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Thursday
Jul252019

Former Soviet republics take different approaches to anti-corruption legislation

Enforcement actions by U.S. and European enforcement agencies as well as the World Bank have drawn attention to bribery offenses committed by multinational companies in Russia and other former Soviet republics, in particular in Central Asia.

Together with local law firms, we have therefore taken a closer look at the anti-bribery and corruption legislation of Russia, Azerbaijan, Kazakhstan, Kyrgyzstan, Turkmenistan, and Uzbekistan. Our review of these countries’ legislation revealed significant differences: 

  • Only Russia, Azerbaijan and Kyrgyzstan also punish companies for the bribery of public officials as well as commercial bribery. In Kazakhstan, companies are punished only for the bribery of public officials. There is no company liability for bribery in Turkmenistan and Uzbekistan.
  • In all countries, the company’s employees are liable for the bribery of public officials irrespective of their position within the company. In the case of commercial bribery, however, Russia, Kazakhstan and Turkmenistan only punish those employees who perform executive functions. 
  • Foreign persons are punished for bribery offenses committed within the relevant country to the same extent as domestic persons. Bribery offenses committed by foreign persons outside the relevant country can, under certain conditions, be prosecuted in all countries except Kyrgyzstan.
  • Only in Russia do companies convicted of bribery face the risk of significant fines -- up to 100 times the amount of the bribe. Employees on the other hand are exposed to severe penalty risks -- including several years’ imprisonment – in all of the countries.
  • In Russia, Kazakhstan, and Uzbekistan, companies are obliged to implement measures to prevent corruption. However, only in Russia can companies claim that they have implemented these measures to be exempt from liability for bribery.
  • In all countries, individuals can protect themselves from liability for giving bribes by reporting themselves to the local law enforcement agencies. Only in Russia and Azerbaijan can companies also benefit from the self-reporting of bribery.
  • Azerbaijan, Kazakhstan, Kyrgyzstan, and Uzbekistan have introduced varying rules aimed at the protection of whistleblowers reporting corruption. Kazakhstan and Kyrgyzstan even incentivize such whistleblowing with the payment of monetary rewards.
  • Except for Uzbekistan, the laws of all countries provide for hospitality restrictions in relations with public officials. Russia, Kyrgyzstan, and Turkmenistan also restrict gifts in relations between commercial organizations.

The findings show that an assessment of the local liability risks for companies operating in these countries -- which should also take into account the unpredictability of enforcement actions by local law enforcement agencies -- must be conducted for each jurisdiction individually. Further details can be found in this overview (pdf). 

_____

Hannes Lubitzsch, pictured above left, is a partner in the Moscow office of Noerr and heading the Russian compliance & investigations practice. He can be contacted here

Anna Fufurina, above right, is a senior associate in Noerr’s Moscow office.  

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