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Cablegate: Anti-Corruption Programs

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RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHMO #1643/01 1620728
ZNR UUUUU ZZH
R 100728Z JUN 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 8518
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 MOSCOW 001643

STATE FOR EUR/RUS

DOJ FOR OPDAT/LEHMANN, NEWCOMBE AND ALEXANDRE, OIA FOR BURKE, OCRS
FOR OHR AND OTT

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PHUM PREL RS KCRM KJUS SNAR
SUBJECT: ANTI-CORRUPTION PROGRAMS

THIS CABLE IS SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET
DISTRIBUTION

1. (SBU) Summary: In response to President MedvedevQs rhetoric about
the rule of law and anti-corruption, the EmbassyQs Law Enforcement
Section (LES) and Resident Legal Adviser (RLA) conducted two
programs last week focused on strengthening RussiaQs capacity to
combat corruption. The first, a roundtable at Moscow State
University, addressed corporate criminal liability, an important
tool in combating corruption, white-collar crime and organized
crime. The second, a training program for 70 Russian prosecutors,
focused on the skills needed to draft and argue motions in criminal
cases, with a special focus on corruption prosecutions. While the
programs advanced the ball on both issues, they also highlighted the
obstacles that Medvedev will face in combating corruption. End
Summary.

----------------------------
CORPORATE CRIMINAL LIABILITY
----------------------------

2. (SBU) Legal provisions allowing for the criminal prosecution of
corporate entities are an important component of any anti-corruption
program. For example, the UN Convention Against Corruption (UNCAC)
requires that member states pass legislation sufficient to hold
corporations liable for corruption offenses and several other
international conventions contain similar recommendations.
Moreover, certain crimes, such as foreign bribery, commercial
bribery, restraint of trade, money laundering and environmental
offenses, are committed almost exclusively by corporations, and the
absence of corporate criminal liability makes it exceedingly
difficult to prosecute such cases.

3. (SBU) Currently, Russian law provides only for administrative,
rather than criminal, liability for corporations, a remedy which
appears completely inadequate. For example, punishments are limited
to small fines, insufficient to deter businesses from potentially
lucrative wrongdoing. Moreover, the absence of criminal liability
means that almost no criminal cases are brought under RussiaQs
environmental and restraint of trade statutes and hampers IPR
enforcement, as many pirate organizations, such as the website
www.allofmp3.com, operate through corporate entities. (In the U.S.,
by contrast, corporations are regularly prosecuted for all of these
offenses. More importantly, knowing that a violation could result
in an indictment, most companies have implemented rigorous internal
compliance programs to prevent violations in the first place.)


4. (SBU) To promote discussion of a possible amendment to Russian
law, on May 30, LES held a seminar at Moscow State University for
approximately 100 Russian criminal law scholars and practitioners.
Anatoly Naumov, one of RussiaQs most famous criminal law scholars,
began the program by discussing the history of debates in Russia
over this subject and explained that a similar proposal in the
1990Qs had been defeated by traditionalists who argued that a
corporation cannot legally form criminal intent (a view that was
abandoned in the U.S. and England in the middle of the 19th
Century.) (N.B. A senior legal advisor in the Presidential
Administration told RLA that, in fact, the proposal had been
defeated because too many Duma Deputies use corporations to hide
assets and launder money and could not risk subjecting them to
criminal prosecution).

5. (SBU) After Naumov, U.S. representatives addressed the seminar.
RLA spoke about the history of corporate criminal liability in the
US. Ben Campbell, US Attorney for the Eastern District of New York,
and one of the lead prosecutors from the Enron case, spoke about
current US practice and new DOJ guidelines designed to prevent
abuse. Adam Safwat, a prosecutor with DOJQs Fraud Section and one of
DOJQs leading experts on international bribery spoke about corporate
criminal liability in Europe. Finally, a representative of the
Business Software Alliance (BSA) spoke about the importance of
corporate criminal liability in combating intellectual property
violations and discussed recent legislative amendments in Latvia.
Other speakers discussed corporate criminal liability in France and
Lithuania.

6. (SBU) These presentations were followed by an open discussion in
which Russian experts argued vehemently among themselves about
whether corporate criminal liability could be introduced in Russia.
Some took the position that such a revision is long overdue and
resolved to draft proposed amendments and submit them to the Duma.
Others passionately supported the traditional view that a
corporation cannot form criminal intent. Still others argued that
the structure of the Russian court system, in which cases involving
corporations are heard in the commercial arbitrazh courts, cannot

MOSCOW 00001643 002 OF 003


accommodate criminal cases against corporations and pointed out that
such an innovation would require a major revision of the court
system. On the whole, the discussion highlighted the extent to
which formalistic jurisprudence and complicated court structures
will continue to pose an obstacle to serious legal reform.

