CORRUPTION WATCH: Medvedev raises fight against graft to new level with national strategy

By bne IntelliNews April 12, 2010

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The Kremlin took the growing campaign to tackle graft to a new level on Tuesday, April 6 by signing off on a draft of the long-awaited national strategy to combat corruption.

Russian President Dmitry Medvedev told a meeting of the state's Anti-Corruption Council that the strategy is "a basic long-term agreement" that sketches out the government's strategy for reducing corruption, reported Interfax.

Endemic corruption has become a major drag on growth and costs the Russian economy $300bn a year, by some estimates, or shaves some 2% off GDP growth a year.

Medvedev has made the drive to stamp out bribe taking and giving one of the main themes of his presidency so far. Among the very first things he did on taking office was to sign a decree on May 19, 2008 to establish the Anti-Corruption Council, followed by a national anti-corruption plan in late July 2008.

Since then, senior officials and state bureaucrats have been fired or jailed almost on a daily basis. More recently, a reform of the police force was untaken, although the Interior Ministry which is responsible for drawing up new legislation to replace the outdated 1991 police law has been dragging its feet.

The federal law on the prevention of corruption was adopted in 2008 and the federal laws outlining the procedures for conducting anti-corruption tests were passed in 2009. And anti-corruption plans have now been adopted in all of Russia's regions, which have also begun to introduce local systems to fight this cancer on the society and economy.

Probably most importantly, Medvedev's campaign has brought the issue into the open and the state is discussing in public not only the problem of corruption, but identifying which services suffer most from it and numbers to show just how big a problem it has become.

Medvedev said that in the first two years of the campaign Russian law enforcement agencies have uncovered over 260,000 graft cases, which is an increase of a quarter over the estimated levels in 2008, while the level of bribe taking is up 5% between 2008 and 2009.

The president has introduced a raft of measures to make it harder to bribe. Amongst those is a proposal to introduce mandatory international financial accounting standards (IFRS) on all companies to fight against a common scam where company owners pay bribes to have their companies undervalued for tax reasons - a major problem, according to Medvedev. "This is a problem that needs to be dealt with. The whole world found itself in a predicament as a result of evaluation problems, which arose with the largest appraisal companies in the most developed economies. So we should keep an eye on it, especially because corruption is so clearly present here," Medvedev was quoted by Interfax as saying. However, he rejected the idea of cracking down on offshore zones as impractical.

Public declarations

Medvedev also proposes to increase the transparency of the system and signed off on a decree to force members of the presidential administration and government to declare their income and net worth. "Increased public attention will be given to information about income and property that are now being submitted by all public servants and officials, as required by the decrees signed last year. This year income and property statements will also be submitted by the administration officials and are due to be published soon. The same applies to all other public servants who are required by the presidential decrees to submit, and part of them to publish, such data," Medvedev said. "The whole country will be watching this process, understandably driven by more than mere curiosity. I see it as an important, though, of course, not universal, way of fighting corruption."

And Medvedev intends to increase the fines for those caught accepting bribes by imposing a fine that is a multiple of the amount taken, although he didn't put a number on just how big this multiple would be.

More radically, he called on the general public to get involved by actively using the internet to out corrupt officials, by posting videos and other evidence online. There have been several cases recently when officials and rich people were embarrassed by vocal protests online that has resulted in government action. "We need to think about using the internet whenever possible," Medvedev said. "There are a lot of capabilities for posting programmes, videos and information on public bodies' websites and websites of public organizations combating corruption."

Several of the new laws are specifically aimed at improving the governance of companies for the benefit of shareholders and to crack down on officials aiding companies trying to cheat the system. At the same time, a set of laws to prevent corporate raiding will be introduced. Laws covering forgery, falsifying company meeting results, doctoring official documents and unauthorised entries to documents like company registers will also be beefed up and carry prison sentences of two to three years.

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