Russia’s hosting a great party–everyone’s invited. Who will be able to survive the hangover from Russia’s samogon (moonshine)?
U.S.-based Panalpina, Inc. and its parent Panalpina World Transport (Holding) Ltd., a Swiss freight forwarding company with 10 offices across Russia, were charged with FCPA violations that occurred in Russia. The charges were for both conspiring to violate and violating the anti-bribery and books and records provisions of the FCPA.
According to the DOJ’s Release, the charges against Panalpina, Inc. arose from thousands of alleged bribes totaling $27 million paid to obtain customs clearance in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan from 2002-2007. The DOJ and Panalpina World Transport agreed to resolve the charges by entering into a deferred prosecution agreement and to pay a combined fine of USD70.56 million.
According to Derek Andersen’s Moscow Times article, it is unclear whether Panalpina will face charges in Russia. Kirill Kabanov, chairman of the National Anti-Corruption Committee, told The Moscow Times that no Western company has ever been charged in Russia with corruption. Kabanov also stated:
“What’s the real risk of corruption? It’s facing charges in the United States! Western companies face the choice of playing by the rules or by playing on the same level as non-Western companies that do not hesitate to use corrupt practices to progress on the market.”
So it seems that the Russian corruption party is not over for everyone…yet. One of the primary complaints following the passage of the FCPA was that US companies were not on a level playing field in comparison to other businesses operating in the international arena. What then will it take to get everyone on equal footing? Richard Alderman, director of the Serious Fraud Office, believes that the UK Bribery Act will expand jurisdiction to foreign companies that operate corruptly in Russia and have some nexus to the UK. Now more than ever, more Russian companies are choosing to list their shares in London and are doing a significant portion of their business in the UK. Time will tell whether the UK Bribery Act will fill in the current potholes in the anticorruption road.
Download the SEC’s Complaint against Panalpina (PDF).