According to the Review, the ordinary courts examined 1,363 cases concerning the violation of article 19.28 of the Code of Administrative Offences of the Russian Federation (hereinafter, the Code) “Illegal remuneration on behalf of a legal person” in total between 1 January 2017 and 31 December 2019. The subjects of those offences were both commercial and non-profit organisations, while certain proceedings against individual entrepreneurs were dismissed due to the lack of evidence constituting an administrative offence.
The analysis of case law has shown that in most cases illegal remuneration was offered/paid for failing to hold persons liable for violations of legal requirements, giving them preference during authorisation procedures, assisting them in the conclusion of contracts, including public ones, signing of certificates of acceptance of executed works, provided services and delivered goods, and failing to enforce mandatory measures.
The Review, summarizing the cases for the indicated period, clarifies the legal position of the Supreme Court on the following issues:
- The acts qualified as constituting an offence under article 19.28 of the Code are recognized to be committed on behalf or in the interest of an entity only in the event that the natural person that committed them represents the entity according to a law or other legal act, the charter of the entity or a proxy, is either an official of the entity or an executive in a commercial organisation. If the indicated person is not officially related to the organisation (is not engaged in an employment, contractual or other relationship with it), he/she can still be found to act in its interests, if the illegal acts were committed by him/her on the instructions, with the consent and approval of the persons empowered to act on behalf of that organisation. In this context the organisation can only be held liable under the condition that its economic or other (for instance, reputational) interest in the commitment of certain acts (refrain from acting) by the official receiving the remuneration has been proven;
- When holding liable an organisation for gradually or systematically providing illegal remuneration for the same deal, the total amount of the remuneration should be taken into consideration; in this case, the jurisdiction depends on the last place of transfer of the remuneration;
- Offers or promises of illegal remuneration should be apparent and unequivocal and target a specific individual. An offer of illegal remuneration means any form of message communicated by any means to potentially transfer immediately or in the future such remuneration to an official, while a promise of it means voluntary commitment to transfer such remuneration. At the same time, an offer or promise of illegal remuneration cannot be considered as a minor threat to the public interest if compared to the actual transfer of remuneration;
- In the event of offer or promise of illegal remuneration on behalf or in the interest of an organisation without providing (defining) a certain amount of the remuneration that entity is to be held liable under paragraph 1 of article 19.28 of the Code;
- Illegal provision of property-related services means the provision of any property benefits, such as the discharge of property obligations, repairs, transfer of a vehicle for temporary use, etc.;
- The absence of conviction against a natural person, acting on behalf or in the interest of an organisation, does not preclude the possibility to take administrative measures against the organisation under article 19.28 of the Code;
- The prosecution of natural persons for active or commercial bribery does not exempt the organisation, on behalf or in the interest of which the respective illegal acts were committed, from legal liability under article 19.28 of the Code;
- The specific property of the organisation** to be seized should be indicated in the sequestration order along with the grounds for imposing this measure;
- The maximum fine that can be imposed by a judge under article 19.28 of the Code is provided for by paragraph 3 of article 3.5 of the Code (one hundred times the amount of illegal remuneration). The minimum amount of sanctions is indicated in the relevant paragraphs of article 19.28 of the Code: it is a multiple of the amount of remuneration and cannot be lower than the indicated minimum sanctions, however a judge can impose a fine of at least a half of the minimum amount provided for by the respective paragraph of article 19.28 of the Code subject to exceptional circumstances;
- Article 19.28 of the Code provides for the penalty of a fine along with the application of the additional penalty of confiscation of the object of the offence also in the cases where the object of the offence was added to the case file or accrued to the State pursuant to a court judgment. When the confiscation is impossible (for example, in the event of a promise of illegal remuneration, where there is no object of the offence as such), only an administrative fine is imposed;
- The grounds for the exemption from liability under article 19.28 of the Code are provided for by note 5 to the article***: for it to be applied, a set of actions of the organisation favouring the detection, investigation and solution of the crime should be identified. The exemption of the natural person that committed illegal acts on behalf or in the interest of the organisation from criminal liability on the grounds indicated in the note to article 291 of the Criminal Code of the Russian Federation (in Russian) does not constitute the ground for exempting the organisation from administrative liability.
The reviews of the existing case law are not released that often and are a valuable source of information for researches and law enforcement practitioners. However, the possibilities for conducting external expert analysis of case law in the field of countering corruption, also under article 19.28, are still limited.
