law submitted to the State Duma on 15 May 2019 would introduce a new offence to the Criminal Code that punishes individuals for the transfer of any information to organisations in the US or EU, provided that this information transfer enabled the imposition of anti-Russia sanctions. The maximum penalty for this offence is up to five years’ imprisonment. If adopted, it could significantly complicate the cross-border transfer of information on Russian businesses, such as the results of corporate investigations. However, to date none of the draft laws against sanctions compliance in Russia have become law.