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Anti-Corruption in Kazakhstan

By Azamat Kuatbekov* and Roman Butenko* (Baker McKenzie Almaty)

Domestic bribery (private to public)

1. Legal framework Bribery of public officials is regulated by Articles 311 to 313 of the Kazakhstani Criminal Code, Article 534 of the Code of Administrative Offences, Article 20-2 of the Law on State Service1 and the Law on Combatting Corruption.2 2. Definition of bribery Under the law, bribery may be committed by either public officials or private individuals who try to corrupt a public official. Bribery is defined as a grant to or receipt by a state official, directly or through an intermediary, of money, securities, other property, proprietary rights or benefits for an act or non-act in the interests of the bribe giver or persons he or she represents, if the act or non-act is part of the public official’s duties under the law, what the public official can do by virtue of his or her authority, or the bribe is given in exchange for general informal protection or advancement. 3. Definition of a public official In regard to corruption, the Kazakhstani Criminal Code lists a number of categories of persons who are considered public officials. These categories include the following: (a) Persons elected for municipal positions (b) Persons registered as candidates for president, Parliament or municipal elections (c) Servants employed by municipalities who are paid out of the state budget (d) Persons involved in managing state organisations or legal entities in which the state owns 50 percent or more of the shares, as well as their subsidiaries (defined as the state organisation or legal entity owning 50 percent or more of the shares) (e) Persons endowed with administrative authority over persons who are not his or her subordinates, or persons who manage or perform administrative functions in state bodies, municipalities or Kazakhstan’s military forces (f) Persons who perform organisational or administrative functions in state authorities, municipalities or Kazakhstan’s military forces (g) Persons who hold positions prescribed by the Constitution or other laws to perform state functions and exercise state authority, as well persons holding political office Bribing persons from categories from (a) through (d) carries the same degree of criminal liability, which differs from criminal liability for bribing persons from categories (e) through (f), which all differ from liability for bribing a person from category (g). 4. Consequences of bribery (a) For individuals involved: The Kazakhstani Criminal Code establishes a range of penalties for individuals who corrupt public officials. They are:

  • Up to 15 years in jail, with or without the confiscation of property
  • Fine of up to 2,000 monthly calculation indices (MCI) (one MCI amounts to KZT 1,852 or approximately USD 10)
  • Up to seven years of prohibition on holding certain positions or performing certain activities with the confiscation of property
  • Up to five years of limitations of certain freedoms

(b) For a company or legal entity: The Kazakhstani Code of Administrative Offences establishes the following types of administrative liability for legal entities that corrupt public officials:

  • Administrative fine of up to 500,000 MCI (approximately USD5 million)
  • Compulsory liquidation

5. Political contributions Contributions to political parties are regulated by Article 18 of the Law on Political Parties.3 There are no quantitative restrictions on contributions. However, the law does identify persons and entities that are not allowed to make contributions, namely: (a) Foreign states, foreign legal entities and international organisations (b) Foreign citizens and persons without citizenship (c) Legal entities with participation of foreign interest (d) State authorities and state organisations (e) Religious and charity organisations (f) Anonymous contributors (g) Citizens and legal entities of Kazakhstan that received grants or donations from international non-governmental institutions 6. Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, amongst others) Under Kazakhstani law, the provision of any benefits to public officials is generally prohibited, and could amount to criminal or administrative liability if the benefits were provided in exchange for, or in connection with, an official’s state functions. However, under the Civil Code, certain symbolic gifts with a value not exceeding 10 MCI (approximately USD100) may be provided to government officials, taking into consideration the definition of bribery, as discussed in Section 1.2 above, that such gifts are legal only if not made in exchange for, or in connection with, the official performing his or her official functions. Otherwise, there is a risk of criminal and/or administrative liability. In addition, in certain cases government officials may be allowed to accept invitations to participate in international science, professional and other similar forums at the expense of organisations, and during the forums, the officials may be permitted to accept certain limited gifts or benefits.

Domestic bribery (private to private)

1. Legal framework Private bribery is regulated by Article 231 of the Kazakhstani Criminal Code. 2. Definition of private bribery Private bribery is defined as the grant to or receipt by a person involved in managing functions in a commercial or other organisation, of money, securities or other property, or an illegal performance of services in exchange for that person using his or her position to advance or provide informal protection for the person bribing. 3. Consequences of private bribery (a) The Kazakhstani Criminal Code provides a range of consequences for individuals involved in private bribery, mainly:

  • Up to five years in jail with or without the confiscation of his or her property
  • Penalty of up to 5,000 MCI (approximately USD50,000)
  • Up to five years of prohibition on engaging in certain activities or holding certain positions

(b) For a company or legal entity, no liability is specified. 4. Limitation on hospitality expenses (gifts, travel, meals, entertainment, amongst others) Generally, Kazakhstani legislation does not establish quantitative or qualitative limitations on paying for hospitality expenses for managers in the private sector.

