Will the UK Bribery Act help Russia fight corruption?

By Konstantin Rozhnov
Business reporter, BBC News

Image caption,
The UK Bribery Act defines practice for both the UK and abroad

When the UK Bribery Act, passed by Parliament earlier this year, becomes law next April, many overseas companies could find themselves in serious trouble.

But for governments in countries such as Russia, where fighting corruption on a national level has not been very successful, the new law could prove to be of significant importance.

Apart from criminalising both private sector corruption and the bribery of officials, it defines how British and foreign firms are expected to do business - not only in the UK, but also elsewhere.

"When the Bribery Act comes into force, I shall have jurisdiction in respect of foreign companies - such as Russian companies - that carry on business in the UK and are involved in bribery in any other country in the world, even if that bribery has no connection with their UK business," Richard Alderman, the director of the Serious Fraud Office, told the BBC.

The same, according to the Act, goes for UK companies doing business internationally.

Co-operation counts

Mr Alderman said that he did not want companies that work ethically to be put at a disadvantage by corrupt ones anywhere else in the world.

But Elena Panfilova, head of the anti-corruption campaign group Transparency International in Russia, believes that the aim would be difficult to achieve without close co-operation between anti-corruption officials from different countries.

As more and more Russian companies choose to list their shares in London, with many other Russian firms doing business in the UK and British companies being present in Russia, the meeting between Mr Alderman and his Russian colleagues during the Russian Law Week in London provides an opportunity to step up co-operation.

Russia is ranked 154th out of 178 states by Transparency International, while the UK is 20th in the group's Corruption Perceptions Index.

Mr Alderman said: "What I want to be able to explore with my colleagues from Russia is how we can work together in order to improve that [Russia's ranking in the index], what they need from us and, indeed, what we will need from them in order to deal with companies and individuals within my jurisdiction," said Mr Alderman.

Vadim Yalovitsky, head of the Unit for International Cooperation in Major Cases of the Prosecutor General's Office of the Russian Federation, said that the level of co-operation between Russia and the UK could increase in future, thanks to the new UK measures.

He told the BBC that in the past, Moscow had been unable to convince UK courts to extradite certain Russian citizens who had been accused of corruption in Russia, but were living in the UK. The accused have argued that their cases were politically motivated.

Mr Yalovitsky also said that "being engaged in a dialogue is always better than avoiding it", adding that it was important to tell the West more about how Russia, its system and the Prosecutor General Office's role had changed.

Devil in the details

While the UK Bribery Act is yet to become law, the US Foreign Corrupt Practices Act (FCPA) has been in place for a while.

Many international firms doing business in the US, having their shares listed in the US or acting on behalf of a US company have had to improve their anti-corruption procedures in line with the FCPA.

In the case of the UK Bribery Act, it will also be vital for a company to have proper procedures in place aimed at preventing bribery.

It will help the firm minimise the risk of being prosecuted for an isolated corruption-related offence.

"The imminent introduction of the Bribery Act in the UK has undoubtedly focussed the minds of international businesses on preventing this most serious of corporate crimes," said Yuri Botiuk, a director in the Litigation team at McGrigors and the head of the firm's Russia and Ukraine desk.

Lawyers say that it should not be very difficult for companies doing business in Russia, the UK and the US to comply with the countries' anti-bribery laws, although the Bribery Act is seen as the strictest of the three.

But some important details may trip up the unwary.

For example, some payments and gifts are allowed in one country and prohibited in another. Also, in Russia the law is focused mainly on preventing officials from accepting or demanding bribes.

Nicholas Munday, head of litigation and arbitration in the Moscow office of Clifford Chance, said: "Our clients are trying to make sure that their practices comply with the Bribery Act, but also comply with the realities of doing business in Russia."

Will to act?

There is a consensus among lawyers and experts that companies compliant with the FCPA and the new UK Bribery Act can have a positive effect on levels of corruption in Russia.

Jonathan Nelms, an attorney in the Moscow office of Baker & McKenzie, says that dealing with such companies acts as an incentive for Russian firms to conduct clean business.

At the same time, the habits learnt by Russian employees of compliant companies will follow them to other firms when they change jobs or start their own businesses.

But Ms Panfilova fears that if Russian anti-corruption officials uncover a bribery offence in a company doing business both in Russia and the West, some officials could be tempted to use it as a tool to put pressure on the firm instead of notifying their Western colleagues.

She also says that if some prosecutors find out that a Russian official has something to do with a corruption-related offence, "the question of readiness to investigate the case further might arise."

But Mr Yalovitsky said the task of fighting corruption had been one of the Russian government's priorities.

For his part, Mr Alderman is urging Russian companies to "approach us - either directly or through intermediaries - to talk about the Bribery Act".

"This Act will be important, it will affect what UK companies do in Russia and what Russian companies do abroad," he says.

And there are those who believe that companies themselves would benefit if they say "no" to corruption.

Mr Nelms said: "While there may be short-term challenges, we believe ultimately that the resources wasted by bribes outweigh the benefits of concluding a particular sale or accelerating a particular government process."

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