Liability for giving illegal remuneration on behalf of a legal entity is provided by article 19.28 of the Administrative Code (the “Administrative Code”)1. Subject to this article, commercial and non-profit organisations whose employees or managers are “caught” giving bribes to officials must be held liable2.
It should be noted that article 19.28 of the Administrative Code is subject to subsidiary application to article 291 (“Bribery”) or article 204 (“Commercial Bribery”) of the Criminal Code of the Russian Federation (the “Criminal Code of the Russian Federation”). So, bribe giving related criminal prosecution of a person having acted on behalf and in the interests of a company will not exempt the company from administrative liability. This means that the general director of the company, who personally offered a bribe, will be convicted under article 291 or article 204 of the Criminal Code of the Russian Federation, with the company being fined under article 19.28 of the Administrative Code of the Russian Federation.
Article 19.28 of the Administrative Code implies administrative liability of a legal entity for such actions as transfer, offer or promise of illegal remuneration on its behalf or in the interests of the legal entity.
Bribery entails the following fines:
Consider the following examples:
- a bribe of 25 000 rubles may cost the company a fine of 1 000 000 rubles.
- a bribe of 1 000 000 rubles (large amount) entails a fine from 20 000 000 to 30 000 000 rubles.
- a bribe of 20 000 000 rubles (significantly large) entails a fine from 100 000 000 to 2 000 000 000 rubles.
Moreover, penalties under this article include the mandatory confiscation of the item of value (for example, money, securities, other property or the cost of property-related services, other property rights). This involves property or property rights that have been the subject of an administrative offence.
The Supreme Court’s review3 of the judicial practice regarding administrative proceedings under article 19.28 of the Administrative Code of the Russian Federation (the “Review”) puts into perspective many issues arising as part of prosecution under this article.
Actions are recognised as committed on behalf of a legal entity if the individual who committed them is:
- a representative of a legal entity, its employee or a person performing administrative functions in a commercial organisation, and, in some cases, in a non-profit organisation (for example, in a budgetary institution);
- an individual who is not bound by employment, contractual relations with the legal entity, but who acted in the interests of this legal entity. For example, in cases where the actions set in article 19.28 of the Administrative Code of the Russian Federation are committed by an individual at the direction, with the knowledge or approval of persons authorised to act on behalf of the organisation.
II. Actions in the company’s interests
According to the Review, as to cases under article 19.28 of the Administrative Code, it is important to understand whether the legal entity was involved in the bribe and whether it was interested in it. Interest can be expressed in the following: the attempts of a legal entity to avoid prosecution for breach of law; the intention to take advantage of licensing procedures, to gain assistance in concluding various agreements, as well as government contracts, signing certificates of acceptance of performed works, services, goods under contracts, to avoid enforcement measures.
Prosecution under article 19.28 of the Administrative Code implies that the offender’s actions must be clearly expressed, be addressed to a specific person and have an unambiguous content.
IV. No specific amount
If the offender offered remuneration but no particular amount was specified, then they must be prosecuted under part 1 of article 19.28 of the Administrative Code, which provides the least possible punishment as part of this article.
V. A fine of at least 1 000 000 rubles
The Supreme Court confirmed in the Review that the minimum fine under article 19.28 of the Administrative Code was 1 000 000 rubles. At the same time, the Supreme Court has approved fines of less than 1 000 000 rubles under article 19.28 of the Administrative Code, but only in “exceptional circumstances”, which must be proved (for example, a difficult financial situation and lack of funds on the company’s organisation). But even with exceptional circumstances, the court does not have the right to impose a fine of less than 500 000 rubles, that is, less than half of the minimum fine as set in article 19.28 of the Administrative Code.
«…The director of a legal entity gave a bribe in the amount of 50 000 rubles to an official so that they do not carry out an inspection of the company. In the course of proceedings, the authorised representative of the company admitted that the company was responsible for the wrongful act, asking to impose a fine of an amount less than the minimum – 100 000 rubles – in view of the company’s difficult financial situation and lack of funds on its accounts. The company was given an administrative fine of 100 000 rubles. The story did not end there … The deputy prosecutor of the city protested against this ruling referring to the fact that no due account was given to the penalty under part 1 of article 19.28 of the Administrative Code of the Russian Federation while giving the 100 000 rubles fine, and that there was no proof of “exceptional circumstances” ».
Upon further proceedings, the company was fined 1 000 000 rubles.…»
VI. Confiscation of the item of value
Article 19.28 of the Administrative Code provides not only a fine, but also the confiscation of the item of value itself (for example, money), and specifically in cases where the item is connected with a criminal case or turned into state revenue by a court ruling. In a situation where confiscation is impossible (for example, a promise of illegal remuneration when there is no item as such), only an administrative fine is imposed.
VII. Relief from fines
According to the Administrative Code, a legal entity has a chance to be relieved of liability under article 19.28 of the Administrative Code, but this requires that the investigation of the case be facilitated (part 5 of article 19.28 of the Administrative Code). However, in its review the Supreme Court emphasises that the individual’s relief of criminal liability under article 291 (“Bribery”) and article 204 (“Commercial bribery”) of the Criminal Code of the Russian Federation does not necessarily mean that the legal entity is automatically exempted from administrative liability.
Article prepared by F+P trainee Olga Fedulkina
1 Administrative Code of the Russian Federation of 30.12.2001 No. 195-ФЗ (as amended on 09.03.2021);
2 The term “official” is interpreted in accordance with Note 1 to article 285 of the Criminal Code of the Russian Federation of 13.06.1996 No. 63-ФЗ (as amended on 05.04.2021, with amendments of 08.04.2021);
3 Review of the Judicial Practice Regarding Administrative Proceedings under Article 19.28 of the Administrative Code of the Russian Federation, approved by the Presidium of the Supreme Court of the Russian Federation on 8 July 2020 (retrieved from: http://www.vsrf.ru/documents/all/29109/)/