Domestic bribery

Legal framework

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

Article 19.28 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 article 291 of the Criminal Code (bribe giving). According to the applicable court practice, this offence entails bribe payments in return for (1) 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, (2) the domestic public official enabling another public official to take such actions, (3) general patronage or (4) general connivance.

To close gaps in the criminal liability for bribery in state procurement procedures, bribery of state representatives which do not qualify as domestic public official are prohibited by article 200.5 of the Criminal Code (bribery of a purchasing commission member).

Further, article 291.1 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 200.5 (bribery of a purchasing commission member), 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 200.5 (bribery of a purchasing commission member), 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?

Both the Administrative Offences Code and the Criminal Code define a domestic official as a person who permanently, temporarily or according to special powers exercises state functions. This definition 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 Federal Law 7-FZ 'On Non-commercial Organisations' dated 12 January 1996). 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' dated 27 July 2004).

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 rather small bribe payments to low-ranking domestic public officials to receive state licences or accelerate registration proceedings.

Facilitating payments to domestic public officials involve substantial liability risks for individuals as well. However, petty bribery prosecution rates are generally falling. In 2019, for the first time, more individuals were punished for offences involving bribes exceeding 10,000 roubles than for those below this threshold (2,842 vs. 1,884 convictions).

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' dated 27 July 2004.

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.

Violations of this prohibition may lead to the dismissal of the relevant individual and entail criminal liability according to article 289 of the Criminal Code (unlawful participation in entrepreneurial activity).

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)).

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 domestic bribery under the Criminal Code:

  • bribe giving to a domestic public official (article 291);
  • mediation in bribery of a domestic public official (article 291.1);
  • small-scale bribery of a domestic public official (article 291.2);
  • bribery of a purchasing commission member (article 200.5);
  • commercial bribery (article 204);
  • mediation in commercial bribery (article 204.1);
  • small-scale commercial bribery (article 204.2); and
  • bribery of an arbitrator (article 200.7).

 

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.

With effect from 7 November 2020, bribery of arbitrators (bribe giving and bribe taking) is prohibited by article 200.7 of the Criminal Code (bribery of an arbitrator). 

Defences

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

Under the Administrative Offences Code, a legal entity will be guilty of an administrative offence, including domestic 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). 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.

Until recently, available court practice gave no guidance on the proper implementation of the anti-corruption measures to avoid liability under article 19.28 of the Administrative Offences Code. However, in the prosecution of Russian Standard Bank in 2019/20, for the first time a higher Russian court (ie, the Fourth General Jurisdiction Court of Cassation) elaborated on the specific anti-corruption measures which a company must take to be excluded from liability for bribery. In that particular case, the court was of the opinion that all necessary measures to prevent the offence had been implemented because the company had adopted an internal anti-corruption regulation, familiarised the relevant employees with this regulation, and incorporated a general obligation to comply with such internal regulations into the employment agreement.

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.

The Russian state contiunes focusing its enforcement actions on bribery of domestic public officials. In 2019, a total of 344 legal entities were convicted of all types of bribery. The black list of sanctioned companies, which is published on the website of the general prosecutor’s office, gained 313 new entries. As in past years, most companies were fined for bribing domestic public officials, a category which also includes employees of the many state-owned companies characteristic of the Russian economy.

The enforcement risk for companies is especially high in cases where rather small bribes are paid. In 2019, 307 companies were sentenced for paying bribes of up to 1 million roubles, while only 31 companies faced sentencing for large-scale bribery (from 1 million roubles) and six companies for very large-scale bribery (from 20 million roubles). This ratio corresponds to those of the preceding years 2018 (425 cases of small-scale, 44 cases of large-scale and two cases of very large-scale bribery) and 2017 (429 cases of small-scale, 37 cases of large-scale and 11 cases of very large-scale bribery).

The fines which are usually imposed by the courts on delinquent companies are still low not only compared to other countries. They are also far below the maximum fines under Russian law, which may range up to 100 times the bribe sum. Thus, the toughest sanction for reputable companies is not the rather small fines, but being included in the publicly available blacklist of companies convicted of bribery. The amount of the maximum fine imposed during the year, however, increased significantly, from 30.5 million roubles in 2018 to 50 million roubles in 2019.

Until recently, Russian authorities used to look the other way when bribery offences were committed by bigger companies. This may change now: In 2019/20, the Russian Standard Bank was the first big-name company to be punished for bribery. The conviction of the bank could be an indication that larger companies will no longer be shielded from prosecution, at least in simple cases which can easily be proven.

Bribing public officials also still involves the greatest liability risks for individuals as well. In 2019 there were 4,726 convictions for bribery of public officials (giving/taking a bribe) compared to only 198 convictions for commercial bribery. In addition, petty bribery prosecution rates are falling. In 2019, for the first time, more individuals were punished for offences involving bribes exceeding 10,000 roubles than for those below this threshold (2,842 vs. 1,884 convictions). Apparently, the authorities are losing interest in prosecuting the widespread bribery of traffic policemen and teachers.

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 (2) 2 million to 4 million roubles, (2) two to four years’ salary, or (3) 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 (2) 1.5 million to 3 million roubles (2) two to three years’ salary, or (3) 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 of 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.
  • Bribery of a purchasing commission member (article 200.5): depending on the bribe sum and other circumstances, up to:
    • a penalty of (1) 2 million to 5 million roubles, or (2) two to five years’ salary, and an occupational ban from certain professions for up to seven 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 seven years.
  • Commercial bribery (article 204): depending on the bribe sum and other circumstances, up to:
    • a penalty of (1) 2 million to 5 million roubles, (2) two to five years’ salary, or (3) 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 (1) 1.5 million roubles, (2) one and a half years’ salary, or (3) 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.
  • Bribery of an arbitrator (article 200.7): depending on the bribe sum and other circumstances, up to:
    • a penalty of (1) 2 million to 5 million roubles, (2) two to five years’ salary, or (3) 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.

 

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.

 

In addition, money, securities or other property, valuable services or other property rights which had been transferred, offered or promised shall be confiscated from the legal entity.

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 2019/20, Russian Standard Bank was the first big-name company to be punished for bribery. In a WhatsApp message, a bank employee in Crimea had offered to pay a bailiff 5 per cent of all amounts that were collected from the bank’s defaulting debtors. In a trial that was fought through five instances up to the Supreme Court, the bank was sentenced to pay a fine of 26.2 million roubles for large-scale bribery of a domestic public official.

Given the difficulties that Russian authorities have in prosecuting cases involving sophisticated or cross-border organised bribery, this case will hardly be the first of many cases of extensive prosecution of Russian businesses for large-scale bribery. However, the conviction of the bank could be an indication that larger companies will no longer be shielded from prosecution, at least in simple cases that can easily be proven.

In the prosecution of Russian Standard Bank, case law on the benefits of a compliance management system was developed further. For the first time, a higher Russian court (ie, the Fourth General Jurisdiction Court of Cassation) elaborated on the specific anti-corruption measures that a company must take to be excluded from liability for bribery. Although the relevant decision was subsequently vacated on procedural grounds, it provides an interesting insight into the requirements that courts may place on compliance management systems.

In this particular case, the court was of the opinion that all necessary measures to prevent the offence had been implemented because the bank had adopted an internal anti-corruption regulation, familiarised the relevant employees with this regulation, and incorporated a general obligation to comply with such internal regulations into the employment agreement. This means that, in certain scenarios, even taking a few formal anti-corruption measures may suffice to shield a company from liability for bribery.