Corruption of foreign public officials

1. Legal framework Corruption of foreign public officials is regulated by Articles 311 and 312 of the Kazakhstani Criminal Code. These are the same articles that apply to bribing domestic public officials. Unlike in other countries, such as the United States or United Kingdom, Kazakhstan’s prohibition against bribing foreign public officials does not extend beyond its borders except in very specific cases. The Kazakhstani Criminal Code only views bribing foreign officials as a crime in the following cases: (a) If the bribery of a foreign public official was committed outside of Kazakhstan by a Kazakhstani citizen and was not prosecuted in the state in which it was committed (b) If the bribery of a foreign public official was committed outside of Kazakhstan by a non-Kazakhstani citizen directly against the interest of Kazakhstan, and was not prosecuted in the state in which it was committed (c) If the bribery of a foreign public official was committed outside of Kazakhstan by a non-Kazakhstani citizen and was not prosecuted in the state it was committed, and bribery is subject to an international treaty to which Kazakhstan and this state are a party 2. Definition of corruption of foreign public officials Kazakhstan’s Criminal Code provides just one definition for corruption of both domestic and foreign public officials. 3. Definition of foreign public officials In relation to this crime, foreign public officials are defined as foreign state authorities empowered with administrative authority over persons that are not their subordinates, or persons with managing or administrative functions in foreign state bodies, municipalities or military forces. 4. Consequences of corruption of foreign public officials Since Kazakhstani legislation does not differentiate between bribery of foreign and domestic officials, the consequences are the same as those mentioned in Section 1.4 above. 5. Limitations on hospitality expenses (gifts, travel, meals, entertainment, amongst others) The limitations on hospitality expenses of domestic officials do not apply to hospitality of foreign public officials because the Law on State Service only applies to Kazakhstani public officials.

Facilitation payments

Kazakhstani anti-corruption laws do not regulate facilitating payments (e.g., modest payments to a public official to encourage him or her to perform an act he or she is legally required to perform) or gifts provided in accordance with generally accepted norms of courtesy and hospitality. Thus, as a general rule, the provision of facilitating payments could lead to liability under the Criminal or Administrative Code.

Compliance programmes

1. Value of the compliance programme in mitigating/eliminating the criminal liability of legal entities Whilst Kazakhstani legislation provides for the administrative (not criminal) liability of legal entities, compliance programmes within the company do not help to either mitigate or eliminate the company’s liability for corruption. 2. Lack of a compliance programme as a crime Kazakhstani legislation does not recognise the absence of a compliance programme as a crime. 3. Elements of a compliance programme (a) Legal framework At present, Kazakhstani legislation does not require companies operating in Kazakhstan to have internal compliance programmes. However, as noted in Section 5.3 (b) below, such requirement has been recently introduced in neighbouring Russia; hence, it is possible that Kazakhstan will change its rules soon to introduce such a requirement. Further, at present, Kazakhstani legislation does not provide for the criminal liability of legal entities (legal entities could only be subjected to administrative liability – mainly fines). Nevertheless, compliance programmes proved to be an effective tool in increasing local companies and their employees’ general awareness of the applicable regulatory regime and potential risks. (b) Recommended practice In the absence of relevant Kazakhstani legislation, court practice and doctrine regarding compliance programmes, the closest guidelines may be taken from the newly introduced Article 13.3 of the Russian Law on Combatting Bribery. This Article 13.3 requires Russian companies to undertake measures to prevent corruption. These measures, according to Article 13.3, may include the adoption of a compliance programme. Presently, no similar requirements exist in Kazakhstan, but in view of strengthening integration processes within the framework of the Customs Union (Belarus, Kazakhstan and the Russian Federation) and harmonisation of these counties’ legislation, it is possible that similar legislative provisions will soon be adopted in Kazakhstan.

Regulator with the jurisdiction to prosecute corruption

Under Kazakhstani legislation, the only agency tasked with prosecuting corruption is the Agency of the Republic of Kazakhstan on Combatting Economic and Corruption Crimes (also known as the financial police). This agency reports directly to the president of Kazakhstan. ——- 1 Law on State Service dated 23 July 1999 No. 453-I 2 Law on Combatting Corruption dated 2 July 1998 No. 267-I 3 Law on Political Parties dated 15 July 2002 No. 344-II * Azamat Kuatbekov is a partner and Roman Butenko is a lawyer in Baker McKenzie’s Kazakhstan office

The above article is a chapter of Baker McKenzie’s publication “Overview of Anti-Bribery Laws in EMEA” (2014). Please send us an email if you would like to receive a copy of the print version of the publication or click below to download the file. [wpdm_file id=1]