Anti-Bribery & Anti-Corruption Compliance in Russia

Transcription

1 Anti-Bribery & Anti-Corruption Compliance in Russia Alex Stolarsky Rechtsanwalt, Director of Legal, Tax and Compliance, Member of the Board, SCHNEIDER GROUP Veronika Kochieva Legal Team Leader, SCHNEIDER GROUP Webinar, June 14

2 accounting ERP import legal tax 2

3 Agenda Applicable international and local regulations Responsibility of local management, Russian entities & their shareholders for noncompliance Step plan of implementing compliance management system in Russia accounting ERP import legal tax 3

4 Applicable regulations

5 Applicable regulations FCPA UKBA Federal Law 273-ФЗ Criminal Code of Russia Administrative Code of Russia accounting ERP import legal tax 5

6 FCPA What constitutes violation: Bribery of foreign officials Books& Records violations Who may be prosecuted: US Issuers, their Russian subsidiaries, US nationals employed in the Russian market Foreign Issuers (directly listed or with sponsored ADRs) and their subsidiaries Persons acting within the USA Agents (subsidiaries, JV partners, distributors and resellers, customs brokers, consultants, advisers, intermediaries, etc., agents and sub-agents of the foregoing) accounting ERP import legal tax 6

7 Bribery is offering, promising, or authorizing to pay or give (directly or indirectly) anything of value to or for a foreign official (or foreign political party / political candidate) to influence any act or decision of the official in his/her official capacity; to induce such official to violate his/her lawful duty; to secure any improper advantage; or to cause such official to use his/her influence; willfully and with corrupt intent; in order to obtain or retain business or to direct business to any person accounting ERP import legal tax 7

8 UKBA prohibits commercial bribery and failure to prevent bribery does not contain specific intent requirement does not make an exception for facilitation payments or reasonable promotional expenses no limitation on fines Applies to: UK listed companies, their subsidiaries and agents accounting ERP import legal tax 8

9 Federal Law 273-ФЗ Sets up an obligation for every legal entity to devise and implement measures to prevent bribery, including: appointing responsible for preventing bribery and other violations persons/departments cooperation with regulators devising and implementing policies and procedures to ensure due diligence Code of Conduct implementation conflict of interests prevention ensuring inadmissibility of false documents and financial statements accounting ERP import legal tax 9

10 Criminal Code What constitutes violation: Passive bribery of Russian/foreign official Active bribery of Russian/foreign official In-between bribery Fraud Commercial bribery Attempt of bribery of Russian/foreign official Bribe is defined as money, securities, property, rights or services for any actions/inactions for the benefit of a briber accounting ERP import legal tax 10

11 Administrative Code Prohibits illegal remuneration on behalf of legal entity of any official or manager accounting ERP import legal tax 11

12 Liability

13 CEO (GD) Financial Liability GD bears full financial liability before the company: for direct actual damages caused by his/her faulty actions(or omissions) forlossofprofit Under FCPA - Civil penalties up to $16K per violation Other civil remedies generally available to SEC accounting ERP import legal tax 13

14 CEO (GD) Criminal Liability Maximum liability under the Criminal Code up to 15 years of custody and fine in the amount of actualbribemultipliedbyupto70 Under FCPA - Criminal fines up to $250K per violation Imprisonmentforupto5years accounting ERP import legal tax 14

15 Russian Company s Liability Maximum liability under the Administrative Code fine in the amount of actual bribe multiplied by up to 100 but not less than (approx. 1,785,000 $) Under FCPA - criminal fines up to $2M per violation + other civil remedies generally available to SEC(injunctions, cease and desist orders, accounting/disgorgement) accounting ERP import legal tax 15

16 Russian Company Shareholders Liability Shareholders of the Russian legal entity may become liable as individuals or entities if they acted on behalf of a company or instructed a company in any bribery related interactions or when repairing damages from the company s misconduct as a subsidiary liable person/entity. accounting ERP import legal tax 16

