– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
By Jason Bush
MOSCOW, April 16 (Reuters Breakingviews) – Hewlett-Packard is under investigation for paying bribes in Russia. It’s the latest sign that western regulators are paying close attention to Russian business practices. The resulting reputational and legal risk may now be the biggest worry for foreign companies in Russia.
German prosecutors suspect former HP managers of paying 8 million euros in kick-backs. Ironically, the payments concern a 35 million euro contract to supply Russia’s Prosecutor General’s Office — the very body charged with fighting corruption.
The HP case is the third major corruption scandal involving a western multinational in Russia in the space of two months. In February, IKEA revealed that it had sacked the head of its Russian operation for condoning bribery. And earlier this month, Daimler paid $185 million to settle a lawsuit brought by the U.S. Justice Department for violation of U.S. anti-bribery laws in several countries, including Russia.
It isn’t news that Russia is deeply corrupt. The country regularly scores dismally on international transparency rankings. But high-profile cases involving western corporations have been rare. That helped foster the impression that Russia’s corruption, whilst an irritating impediment to business, was manageable.