A January 2018 Transparency International study surveyed 200 companies in Russia and concluded that 84 percent ranked "low" in terms of their level of transparency, despite the Federal Anti-corruption law’s encouragement to promote compliance measures. Even though the Russian government has verbally committed to eradicating corruption, there has been inconsistent commitment to enforce those measures.
Petty and high-level corruption is evident among political and business elites as well as in various government and business sectors in Russia. Corruption has typically been more prevalent in the judicial, law enforcement, and public procurement sectors. The threat to locals and foreigners alike has remained the same over the past few years, even with the recent creation of legislation to eradicate corruption.
What is Petty Corruption?
Petty or “routine” corruption refers to public officials who routinely abuse their authority when interacting with individuals or businesses seeking out basic goods or services, usually by asking for illegal but relatively small facilitation payments. Although foreign nationals and businesses can mitigate these threats, the risk of exposure is higher leading up to and during the FIFA 2018 World Cup™ given the increased number of visitors to Russia.
Law Enforcement Bribery & Harassment
Security forces are known to bribe and extort foreigners and locals alike, and often resort to such requests to supplement persistent low salaries. Traffic police typically perpetrate this crime knowing that victims are more likely to pay a small bribe rather than the relatively high official fine for a traffic violation. Police may target foreigners, often stopping them and requesting to review documentation. Perpetrators will sometimes claim there are problems with the documents and demand that victims pay a fine. This type of bribery is possible in areas heavily frequented by tourists such as large metropolitan areas like Moscow and Saint Petersburg.
Police and law enforcement officials have also harassed and stigmatized local and foreign non-governmental organizations that attempt to monitor elections or expose corruption and human rights abuses in Russia. Authorities have typically exploited laws as an excuse to impose fines and have occasionally shut down NGOs. Since 2012, Russian authorities have mandated that NGOs receiving funds from outside Russia must register as “foreign agents.” The government has used this rationale to justify fines or closures of NGOs, including local offices of foreign firms that have not registered.
Lack of Independence in Judicial System
The high level of corruption and lack of independence in the judicial system poses a significant concern as well. Russian law provides the right to a fair and public trial to defendants, though interference from the executive branch and law enforcement often undermines this principle. There are also concerns that, during legal disputes between investors and the government, Russian courts frequently adopt rules with little transparency and without incorporating public comments - creating concerns that outcomes of certain cases are pre-determined or judicial authorities may use bribes or fabricate evidence. Foreign companies operating in Russia typically include foreign arbitration clauses in their contracts to minimize the role of the Russian legal system.
Public Procurement Demands of Transparency
Corruption involving Russian public authorities, government officials, or national and international companies is prevalent whenever there is an exchange of goods and services. Companies involved in the construction sector and building contracts are particularly vulnerable to bribes, kickbacks, or other miscellaneous payments to government officials to obtain public funds for a project. Although recent reports indicate that there is less corruption in recent years in public procurement, there are many claims that investment approvals still strongly depend on company officials’ relations with Russian government officials. Foreign companies operating in Russia often implement specific due diligence procedures to ensure transparency. For example, the U.S. Commercial Service, a division of the U.S. Department of Commerce, offers international company profiling services to help American businesses evaluate potential foreign partners.
Current Anti-Corruption Efforts in Russia
In recent years, the Russian government has enacted the Federal Anti-Corruption Law - which criminalizes all forms of bribery, abuse of power, conflict of interest, and money laundering. The law also encourages companies to develop compliance measures. Russia has also signed international agreements such as the Organisation for Economic Cooperation and Development (OECD) Anti-Bribery Convention, which criminalizes bribery between foreign public officials and international businesses. In October 2017, the government approved a draft law protecting those who report corruption; though it has yet to become fully enacted and currently lacks incentives for individuals to report crimes.
Methods to Reduce Risk of Bribery
- Familiarize yourself with local anti-corruption laws and those of your home country to ensure full compliance.
- Consider seeking appropriate advice from a qualified legal counselor.
- Ensure that the business you are dealing with has effect compliance programs in place to effectively detect corruption, including bribery attempts.
- If stopped by police, politely ask for the officer’s name, badge, and patrol car number.
- If a police officer is seeming to push ahead with a bribe, state that you wish to contact your consular office about the matter.
- Report all attempts to solicit bribes to your diplomatic mission.
The risk of high-level and petty corruption creates a climate of uncertainty for foreign companies and visitors in Russia. Foreign travelers and businesspeople operate frequently in Russia and can implement mitigation strategies to avoid becoming victims of bribery or abuses of power. For 2018 World Cup attendees, learn about security risks and personal safety best practices with our 2018 World Cup Information Hub. There, you can explore various advice sheets, blogs, webinars, Special Reports, and more. You can even sign up to receive weekly updates throughout the World Cup tournament, including expert analysis of daily operations, podcasts, and more.
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