Corruption: Russia's Economic Stumbling Block

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Thus, U.S. companies and non-U.S. companies with U.S.-listed securities—and all subsidiaries of such companies—must comply with the FCPA or face criminal and civil sanctions. Out of self-protection, qualifying companies are increasingly implementing internal anti-bribery compliance programs and reporting to their national officials and international officials (such as the OECD) the corruption pressures to which they are exposed in Russia. Over time, these measures may induce Russian officials to take corruption issues more seriously. After all, it was exactly such measures that shifted the business and political climate in Europe from one that was highly tolerant of bribes to one that gave birth to the OECD Anti-Bribery Convention. Prosecution in OECD countries has already begun, with some cases including counts related to alleged bribery in Russia.

The OECD's Best Weapon: Peer Review

During Obama's recent visit to Moscow, the Russia-U.S. Joint Working Group on Investment & Institutional Integrity made a number of recommendations. Among proposals regarding integrity, governance, and transparency, the group advised that Russia become a member of the OECD Anti-Bribery Convention. Membership would enlist Russia's commitment to numerous legally binding decisions, including the Anti-Bribery Convention. The Convention would require thorough evaluation of Russia's current legislation and enforcement efforts. Further, it would require Russia to implement extensive legal, regulatory, and policy measures to prevent, detect, prosecute, and sanction the bribery of foreign officials. Most important, the Convention has a peer-review mechanism that monitors each country's enforcement record. In practice, peer review has pressured governments to tighten their anti-corruption enforcement. The prospect of such peer review may also stimulate Russia to bring its anti-corruption efforts in line with OECD standards.

To many observers, the prospects for Russia's anti-corruption program seem bleak. Russia appears more on track, however, when its efforts are considered in the context of other countries' achievements. When U.S. companies first became subject to the FCPA more than 30 years ago, they lobbied for European and Asian companies to be held to the same standard. Many in Europe and Asia simply smirked at American naivete; after all, until 10 years ago, foreign bribes were legitimate tax deductions in many OECD countries.

It has taken several decades to change that culture. Similarly, it isn't reasonable to expect Russia's business and political culture to change in this decade, or for at least several years to come. Change may come as Russia gets more integrated into the global economy. But it will come only if non-Russian companies doing business in Russia began to insist, lobby, and educate in favor of an anti-corruption culture and a level playing field.

Carol M. Welu, a partner at the London office of Squire, Sanders & Dempsey, has acted as lead counsel in major international corruption investigations . Yevgenya Muchnik is a corporate lawyer at the firm's Moscow office .

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