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Wednesday
Apr012015

Russia: No corporate criminal liability for bribes, but there's still punishment

There is no criminal liability of a legal entity for bribery in Russia because only a person is subject to the Russian criminal law. But that's not the end of the story.

Under an administrative law, a legal entity can be held liable for a bribe if someone acting on behalf of the legal entity paid the bribe. An example would be when an employee pays a bribe so that the company can obtain a license for some business activity. In that situation, the person can be prosecuted under the criminal law. The company isn't subject to criminal prosecution but can be held responsible under the administrative law.
 
Article 19.28 of the Code of the Russian Federation on the Administrative Offenses dated December 30, 2001 № 195- FZ imposes administrative liability on a legal entity -- here's a rough translation -- "for the unlawful provision, offer or promise of anything of value to a public official for any actions or omissions to act in the interests of the legal entity."

The sanctions for violations vary, depending on the amount of "the unlawful remuneration" (the bribe). The minimum sanction is a fine of up to three times of the amount of the bribe, but not less than RUB 1,000,000 ($17,450). The maximum sanction is a fine of up to 100 times of the amount of the bribe, but not less that RUB 100 million ($1.745 million). In all cases, the government has the right to confiscate the amount of the bribe or its equivalent.
 
The official statistical figures demonstrate year to year an increasing the number of cases being decided by Russian courts under Article 19.28 the Code of Administrative Offenses. In 2011, courts convicted only 65 entities under the provision. In 2012 the number of cases doubled (101) and in 2013 reached 222 cases. There is no statistical information yet for 2014.

Moreover, when a company is fined due to the administrative proceeding, the fine is deemed to be damages suffered by the company. Thus a shareholder of the company has a right to sue any culpable directors of the company for damages.

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Kristina Furlet serves as compliance specialist in a Russian subsidiary of a global provider of telecom services.

Reader Comments (1)

The decisions to prosecute and penalize often is a political tool of the ruling elite if not in the Kremlin than at the regional or local level. See Ethan S. Burger, Mary Holland, "Law as politics: the Russian Procuracy and the Investigative Committee" 2 Colum. J. E. Eur. L. 143 (2008).

Such is the nature of kleptocracies. Karen Dawisha's book is a must for anyone with an interest in Russian during the Putin era.

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“Law is politics.”

V. I. Lenin

“The past is the present, isn't it? It's the future too.”

Mary Tyrone from Eugene O'Neill's Play “Long Day's Journey into Night”
April 1, 2015 | Unregistered CommenterEthan S. Burger
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