Legal Update – Russia’s War on Corruption Gets a European Makeover

The Ministry of Justice is drafting amendments to several Russian laws, as part of the country’s effort to join the Group of States against Corruption (GRECO).  According to press reports, the amendments will include at least three significant changes: (i) gifts to Russian officials under Article 575 of the Civil Code will be prohibited entirely; (ii) in rem confiscation of ill-gotten gains (“disgorgement”) will be adopted as a legal remedy to corruption crimes; and (iii) the list of officials with immunity from prosecution will be reduced.  The changes are another sign of Russia’s slow, but steady progress towards adopting Western legal standards on corruption, and specifically show that Russia intends to become a party to the OECD Anti-bribery Convention.  

BribeRecently, Vedomosti reported that the Ministry of Justice has been tasked with preparing amendments to Russian Federal Laws and provisions of Codes (e.g., Criminal Code) related to corruption (reported here in English by The Moscow Times).  The amendments are intended to address flaws and gaps identified by a December 2008 review of Russia’s anti-corruption legal framework by GRECO.  The report was a product of the first and second evaluation rounds by GRECO, with a third round planned in the near future (see country reports for the third round here). Russia’s “compliance report” is due on June 30th.  The review finished just a few weeks before Pres. Medvedev overhauled the very same laws, as called for in his National Anti-Corruption Plan.  Below I will discuss the reforms reported on by Vedomosti, though this list may be incomplete or subject to change. 

Gifts to Russian Officials will be Prohibited Entirely     

The Kremlin plans on adopting GRECO’s recommendation that Russia “eliminate the practice of accepting substantial gifts of any form in the public administration and to consider abolishing the legal justification for such gifts as contained in Article 575 of the Civil Code” (emphasis mine; see page 65 of the report).  This is a very poorly-worded recommendation, but I think it should be read in the context of GRECO’s Convention against Corruption, which prohibits giving, promising, etc. any “undue advantage” to a public official.  In its accompanying explanatory report, GRECO clarified that the term “undue advantage” is intended to exclude “advantages permitted by the law or by administrative rules as well as minimum gifts of very low value or socially acceptable gifts.”  Still, according to GRECO Head Wolfgang Rau, “Gifts need to be prohibited entirely with the exception of certain situations, when refusing the gift is not permitted for diplomatic reasons, but in those situations the official should declare the gift.”

At the time GRECO conducted its review, Article 575 permitted officials to receive gifts worth 500 rubles or less (approx. $16), and it seems this is what bothered the GRECO people.  But, such gifts would not be “substantial” in most parts of the world, and especially not in Russia.  Indeed, many observers in the business community complained that the $16 rule was absurd and impossible to reconcile with Russia’s gift-giving culture.  And the Medvedev administration listened – on Christmas Day (no joke) the limit on gifts to officials was raised to 3,000 rubles (approx. $100) by Federal Law 280-FZ, “On Amending Certain Legislative Acts in Connection with the Ratification of the UN Convention against Corruption.”   Law 280-FZ also established an exception for gifts received during “official events” like those alluded to by Mr. Rau, which must be declared and turned over to the official’s agency.  

Thus, in order to join one multilateral anti-corruption club, Russia had to raise the permissible value of gifts to officials.  Now, to join a different multilateral anti-corruption club, Russia needs to completely eliminate permissible gifts to officials.  Russia’s first choice, however, is to join the OECD, and thus become a party to the OECD Anti-Bribery Convention.  That means Russia will give preference to GRECO’s recommendations, which are more consistent with the OECD Convention than the UN Convention (the OECD Monitoring Group generally opposes legal provisions that explicitly allow gifts to officials).   

Confiscation of Ill-Gotten Gains Will Be Adopted

The second major GRECO recommendation Russia will reportedly adopt relates to confiscation of the proceeds of corruption crimes, aka “disgorgement” (see page 44 of GRECO report).  Current Russian law on the use of confiscation can be found in Chapter 15.1 of the Criminal Code (Articles 104.1 – 104.3).  Under Art. 104.1, confiscation is used in 51 different crimes, of which three relate to corruption – Art. 204 (commercial bribery), Art. 285 (abuse of official authority), and Art. 290 (bribe-taking).  Vedomosti‘s source in the presidential administration indicated that the amendments will add Art. 201 (abuse of authority) and Art. 291 (bribe-giving).

To the extent any others are added to the list, they will likely be drawn from this list adopted by the Prosecutor General and MVD in April 2010, for the purposes of calculating statistics on corruption crimes.  The list is itself interesting, since it seems to indicate how the General Prosecutor and MVD are “cooking the books” on reporting corruption crime statistics.  For example, the list includes smuggling (Art. 188) as a de jure corruption offense, and others – including “abuse of power” (Art. 201) – when done with an intent of “self-interest.”  The changes to how corruption crimes and prosecutions are counted took effect in January 2010 (i.e., they are retroactive).  So, during the next presentation to the Federation Council on this topic, expect to see absurd statistical increases for “corruption” crimes.   

GRECO also recommended that Russia adopt in rem confiscation – the seizure of an object (e.g., property) based on suspicions that it constitutes proceeds of a corruption crime.  Currently, Russian law only allows in personam confiscation – the seizure of an object from an individual based on proof that the object is proceeds of the crime for which the individual is on trial/convicted.  Only a court may order in personam confiscation, and prosecutors have the burden of proving that the object is in fact proceeds of a crime.  In an in rem action, prosecutors would bring a case against the object itself through the use of a “legal fiction” that treats the object as though it were a person.  Here, the individual would have to prove the lawful origin of the object. 

This change appears to be sparking the most debate.  Proponents say it is essential to the fight against corruption in Russia, where evidence of ill-gotten gains are easier to find – e.g., Moscow Dep. Mayor Resin’s $1 million watch –  than it is to catch individuals “in the act.”  Opponents argue that confiscation would undermine the development of property rights in Russia, and is too powerful a weapon to provide notoriously-corrupt law enforcement structures (coincidentally, the biggest proponents are from the Interior Ministry and Federal Narcotics Control Service).  

Number of “Spetzsubjekty” Will Be Reduced

Finally, Russia will reportedly reduce the number of spetzsubjekty (спецсубъекты), the “untouchables” of Russian officialdom who have immunity from prosecution under Art. 447 of the Criminal Procedure Code.  The GRECO report recommended that Russia “reduce the categories of persons enjoying immunity from prosecution to the minimum required in a democratic society,” and “thoroughly revise” the procedures for lifting immunity and establish guidelines on their use.  In 2008, the Duma proposed lifting immunity from investigators, attorneys/barristers, prosecutors, and members of the Election Commissions (but not Duma Deputies).  Vedomosti cited Kremlin officials who said that such a measure will be supported now, with time running out to implement the GRECO recommendations.

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