Article 19.28 was introduced in the Code in 2008. It is justices of the peace that examine the cases of violation of this article. The relevant cases can be found in digital format on the websites of courts in the public automated system “Justice” (hereinafter, the Justice system) or on regional portals. In addition, since 2016 the General Prosecutor’s Office of the Russian Federation has been maintaining on its website the Register of legal persons held liable for administrative offences of illegal remuneration (in Russian), which also constitutes a sort of database of case law the information for which is provided by the prosecution bodies of the regions of the Russian Federation.
At the same time, the search and analysis of the case law regarding article 19.28 of the Code still presents many difficulties that stem either from the functionality of the existing databases or the completeness and accuracy of the information provided by them.
For instance, in spite of the fact that in most situations the search of the respective cases on the websites of courts in the “Justice” system can be conducted by the number of the article, whose violation constituted the subject of proceedings, the search results will not always be relevant. Human reliability is its main cause: cases are linked to the article in the search engine by the staff of judicial bodies which can either “forget” to link a certain case or link a wrong case to it in the filter. In some databases of case law (in the first place, in those that are created autonomously by regions and are not included in the Justice system) the possibility to search by article number is not provided: it is possible to find only a certain case in such databases by its number and/or the persons involved in it, but it is impossible to analyse all the cases related to article 19.28.
The incompleteness of databases is yet another problem caused by human reliability. Firstly, as already mentioned, they can simply “forget” to link a case to the filter when digitalizing its hard copy. As a consequence, it is highly likely that this case will not be included in the law enforcement statistics. A similar situation may occur if the old version of the website of a court in the Justice system (with no filters) was transformed into a new one: although courts do not seem to use the old version anymore, just two years ago they often uploaded cases in the database of the old version. The only way to search cases in such databases was by their title: it was supposed to contain the article number or the surname of the accused. In fact, however, this information was not always included in titles, cases were often sorted by weeks, and sometimes cases for certain years were not reflected: under these conditions, the search of relevant cases required a lot of time, which also did not exclude the probability that the case that was needed could not be found or went unnoticed in the database.
Secondly, the very process of digitalizing hard copies of cases has many flaws. For instance, when digitalizing cases, the factual background and the merits, as well as certain personal data (or the data considered personal by the members of the judiciary) may be excluded. As a result, it may be impossible to understand what the case was about – who paid the illegal remuneration and what its amount and aim were. In the end, it is impossible to fully analyse the existing law enforcement practices.
What is more, cases may “be lost” (or their search may be complicated) when databases are updated.
In this context, it should be noted in the first place that the Justice system was established only in 2010, which means that in principle the cases opened in accordance with article 19.28 of the Code between 2008 and 2010 are not available for search and analysis in digital format. From 2010 through 2016 (before the Register of the General Prosecutor’s Office was established) cases were to be digitalized and stored in the Justice system, but it is rather difficult to verify the accuracy of relevant information. The assumption about the incompleteness of the databases of court decisions for the indicated period is partly supported by a sample comparison of the information on the cases from the Register and the websites of courts: although the Register comprises the cases since 2014, a considerable number of cases published on the websites of courts for the years 2014 to 2015 do not appear to be included in the Register; the opposite also happens: the information on a case is present in the Register but is not published on the website of the respective court.
Cases may also “be lost” when the information of a regional court of the Russian Federation is transferred from the Justice system to a regional portal. For instance, the cases of the justices of the peace of Yamalo-Nenets Autonomous District were initially stored in the Justice system; later, the region created its own website, archiving the portal in the Justice system without transferring the cases from the “archive” to the database on the new website.
Therefore, the existing system of transfer and storage of court cases in digital format raises many questions and makes it impossible to conduct comprehensive analysis of the law enforcement practices under article 19.28 of the Code.
*Article 19.28 of the Code provides for the liability for illegal transfer, offer or promise of money, securities or other property, provision of property-related services or property rights on behalf or in the interest of an organisation or in the interest of another organisation related to it to an official, an executive of a commercial or other organisation, a foreign official or an official of a public international organisation for acting (refraining from acting) by virtue of his/her position.
**The possibility to seize the property of a legal person (or, in the absence of any property, its accounts) was introduced in Russia in 2018 (in Russian) as a provisional measure in the cases of illegal remuneration on behalf of a legal person.
***A legal person may be exempted from liability for the violation of article 19.28 of the Code if it has contributed to the detection and investigation of the offence, and/or the detection, investigation and solution of the crime related to that offence, or there was extortion against the legal person.