Countering corruption in the private sector

 
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Anti-corruption in the private sector falls on the shoulders of the company's management, but in certain cases it also attracts the attention of law enforcement agencies. This type of crime and delinquency brings more harm to the companies themselves, rather than to society and the state, but creates an atmosphere of permissiveness that adversely affects society as a whole. In addition, corruption in the form of tribute, patronage, kickbacks raises the cost of goods and services, which hinders the development of the economy. In the fight against corruption, various mechanisms are used - from criminal law to technical ones.

Forms of corruption in the private sector

The phrase “private sector” is not a civil law concept, it practically does not occur in international acts related to combating corruption. It can be attributed on an equal footing:

  • enterprises with a small share of state participation;
  • private companies;
  • individual entrepreneurs;
  • public organizations.

All of them do not directly function in the public legal space, and corruption in them often remains a latent phenomenon.

Identifying corruption in the private sector often falls on the shoulders of third parties who are not employees of the victimized company. So, in one of the recent cases, when the chairman of a garage cooperative was sentenced to a fine for falsifying an entry in the work book, the fact of the violation was established by a bank employee, to whom the person who bribed the chairman applied for a loan.

In the event that corruption activities go beyond the framework of private sector organizations and infringe on the foundations of public law and order, for example, in the case of bribing an employee of a tax authority or bribery of officials of state and municipal bodies, these crimes become an infringement on the foundations of public administration and are punished more severely.

The most frequent manifestation of corruption in the private sector is considered to be commercial bribery (Article 204 of the Criminal Code of the Russian Federation), the subject of which is an official who performs managerial functions of any kind, but the legislator also identifies other forms of criminal behavior.

The legal basis for combating them is the Criminal Code of the Russian Federation, the Law "On Combating Corruption", the Code of Administrative Offenses of the Russian Federation. The main share of offenses falls on commercial bribery, but along with it can be distinguished:

  • illegal remuneration on behalf of a legal entity (Article 19.28 of the Administrative Code of the Russian Federation);
  • petty theft (Article 7.27 of the Code of Administrative Offenses of the Russian Federation).

Both of these offenses can become independent grounds for prosecution. The punishment for them is not large, but the very fact of bringing to administrative responsibility under these articles will significantly complicate the further employment of the guilty person. Sometimes corruption in the private sector also manifests itself in the form of fraud (Art. 59 of the Criminal Code of the Russian Federation), for example, when one or more employees of a company receive benefits through abuse of the trust of top management, while sharing part of the income with a higher line manager.

The damage from private sector corruption

Considering the damage caused by corruption in the private sector, it can be revealed that not only companies and their shareholders suffer from it, but also counterparties and customers. The following types of damage take place:

  • the quality of performance of individual operations, performance of works, services, manufacturing of products decreases. As applied, for example, to a construction contract, poor-quality performance of work in the event of a building collapse can cause harm to the life and health of citizens;
  • the quality of corporate governance is deteriorating, which negatively affects the company's reputation and its investment attractiveness;
  • declines in income received by shareholders and owners of companies;
  • the number of the company's counterparties is decreasing, including only those organizations in which persons prone to corruption are employed. This not only negatively affects the business climate, but also undermines the foundations of free competition;
  • when conducting tenders and purchases, only corrupt bids win, which leads to negative selection in the markets for goods, works, services and to a general decrease in their quality;
  • corruption requires the creation and development of certain channels for the transfer of funds, which supports the existence of infrastructure - companies that cash out funds, fly-by-night firms, banks operating without a license, channels for withdrawing funds abroad. This same infrastructure is easily used for criminal and terrorist activities.

This damage on a national scale is quite difficult to assess, but observing the activities of law enforcement agencies and regulators to combat corruption in the private sector, we can conclude that the seriousness of the problem is obvious at the state level. It slows down the development of the economy and in some cases directly negatively affects the state administration itself.

