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Friday, July 13, 2007

Annals of Russian Corruption

Writing in the Moscow Times, columnist Georgy Bovt further exposes the horrors of Russia's fundamentally corrupt society. Russia has the worst of both worlds; ruled by a failed KGB spy it has lost its liberty, yet it has not gained freedom from criminality. It's living a nightmare.

The event that most caught my attention in in the news the other day was the arrest of a top municipal official in the small town of Solnechnogorsk near Moscow. This position is roughly equivalent to serving as the head of a village. And this "village head" was arrested on suspicion of taking a $200,000 bribe for granting permission for the construction of a single apartment building in his jurisdiction.

In the West, a bribe of this scale would qualify as a major corruption scandal. These scandals usually attract a lot of attention, triggering various investigations. Not only is the individual crime directly addressed, but Western countries take a close look at whether there was a systemic failure in the way government institutions regulate, punish and deter malfeasance.

But here in Russia, this bribe case resulted in only a terse and dry announcement in the news as if it were some trivial and banal matter. And to be perfectly fair, what is a meager $200,000 bribe when such building permits in Moscow go for $1 million at the very least? In fact, the scale of bribe-taking in Russia has reached such levels that nobody is shocked anymore by news of yet another case of corruption.

The town of Solnechnogorosk, 65 kilometers northwest of Moscow, is by no means a depressed or dilapidated town. You can see the construction of modern apartment buildings, supermarkets, offices and various industrial buildings. Of course, you could console yourself with the thought that bribes are not required for every construction project, but this would be naive. As anyone who has ever tried to build something can tell you, bribery is standard practice in Russia. It can be direct or indirect, in cash or services. Whatever the form of the bribe, bureaucrats always profit the most.

Corruption is so pervasive that it has long been viewed as a banality of Russian life. We are no longer indignant when we hear about corruption because we have gotten so used to it. It has become the norm both for higher ups and for those of lower rank. The only difference is the scale. Of course, Russians "notice" the corruption in the country and, in theory, they are opposed to it (and remain opposed until they become the focus of a corruption allegation). According to a recent survey conducted by the Levada Center, 43 percent of respondents named corruption as the main problem in Russia, and another 29 percent named "pressure from officials and bureaucrats."

This is nothing new. Although this problem has been around and has been publicly acknowledged for years, President Vladimir Putin's war on corruption has not improved the situation. The number of people accepting illicit payments and the size of the bribes have increased significantly. From an informal polling of business acquaintances, I learned that the usual kickback during the years under President Boris Yeltsin's tenure was from 20 percent to 30 percent, but that it has risen to 60 percent to 70 percent and higher today. State-owned companies and organizations close to administration siloviki are especially burdened by the problem.

Understandably, respondents usually named the institutions with which they had the most frequent dealings as being "among the most corrupt." For this reason the Health and Social Development Ministry, the Interior Ministry and the Finance Ministry led the list. But various State Duma deputies, judges and education officials were also mentioned.

Respondents did, however, note improvements in a range of areas. A Levada Center survey conducted back in the spring of this year showed honesty on the rise among the traffic police. In 2005, motorists reported paying bribes in 78 percent of roadside spot inspections, while in 2007, the number dropped to 57 percent. It would also seem that the number of bribes has decreased in connection with the issuance of driver's licenses and vehicle technical inspection certificates.

Examining the situation more closely, however, it is clear that a side business in technical inspections has sprung up in cahoots with the police. Now, instead of a traffic police officer on the street pocketing the bribe, motorists pay the same amount to firm closely connected with the traffic police; this private company promises to "help" speed up the processing of necessary documents. The issuance of driver's licenses is carried out in close "cooperation" with driving schools. Moreover, private organizations linked to every auto dealer act as middlemen in issuing license plates and official vehicle passports.

Within the last few years, "auxiliary" service firms that work with every state institution have popped up everywhere. "Express" and "simplified" ways to process required paperwork have become ubiquitous -- and always for a fee. The average Russian has become accustomed long ago to looking for the simplest and quickest way to get around bureaucratic obstacles rather than trying to fulfill formal legal requirements.

The result is that it has become customary to "thank" others for their services. Money is paid not as fines for violations of the law, but to grease the palms of bureaucrats to induce them to simply do what they are supposed to do as an official part of their job -- issue the necessary stamps, certificates or documents. Even if the person doesn't agree to pay the bribe, the bureaucrat can still find a way of squeezing the same amount of money from you by levying a fine for some kind of violation of a rule. Or the bureaucrat can act as a roadblock by simply refusing to carry out his normal duties as required by his job function and by the law.

The same practice applies to university professors, who "allow" their students to pass their exams; to the bureaucrats who issue residency registration documents; or to the government property registration department when a property owner applies for his ownership documents. This is also how the Federal Tax Service "helps" private firms to reduce their clients' tax obligations.

An acquaintance in business told of the following typical experience: After Federal Tax Service inspectors completed a review of his firm, they announced that no violations were found -- a rarity to say the least. The ranking officer then took the businessman aside and said, "That will cost $10,000."

"What for?" the perplexed businessman replied. "You just said there were no violations."

"You're paying for the fact that we didn't find any," the officer matter-of-factly responded. "Had we found violations, the fee would have reached $50,000." He then kindly gave the businessman a few pointers on how to fill out the necessary tax-reporting forms.

Is this corruption or simply the typical way of life in Russia, where the distinction between legality and illegality has been almost entirely erased?

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