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Companies in Russia may avoid liability in domestic bribery cases if they assist in identifying the offence (e.g. by disclosing information), assist in investigation of the bribe, or if the bribe has been extorted, according to a new law which goes into force on August 14, 2018 (the “Law”).1

The Law also allows courts to freeze the property of suspect companies during bribery investigations.

The Law supplements Article 19.28 of the Russian Code of Administrative Offences, which prohibits bribery by companies and which has been broadly applied to prosecute companies for the mere promise of a bribe by any person on behalf or in the interests of the company. Offenders are subject to severe fines of up to 3, 30 or 100 times the amount of the bribe.

Courts may now freeze the property of companies under investigation for bribery up to the maximum amount of any potential fine. They will also be entitled to freeze the bank accounts of a suspect company if they believe it does not have enough property to pay the potential fine. The courts may consider the prosecutor’s request to freeze property or bank accounts without notifying the suspect (who will be subsequently sent a copy of the court order). The accounts will then remain frozen until the company is found not guilty, or until it pays the fine.

It remains to be seen how effective the new leniency grounds will be in facilitating the discovery of, and reducing the amount of, corruption in the conduct of business in Russia. The introduction of freezing orders, however, only reinforces the importance of having a robust anti-bribery program, well documented and effectively enforced.

 


  1. see Federal Law No. 298 dated 3 August 2018 “On Amending the Russian Code of Administrative Offences”
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Paul Melling is an English solicitor, founding partner of Baker McKenzie’s Moscow and Almaty offices, and founder of the CIS offices’ pharmaceuticals and healthcare practice. He leads the CIS offices’ Compliance Practice Group and is a steering committee member of the Europe Compliance and Pharmaceuticals & Healthcare groups. He joined the London office in 1980 as a member of the East-West Trade Department, focusing on the COMECON countries of Eastern Europe, particularly the former USSR. He moved to Moscow in January 1989 and has spent over 24 years as a partner in the CIS. In 2009, he received the AIPM’s Distinguished Service Award for his contribution to the development of the Russian pharmaceuticals market.

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Anton Subbot heads the Antitrust & Competition Practice Group in Baker McKenzie's Moscow office. Prior to joining Baker McKenzie, he worked as a legal adviser in a Russian firm. Mr. Subbot has been ranked by Chambers Europe and recognized in Global Competition Review’s GCR 100 for his work on antitrust matters.

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Edward Bekeschenko is a partner in Baker & McKenzie's Moscow office. He is ranked as a leading lawyer in dispute resolution by Chambers and Legal 500. Prior to joining the Firm in 2001, Mr. Bekeschenko headed the legal department of a major Russian metallurgical company and was vice president of a Belarusian law firm.

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Maxim Kalinin serves as managing partner of Baker & McKenzie’s St. Petersburg office and head of the Mergers & Acquisitions, Corporate, Real Estate & Construction and Employment practice groups. He was named a European legal expert in Russia by European Legal Experts 2008, and was recognized by Chambers Europe "for his expertise in M&A and real estate work". He is also cited by Legal 500, Who’s Who Legal 2009, The International Who’s Who of Real Estate Lawyers 2008 and the Private Equity Handbook 2007/2008 for his corporate and real estate work