Countermeasures

When developing a system of anti-corruption measures in a company, its manager and shareholders should rely on international experience and domestic developments. The manager and shareholders must develop and implement one of the proven anti-corruption programs. Its basis will be the attitude of both the leadership and the team to it, the most important elements are:

  • its support by the Board of Directors;
  • decisions within the framework of the program must be formalized, i.e. supported by the decisions of the supreme governing bodies, standards and methods adopted at their level to reduce the influence of an individual on a particular action or document;
  • availability of operational communication between employees, security services and company management;
  • the presence of a collegial body, which is entrusted with dealing with difficult situations and to which one can appeal in case of a conflict of interest.

Organizational

Organizational measures should be the backbone of any anti-corruption policy. They are divided into three groups:

  • documentary;
  • structural;
  • operational.

Documentary measures include the development of internal standards and methodologies that make it difficult to commit a corruption offense. These are the Codes of Corporate Ethics, the Regulations on Conflict of Interests and the Procedure for its Consideration, Regulations on the Corruption Hotline, anti-corruption clauses in contracts. Within the same framework, there are tender procurement procedures that exclude an arbitrary choice of contractors, constant analysis of business processes in order to identify corruption-prone points, creating the need for a written justification for the choice of a particular contractor.

Structural measures include the creation of units in the organization that are solely responsible for the prevention of corruption in the private sector or have this function as their main function. These units include:

  • Economic Security Service.
  • Internal audit service.
  • Internal Control Service.

The management of such divisions should be subordinate to both the executive body and shareholders, and also be able to provide reporting on both lines. The provisions on these organizations should provide for the obligation to inform the law enforcement agencies about the violations identified if they have signs of corpus delicti under Art. 24 of the Criminal Code of the Russian Federation.

Operational measures fall entirely on the shoulders of the economic security service and human resources departments. They consist in the need to check the personnel when hiring, constantly informing them about the inadmissibility of corruption manifestations, sometimes conducting selective control of certain transactions, for example, making test purchases. Operational measures can be applied only on condition that constitutional human rights are observed, and that the use of control methods prohibited by law is prohibited.

Technical

The security system is impossible without the competent use of software and other technical means. Any corruption crime is based on the misuse of the company's technical equipment. For the production of counterfeit documents, printers and copiers are used, for conspiracy, the premises of the organization are often used without any hesitation. E-mail and messengers allow online discussion of the details of an impending crime. Making it difficult to access these funds will help protect the organization from some of the corruption offenses. The technical measures will be:

  • equipping the company's premises with video surveillance and sound recording devices;
  • control of access of employees of different levels to various arrays of information, databases;
  • tracking in a periodic mode who and what information resources and documents used, requesting an explanation of the purpose of using the information;
  • storage of the most important documents in secure safes;
  • use of “secret”, “commercial secret” labels on documents.

Among the software tools it is necessary to name electronic document management systems, DLP systems and SIEM systems. They will allow you to exclude illegal access to information, redirecting it to external sources. They will also allow you to track the formation of tender documents, find out who and for what purpose made changes to it.

Criminal law

Companies can use all the resources provided by law enforcement to combat bribery. As soon as the economic security services have suspicions about the possibility of committing an act of this kind, there is the right to file an application with the inquiry authorities. They have the right to carry out a set of measures in the field of operational-search activities, which will help bring the offender to justice.

In addition to measures to detect and suppress corruption, we must not forget about the means designed to reduce the damage from corruption crimes. This includes compensation for damages by filing civil claims in criminal cases, and termination of transactions based on corruption crimes, for example, commercial bribery. The reasons for the recognition by the court of such transactions may be both misleading one of the parties, and a change in the circumstances by which the party does not receive what it could count on when concluding the transaction.

Modern researchers of such a phenomenon as corruption in the commercial sphere note that the number of revealed facts is decreasing, and the coefficient of bringing the perpetrators to justice is also decreasing. This may indicate an improvement in the quality of control over this phenomenon on the part of the management of companies, and their greater concern for their reputation, and simply a significant reduction in the shadow turnover of cash. The legislation provides organizations with a number of measures and methods to combat corruption in the private sector, and companies, focused on improving the quality of their services, to consolidate their market share, seek to get rid of corrupt officials in their ranks. There is a certainty that commercial bribery and similar offenses will soon cease to be a daily occurrence, becoming a rudiment of the old system.

14.12.2020