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« Compliance officers stand alone, but not apart | Main | Eni says audit proves no Algeria bribes »
Wednesday
Jan222014

Russia shows signs of reversing its bribery culture

One may wonder whether the risk of corruption in Russia is worth the potential profits. There are strong indications that things are turning around and foreign companies may be missing out on great business opportunities if they avoid the region altogether.

New anti-corruption law illustrates that times are changing and authorities do not simply want to be passive bystanders. Not only are some Russians appalled by their countrymen's corrupt behavior, organizations such the World Trade Organization (WTO) and the Organisation for Economic Co-operation and Development (OECD), are closely monitoring Russia's efforts in fighting corruption since Russia received an invitation to enter these organizations.

More importantly, the Russian government, prominent business organizations and the media have all teamed up to fight bribery and corruption in Russia. In a press conference in December 2012, President Putin announced to 1,040 Russian journalists and 186 foreign journalists that Russia will provide foreign government partners an award for their assistance in catching corrupt Russian officials.

Additionally, a new Russian law prohibits Russian government officials from buying real estate and holding bank accounts in foreign nations. To administer this law, President Putin has enlisted the help of foreign governments.

Perhaps the Russian business community's initiative provides the most telling evidence of Russia's commitment to fight corruption. Some of the leading business associations such as the Russian Union of Industrialists and Entrepreneurs, Commerce and Industry of the Russian Federation, Business Russia, Russian Public Organizations for Small and Medium Enterprises, signed an Anti-Corruption Charter in October 2012.

In the Anti-Corruption Charter, the most prominent business organizations expressed their readiness not only to support the government's measures against corruption, but to tackle corruption and bribery in Russia. The Charter details due-diligence initiatives such as: training programs for employees on anti-corruption laws; new ethics standards; audit procedures to prevent conflicts of interest and commercial bribes; and rules for donations.

Another indicator that things are turning around in Russia is the high level of press coverage surrounding corruption and bribery cases. Previously such cases were rarely covered because bribery was part of the Russian business culture and (perhaps) not considered 'news.'

Several Russian news agencies now have a 'corruption' link on their websites and there are blogs dedicated exclusively to anti-bribery news. Many of these news outlets are state-owned, so arguably the government is attempting to change Russian culture with regard to bribery, although voices in the truly private spere in this discussion would be welcome.

One may even stumble on news articles involving small bribes. For instance, the head of finance in the Republic of Altai (Southern Siberia), Svetlana Gaminka, presented a bottle of cognac and a piece of chocolate (worth only 774 rubles or about $25) to another public official in exchange for a meeting between the official and her nephew. Gaminka was found guilty of bribery and fines 35 times the bribe amount.

Despite Russia's recent efforts to improve transparency and reverse decades of poor business ethics, there is room for improvement. Unlike in the United States, when corporations are found liable for bribery in Russia, their names are rarely disclosed in the media.

One recommendation is to clearly criminalize offering or attempting to bribe a government official. Russian law only expressly applies to giving a bribe. It does not explicitly cover offers and promises of bribes. As the OECD points out, the Criminal Code 'imposes light punishments for attempt crimes and preparations for a crime, resulting in criminal penalties that might not be effective, proportionate and dissuasive.'

Russian legislators should consider imposing identical penalties for attempted and completed acts of bribery to deter wrongdoers.

Despite the areas needing improvement, it appears Russia is finally getting serious about tackling corruption and reversing a culture that has turned a blind eye toward bribery for decades. As the world watches the upcoming winter Olympics in Sochi, it will be closely observing Russia's proposed anti-corruption path.

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Olesya Sidorkina is a graduate of the University of California at Davis School of Law and a semester associate at the U.S. Securities and Exchange Commission.

Reader Comments (1)

Thank you for this article, Olesya. It`s nice to hear not only criticism about our country, but some positive things. As I had worked in the General Prosecutor`s Office of the Russian Federation for a few years before I left it last year, I can say that our authorities consider corruption as a very serious problem. They do all what it needs to apply and implement recommendations, given by different international organizations such as GRECO, UNODC, OECD, FATF, Moneyval and etc. I know personally that people who are responsible for implementation of conventions on corruption and AML/FT: they all are very honest and hard-working people. Unfortunately, there are a lot of obstacles which hinder the realization of new measures on fighting corruption, everywhere, and, first of all, in minds of Russian people. Unless they (most of them) think and work honestly, there will be a corruption. But let`s be optimistic)
January 23, 2014 | Unregistered CommenterAndrey Shikhov
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