Bbabo NET

Economics & Business News

Russia - Lawyers recommend businesses to abandon the practice of kickbacks

Russia (bbabo.net), - Experts from the Russian Bar Association have warned that companies that are addicted to kickbacks while fulfilling government contracts risk going bankrupt. And their leadership can go to trial.

Quite often, a company agrees to pay a kickback in order to receive a large government order, lawyers say. But this is a risky practice. As a result, the company may not have enough funds to complete the order on time, and this can lead to serious financial and legal problems.

"If a company undertakes the construction of a strategically important facility, but fails to cope with the task, for example, does not hand over the facility on time, then it may not only lose the rest of the payment, but also pay a substantial penalty," says a member of the commission of the Association of Lawyers of Russia on legal problems of insolvency " bankruptcy" Ilya Sofonov. - Following (first of all, this concerns state contracts) there is always a criminal case against the leadership."

Among other things, the member of the AJUR commission continues, a contracting company often has a "hole" in the budget, called a cash gap. "As we see from our experience, in order to 'plug' this hole, it is not uncommon for construction companies to kind of 'borrow' they have already received from another project." And in order to patch up the second "gap", which will inevitably appear in the second project, the company gets into the budget of the third project, and this goes on ad infinitum. “In our experience, the company eventually fails to cope, this cash gap continues to “walk” on the company’s budget,” says Ilya Sofonov. the company simply cannot withstand the creditor burden and slides into bankruptcy."

In turn, the partner of the First Legal Network, Pavel Kurlat, emphasizes that if an organization starts playing such unscrupulous games, then in the end it loses. “You need to understand that with a significant amount of so-called kickbacks, this directly affects the economic efficiency of a particular transaction,” he says. termination of the contract and, say, the recovery of damages that may lead to the bankruptcy of this contractor. In any case, this is a risky game."

Moreover, such contracts contain conditions on a fixed cost of services and do not imply the possibility of their increase in case of any circumstances. “Roughly speaking, an organization must calculate its strength when entering a project and understand that if you conclude such an agreement and still take the risk of a significant increase in the price of the same materials, plus you pay a kickback, then the risks increase significantly,” said Pavel Kurlat.

Russia - Lawyers recommend businesses to abandon the practice of kickbacks