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Russia

9. Corruption

Despite some government efforts to combat it, the level of corruption in Russia remains high. Transparency International’s 2020 Corruption Perception Index (CPI) puts Russia at 129th place among 180 countries – eight notches up from the rank assigned in 2019.

Roughly 24 percent of entrepreneurs surveyed by the Russian Chamber of Commerce in October and November 2019 said they constantly faced corruption. Businesses mainly experienced corruption during applications for permits (35.3 percent), during inspections (22.1 percent), and in the procurement processes (38.7 percent). The areas of government spending that ranked highest in corruption were public procurement, media, national defense, and public utilities.

In March 2020, Russia’s new Prosecutor General, Igor Krasnov, reported RUB 21 billion ($324 million) were recovered in the course of anticorruption investigations in 2019. In December 2019, Procurator General’s Office Spokesperson Svetlana Petrenko reported approximately over 7,000 corruption convictions in 2019, including of 752 law enforcement officers, 181 Federal Penitentiary Service (FPS) officers, 81 federal bailiffs and 476 municipal officials.

Until recently, one of the peculiarities of Russian enforcement practices was that companies were prosecuted almost exclusively for small and mid-scale bribery. Several 2019 cases indicate that Russian enforcement actions may expand to include more severe offenses as well. To date, ten convictions of companies for large-scale or extra large-scale bribery with penalty payments of RUB 20 million ($320,000) or more have been disclosed in 2019 – compared to only four cases in the whole of 2018. In July 2019, Russian Standard Bank, which is among Russia’s 200 largest companies according to Forbes Russia, had to pay a penalty of RUB 26.5 million ($420,000) for bribing bailiffs in Crimea in order to speed up enforcement proceedings against defaulted debtors.

Still, there is no efficient protection for whistleblowers in Russia. In June 2019, the legislative initiative aimed at the protection of whistleblowers in corruption cases ultimately failed. The draft law, which had been adopted at the first reading in December 2017, provided for comprehensive rights of whistleblowers, and responsibilities of employers and law enforcement authorities. Since August 2018, Russian authorities have been authorized to pay whistleblowers rewards which may exceed RUB 3 million ($50,000). However, rewards alone will hardly suffice to incentivize whistleblowing.

Russia adopted a law in 2012 requiring individuals holding public office, state officials, municipal officials, and employees of state organizations to submit information on the funds spent by them and members of their families (spouses and underage children) to acquire certain types of property, including real estate, securities, stock, and vehicles. The law also required public servants to disclose the source of the funds for these purchases and to confirm the legality of the acquisitions.

In July 2018, President Putin signed a two-year plan to combat corruption. The plan required public discussion for federal procurement worth more than RUB 50 million ($660,000) and municipal procurement worth more than RUB 5 million ($66,000). The government also expanded the list of property that can be confiscated if the owners fail to prove it was acquired using lawful income. The government maintains an online registry of officials charged with corruption-related offences, with individuals being listed for a period of five years. The Constitutional Court gave clear guidance to law enforcement on asset confiscation due to the illicit enrichment of officials. Russia has ratified the UN Convention against Corruption, but its ratification did not include article 20, which deals with illicit enrichment. The Council of Europe’s Group of States against Corruption reported in 2019 that Russia had implemented 18 out of 22 recommendations of the Council of Europe Group of States against Corruption (GRECO) (nine fully implemented, nine partially implemented, and four recommendations have not been implemented), according to a Compliance Report released by GRECO in August 2020. GRECO made 22 recommendations to Russia on further combatting corruption developments: eight concern members of the parliament, nine concern judges, and five concern prosecutors.

In 2020, overall damage from the corruption crimes entailing criminal cases in Russia exceeded RUB 63 billion ($ 836.7 million). The number of detected corruption-related crimes in January-February 2021 increased by 11.8 percent to 7,100 up from 6,300 in the same period of 2020, according to the Prosecutor General’s Office. The number of bribery cases increased by 21 percent year-on-year in the same period to reach 3,500. The damage caused by corruption increased from RUB 7.2 billion ($ 98.2 million) in January-February 2020 to RUB 13 billion ($ 177.4 million) in the same period of 2021.

U.S. companies, regardless of size, are encouraged to assess the business climate in the relevant market in which they will be operating or investing and to have effective compliance programs or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in Russia should become familiar with the relevant anticorruption laws of both Russia and the United States to comply fully with them. They should also seek the advice of legal counsel when appropriate.

Resources to Report Corruption

Andrey Avetisyan
Ambassador at Large for International Anti-Corruption Cooperation
Ministry of Foreign Affairs
32/34 Smolenskaya-Sennaya pl, Moscow, Russia +7 499 244-16-06
+7 499 244-16-06

Anton Pominov
Director General
Transparency International – Russia
Rozhdestvenskiy Bulvar, 10, Moscow
Email: Info@transparency.org.ru

Individuals and companies that wish to report instances of bribery or corruption that impact, or potentially impact their operations, and to request the assistance of the United States Government with respect to issues relating to issues of corruption may call the Department of Commerce’s Russia Corruption Reporting hotline at (202) 482-7945, or submit the form provided at http://tcc.export.gov/Report_a_Barrier/reportatradebarrier_russia.asp .

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