Is FCPA Enforcement in Russia the Next China?

Global anticorruption enforcement is at an all-time high and likely to increase. As a top federal enforcement official recently proclaimed, “[W]e are in a new era of FCPA enforcement, and we are here to stay.” The U.S. Foreign Corrupt Practices Act (FCPA) is center stage in this enforcement effort, but it is increasingly paralleled by a number of anticorruption laws in other countries, such as the U.K. Bribery Act that went into effect last year. At the same time, U.S. companies, facing relatively faster-growing markets and reduced labor costs overseas, have been increasing their footprint in foreign countries.

These combined trends have caused companies to take a fresh look at their anticorruption compliance policies, conduct internal investigations, and take remedial measures. In recent years, much of the FCPA focus—by enforcement authorities, the public, and corporations—has been in China. Relatively little focus has been placed on Russia. This article explores the trends that suggest an increase in FCPA enforcement in Russia, and highlights some of the unique anticorruption challenges that U.S. companies face when doing business in Russia.

Increasing FCPA Enforcement in “BRIC” Countries

Brazil, Russia, India, and China—known in white-collar parlance as the “BRIC” countries—have increasingly been in the crosshairs of FCPA enforcement. As is now known to any multinational company, the FCPA prohibits U.S. companies and individuals from offering or providing items of value to improperly influence foreign officials in order to obtain or retain business. In addition, the FCPA requires companies that are registered with the Securities and Exchange Commission to maintain proper books and records, and to devise and maintain a system of internal accounting controls. Although the FCPA was passed in 1977, significant enforcement by the U.S Department of Justice and SEC did not increase until more recently. Indeed, since 2004, there has been an eight-fold increase in FCPA enforcement. In 2009 and 2010 combined, more than 50 individuals were charged with FCPA violations, and nearly $2 billion in criminal fines were collected.

FCPA enforcement is only expected to increase in the future, and the DOJ has expressed a specific interest in Russia. Assistant Attorney General for the Criminal Division Lanny Breuer, as the DOJ leader responsible for FCPA enforcement, has repeatedly articulated an aggressive stance on anticorruption enforcement that shows no signs of abating: “[A]s we have become more aggressive, you have become more worried. . . . You are right to be more concerned.” Last year, Breuer firmly planted the FCPA flag on Russian soil when he spoke at a Russian summit on anticorruption efforts, emphasizing that corruption remains a significant problem in Russia, highlighting the multiple ways in which the FCPA can reach and affect companies doing business in the country, and warning the audience that the DOJ is not shy about investigating FCPA violations in Russia.

FCPA Enforcement in Russia Presents Serious and Unique Challenges