Russia’s corruption dance

Zygmunt Dzieciolowski
14 June 2006

Twenty years of travelling to and around Russia have given me plenty of thoughts to entertain myself with on the flights into Moscow. A favourite game is to try to think of the most appalling examples of corruption I have come across.

Back in 1997 I went to a media briefing held by the then deputy prime minister, Anatoly Chubais, the father of Russian privatisation who now runs the electricity monopoly RAO-UES. Chubais had a relatively clean reputation, but a few days before this particular briefing his political opponents had uncovered sensational news.

Chubais and four of his friends had just managed to pocket $400,000 between them on a book on the history of Russian privatisation. On the surface this seemed an obvious kickback, probably from those who had benefited from his decisions. The book itself was never written, never published, and the money was paid by an obscure company registered in Switzerland.

After the briefing one of his closest aides gave me a different story. "This is just black propaganda", the man maintained. When I pressed him, he changed the defence. "Okay, even if they did take the money, they are young men who work around the clock. They have wives, they need vacations, or sometimes to buy decent clothes. How could they afford that on government wages?"

He clearly thought it was an utterly reasonable defence.

Zygmunt Dzieciolowski is a Polish journalist and writer who has reported on Russia for leading German, Swiss and Polish newspapers since 1989. He is the author of the book Planet Russia, published in Poland in 2005.

Also by Zygmunt Dzieciolowski on openDemocracy:

"Mikhail Khodorkovsky's shadow" (3 April 2006)

"Russia: racism on the rise" (26 April 2006)

In the mid-1990s, also during the Yeltsin years, a friend of mine who was Moscow correspondent for a small Swiss newspaper had to get his official press accreditation extended. That routinely entailed a wait of two months.

The press-centre official offered to help. "You shouldn't wait so long", he suggested over a brandy at the centre's bar. "Let me see what can be done." After twenty minutes in his office he returned with a new press ID. But, he said, there was a slight problem. He had a $50 note that was rather old, worn out, and difficult to exchange into roubles. Did my friend have a newer one in his wallet? They exchanged notes under the table as if in a spy movie.

"And no bonus for me?" the Russian asked, the disappointment obvious in his voice after seeing the Swiss journalist's wallet. An extra $100 was quickly passed under the table.

More recently a friend in St Petersburg who edits the local opposition newspaper came to Moscow to interview a former government official. They met in the city centre, then travelled to his suburban house on the Rublyovskoye Highway, the most prestigious address in the city. My friend was shocked at the oligarchic opulence of the neighbouring residence. The owner was one of the former heads of the Federal Privatisation Agency. He had never worked in the private sector, and his official salary would not have given him the slightest chance to build such an ostentatious palace.

A land of favours

Over the last twenty years Russia has seen some extremely serious corruption cases. In the mid-1990s, multimillion dollar companies were sold for a song to oligarchs with political connections. The seat of Russian power (the Kremlin) was itself renovated by Mabetex, an obscure Swiss company headed by an Albanian businessman. The Russian media reported that the contract was secured through handsome payments to those who arranged it.

But corruption did not end when the sun set on Yeltsin's time in the Kremlin. It still blossoms today.

The owner of the London soccer club Chelsea, Roman Abramovich, sold his Sibneft oil company in October 2005 for nearly $14 billion. The buyer was Gazprom, the energy giant controlled by the Russian Federation. The Russian Federation had originally sold the oil company to Abramovich and his ex-business partner Boris Berezovsky for only $130 million. Most Russians have no doubt that those who undersold Sibneft managed to cash in at some point on their own generosity.

Russia is all about corruption. It is a land of kickbacks and bribes, petty ones and big. Traffic policemen pocket most of their money from motorists initially caught speeding or parking illegally. A job in a customs office is considered a plum post, and because it pays so well a payment is often needed just to secure it.

Places at the best universities are easier to get if the students have already ordered private lessons at exorbitant prices from lecturers who in turn are especially lenient during entry examinations. The parents of fearful young Russian army conscripts know very well that the best way of avoiding the draft is to pay a bribe to the regional military authorities.

My Russian friends always burst out laughing when I relate the story of Pawel Piskorski. He is a member of the European parliament and a former (1999-2002) mayor of the Polish capital, Warsaw. Piskorski was recently expelled from his party, Platforma Obywatelska (Civic Platform) after being unable to explain how he financed buying a piece of northern Polish forest. No such scruples exist in the Russian parliament.

Deputies introduce changes to laws, block laws, propose new ones, all to protect whoever is helping them in turn. If they aspire to higher office they know that that too will cost them.

Corruption in post-Yeltsin Russia may actually have increased, say experts from Moscow's Indem think-tank. Its 2005 report estimated that Russians spend more than $3 billion annually in kickbacks and bribes in everyday situations alone. Indem's figures for business corruption are even more shocking. Since 2001, it says this has grown by at least 800%, costing the national economy $300 billion. Transparency International puts Russia 126th on its corruption list, alongside Sierra Leone and Niger.

Also in openDemocracy:

Alena Ledeneva, " How Russia really works " (16 January 2002)

The politics of anti-corruption

In his six years in office, President Vladimir Putin has regularly declared his willingness to fight corruption. The subject was a major theme of his "state of the nation" address in May 2006. His critics say he only pays lip service to the issue. Indem experts argue that the increase in corruption under Putin is due to the undemocratic changes he has brought in. Courts depend on political power, the media is under the Kremlin's thumb, and NGOs are under extreme pressure. In Putin's Russia there is less and less room for anything that could expand public transparency.

The proposed clampdown in Putin's new anti-corruption campaign is, he says, extremely serious: "Any official must know that the state is not going to ignore any ill-gotten gains." Several high-ranking officials from the FSB security service and the head of the customs authority, Alexander Zherekov, have been fired and/or arrested. Some members of the parliament's upper chamber may also lose their seats because of corruption.

"The war on corruption has already yielded some results, but it isn't over yet", Putin said during a recent television interview from the seaside resort of Sochi. Putin's campaign was immediately supported by the prosecutor-general, Dimitri Ustinov, who made a public promise to open "new major cases" against corrupt officials. Instead, on 2 June, Ustinov was himself sacked.

Some Putin supporters say he is looking to cast an attractive gloss over the later phase of his presidency. Others, including Stanislav Belkovsky, the director of the independent think-tank the National Strategy Centre, have no such illusions. Belkovsky is better able than most to assess the currents of influence at the head of the Russian state; after all, it was he, as far back as early 2003, who predicted the earthquake that would shake Russia over Yukos and Mikhail Khodorkovsky. For today's protagonists of "anti-corruption", he says, the latest purges mark the beginning of the political campaigning season. In 2007 Russia elects a new parliament; in 2008 it elects a new president.

Belkovsky believes that the flurry of activity over the corruption issue reflects the growing conflict between different Kremlin clans that are jostling for position over the succession to Putin. The contest is delicately poised: the huge amounts of money coming through the customs inspectorate will now be directly controlled by Vladimir Putin and Igor Sechin, his administration's influential deputy director; at the same time, Putin's clan has been weakened by the dismissal of his close ally, Dimitri Ustinov.

There is a fly in this calculation too. An opinion poll in early June suggests that a majority of Russians would prefer the president to run for a third term. It might have been guaranteed to receive both quiet satisfaction and cool calculation in the Kremlin. Might it be a neat way to resolve the argument over Russia's short - and medium - term political future if the successor to Vladimir Putin were to be … Vladimir Putin?

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