17 Step plan of implementing compliance management system in Russia

18 Implementing compliance in Russia Commit to compliance by way of: 1. Appointing compliance officer: reporting to HQ 2. Code of Conduct and relevant policies, procedures and contract clauses adoption: consider Russian law 3. Ongoing team training 4. Ensuring effective control and investigations: whistle-blowing, anonymity guaranteed 5. Auditing regularly: internal and external compliance audit 6. Exercising due diligence: red flags accounting ERP import legal tax 18

19 Background check on business partners: typical red flags Third-party receives excessive "commissions" requests payment of "success fee" receives unreasonably large discounts "consulting agreements" include only vaguely described services in line of business different than engagement is related to or closely associated with a foreign official became involved at the request of foreign official is a shell company and/or incorporated in an offshore jurisdiction requests payment to offshore bank accounts requests cash payments, large bonuses or upfront payments accounting ERP import legal tax 19

20 Benefits of Compliance System An effective corporate compliance program can: Help to prevent a company, its officers and employees from criminal and civil fines Protect its directors and shareholders from personal liability accounting ERP import legal tax 20

21 Prominent FCPA cases in Russia Teva Pharmaceutical(December 2016): $283m fine and $236m disgorgement Vimpelcom (February 2016): $283m fine to DOJ, $236m disgorgement to SEC, and $397.5m to Dutch authorities accounting ERP import legal tax 21

22 UKBA case in Russia Rolls Royce (January, 2017): conspiracy to corrupt by causing intermediaries to pay bribes to obtain contracts in Indonesia, Thailand, India and Russia 239m financial penalty 258m financial disgorgement 13minSFOcostspaidtoHMTreasury $170minfinespaidtoUSDOJ $25m in fines paid to Brazilian authorities accounting ERP import legal tax 22

23 Case Study: Morgan Stanley Mr. Garth Peterson, Morgan Stanley's managing director for real estate investments in China, had a personal friendship and secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. a Chinese state-owned entity with influence over the success of Morgan Stanley s real estate business in Shanghai. Peterson secretly arranged to have at least $1.8 million paid to himself and the Chinese official that he disguised as finder s fees that Morgan Stanley s funds owed to third parties. In April 2012, the DOJ and SEC publicly announced their decision not to charge Morgan Stanley. The decision not to charge Morgan Stanley was the first-ever publicly announced decisionnottoprosecuteacompanyafteranfcpainvestigation.boththedojandsecsaid Morgan Stanley would not be prosecuted because of its strong compliance program: f.ex., PetersonwastrainedontheFCPAwhenhewasfirst hired dayone. Hereceivedatleast35 compliance trainings, no fewer than 8 of which specifically addressed FCPA issues. Peterson regularly certified that he read, understood and agreed to comply with Morgan Stanley s Code of Conduct, which included an FCPA policy. It was the first time the agencies publicly credited a pre-existing compliance program in a decision not to take enforcement action against a company Peterson was sentenced to nine months imprisonment. Additionally he agreed to pay more than $250,000 in disgorgement and relinquish his interest in the valuable Shanghai real estate (currently valued at approximately $3.4 million) that he secretly acquired through his misconduct. Findmoreat accounting ERP import legal tax 23

24 Questions accounting ERP import legal tax 24

25 Alex Stolarsky Rechtsanwalt, Director of Legal, Tax and Compliance, Member of the Board, SCHNEIDER GROUP Veronika Kochieva Legal Team Leader, SCHNEIDER GROUP The exclusive right to the content of this presentation including the rights of translation, reproduction, transmittal, distribution and usage of the presentation and parts of it, in any way, as well as the rights to the company s logo and name SCHNEIDER GROUP, in existing and future publications in printed or electronic form, and the ability to confer rights to a third party belong to SCHNEIDER GROUP. The reproduction, alteration, transmittal or any distribution or usage of this presentation or parts of it, as well as of the company s logo or name SCHNEIDER GROUP in any way, need the written permission of SCHNEIDER GROUP in advance and shall be accompanied with the link to the SCHNEIDER GROUP website and reference to the copyright permission. SCHNEIDER GROUP accounting ERP import legal tax 25

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