----------------------
PROSECUTORIAL TRAINING
----------------------

7. (SBU) Immediately after the corporate criminal liability program,
RLA conducted a week long training program for 70 Russian
prosecutors at the St. Petersburg Procuracy Training Institute. The
program focused on drafting and arguing motions in criminal cases, a
task which Russian prosecutors often perform extremely poorly, doing
little more than ritualistically invoking statutory language with
little supporting argumentation or evidence.

8. (SBU) The program was significant in that it brought together a
number of top U.S. and Russian prosecutors as instructors. U.S.
instructors included the Chief of the Securities Fraud Unit of the
New Jersey U.S. AttorneyQs Office; a New York prosecutor currently
prosecuting a mob boss who solicited the murders of a federal judge
and a federal prosecutor; a distinguished Wisconsin prosecutor with
thirty years experience; and a federal magistrate judge with
extensive federal prosecutorial experience.

9. (SBU) Russian instructors included the head of the General
Procuracy Public Prosecution Section; one of the prosecutors from
the famous Tri Kita (Three Whales) case, a major corruption and
smuggling case which has figured prominently in the siloviki wars;
a prosecutor from the so-called Werewolves in Uniform case, which
involved the prosecution of police officers who were operating a
racketeering and extortion gang within the police; and a prosecutor
who recently convicted several members of a notorious murder for
hire gang. (In other joint training programs, Russian instructors
have usually been academic lecturers, rather than prosecuting
prosecutors, and as far as we are aware, this is the first time that
so many high profile Russian prosecutors have participated in any
prosecutorial training program.)

10. (SBU) Following a format that has proven successful in other LES
training programs, Russian and U.S. instructors lectured in pairs on
various skills, included drafting written motions, arguing motions
in court and drafting and arguing appeals. These lectures were
followed by demonstrations in which instructors simulated situations
drawn from real cases to illustrate how they would argue a
particular motion. The demonstrations were followed by work in
breakout groups in which students practiced the relevant skills and
received critique from both Russian and U.S. instructors and other
students. The program concluded with a mock proceeding in which
students played the prosecutors, defense lawyers and witnesses. A
practicing judge from St. Petersburg District Court presided.

11. (SBU) Throughout, the program emphasized the skills needed to
prosecute corruption cases, as most of the case demonstrations drew
on situations from real corruption and white collar cases and the
mock trial drew on a real case involving the prosecution of two
Customs officers who extorted a bribe from a businessman in order to
let a shipment of furniture clear Customs. The program proved highly
successful. Students who, at the beginning of the week, appeared
nervous and inarticulate speaking in court situations, were, by the
end of the week, arguing motions forcefully and persuasively.
Student reviews were uniformly enthusiastic and the General
Procuracy has asked RLA to do a repeat program in Irkutsk for
prosecutors from Siberia and the Far East.

----------------
AN UPHILL BATTLE
----------------

12. (SBU) Although the program was successful and the Procuracy
appears to committed to continuing to work with us in this area, it
also contained disturbing indications of just how widespread
corruption is in the Russian legal system and the obstacles that
Medvedev will have to overcome in combating corruption. For
example, one of the Russian prosecutors boasted to RLA about how he
collects blackmail material on judges to coerce them into reversing
what he termed illegal decisions. (Although he claimed this was a
necessary anti-corruption measure, it is clearly illegal and
contains enormous potential for abuse. Moreover, his claims do not
appear to be idle. In one academic survey, 11% of Russian judges
said that they had been pressured to reach certain decisions in
cases. 75% of them said that the pressure had come from
prosecutors.) He also openly admitted to Qmaking problemsQ for
witnesses who try to change their testimony at trial.

MOSCOW 00001643 003 OF 003

13. (SBU) Similarly, in one of the breakout groups, a Russian
prosecutor proposed (only half-jokingly) altering a document in
response to a defense motion to exclude it, a comment which prompted
a question to RLA as to whether American prosecutors QalsoQ engage
in this practice. In the mock trial, one student created a scenario
in which the defendant offered fabricated evidence, which drew
applause from the audience members, suggesting that the practice is
quite common. (This reaction appears to be justified. According to
the survey cited above, 30% of Russian defense lawyers admitted to
knowingly presenting false information in court, while 50% said that
they thought it was acceptable to offer evidence of dubious origin.)

RUSSELL

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