International, Russia - Written by Barry & Richard on Wednesday, February 15, 2012 12:02 - 0 Comments
Anti-bribery compliance: A competitive advantage in Russia.
For Russian headquartered businesses looking to trade with international companies a commitment to anti-bribery compliance will be a strong competitive advantage. International companies are interested in investing in Russia but they (rightly) worry about corruption and their exposure to associated risks if they enter the Russian market.
International companies will be attracted by Russian businesses who promise (and can deliver) high ethical standards and will prefer to do business with them.
This strong commercial rationale combines with a general trend toward less corruption globally and heightened enforcement risk with corresponding potential damage to reputation which may be a significant driver for international companies, in addition to creating a more sustainable business.
However, putting in place anti-bribery compliance procedures in Russia (and some other jurisdictions) is not without difficulty.
In part this is down to the fact that Russia is a risky place to do business from an anti-bribery standpoint.
However, it is also due to strong cultural reasons which too many western businesses overlook when embarking on relationships in Russia (or other jurisdictions).
…“I understand that you are worried about the UK Bribery Act but you are not in the UK now.”…
…“It’s against the law and everyone knows it, so we don’t need to take any more steps to prevent it”…
are both arguments which are made.
Putting in place policies to prevent bribery may be regarded as offensive by some who may think that the need for a policy equates to a presumption of their guilt.
Similarly, demands for anti-bribery protections may also be met by:
“We are not the state, we cannot bribe ourselves”
“This is standard wording. We don’t change it for anyone.”
It is important to explain the backdrop to the requirements. In the case of an international investor it may be that the best way is to emphasise that it seeks protection because of the internal rules the investor is under (as a result of being subject to anti-bribery laws).
Whistleblowing is an uncomfortable concept for many. For similar reasons disclosure and certification requirements are also misunderstood and mistrusted.
Anyone seeking to put in place anti-bribery policies should ensure that the backdrop to imposing them is properly explained without creating a perception of mistrust.
We recommend any business in Russia putting in place anti-bribery controls does so with a very clear and positive message explaining that it is doing so because it is important for the business and why – at the same time dealing with any misconceptions.