CORRUPTION WATCH: Russia's bribe size up 33-fold since 2008

By bne IntelliNews September 7, 2012

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The size of the average bribe in Russia has increased 33-fold since Dmitry Medvedev launched his anti-corruption drive in 2008 following his election as president that year.

Bad news? Not necessarily. While the campaign has not reduced the level of corruption, which is endemic, it has clearly raised the risk of taking a bribe and - ironically - market forces are at work: just how much the risks have increased is clear to be seen in the cost of a bribe now.

"Corruption has permeated the country from top to bottom: From the highest public officials to the TSZh (homeowner's associations)," the chairman of the Russian Association of Lawyers For Human Rights, Yevgeniy Arkhipov, summarized the results of the four-year struggle.

Russia's nationwide anti-corruption community outreach office, Clean Hands, which is part of the Russian Association of Lawyers For Human Rights, published its fifth report on corruption in the country at the start of September and found the average bribe has increased from RUB9,000 to RUB300,000 ($300 to $10,000) between 2008 and 2012, reports Kommersant.

The average amount of a bribe differ by regions: in the Moscow Oblast the indicator has increased five-fold to reach RUB395,000, while in Tatarstan it has been cut in half. Moscow City generates the most complaints for the Clean Hands office with Maritime Kray and Moscow Oblast in second and third place.

Steps

Medvedev launched Russia's version of a "Clean Hands" anti-graft drive at the end of 2008, starting with a federal anti-corruption law that dramatically increased the punishments for bribe-taking.

The next major reform came in 2010 when the Interior Ministry was shaken up. The police force has also been reorganised, although less has been done here, as the Kremlin wants to make sure the police remain loyal in the face of rising public protests.

The size of the shadow economy has also increased, the report claims, from 35% of GDP in 2008 to 52.6% now, although part of this growth is connected to the economic slowdown: in difficult economic times small companies start cheating on their taxes as a survival mechanism. While this is a form of corruption and also involves bribe-paying, the root cause is external and in theory the trend will reverse during an economic pick-up without the government having to do more than enforce the current rules.

However, the conclusion of the report was upbeat, with the authors talking about a "corruption bottom" in Russia. In the first phase of an anti-corruption drive, the level of corruption stays the same, but the costs go up. In the second phase, about to begin, the anti-corruption measures begin to bite and the level of corruption starts to fall.

For its part, the Kremlin shows no sign of letting up its push to do something about graft and since the start of this year has begun to institutionalise the anti-corruption effort. The declaration of income of Duma deputies (and their families) rule has been extended to cover all civil servants and a new rule imposed where civil servants have to declare any purchase worth the equivalent of three-times their annual income or face confiscation or jail. At the corporate level, state-owned companies are now banned from subcontracting work to any company where they cannot identify the ultimate beneficial owner of the company. In the utilities sector - which president Vladimir Putin singled out as amongst the most corrupt in the country in December - some companies have already cancelled up to 60% of their contracts thanks to this rule.

The anti-graft drive could of course go faster, but after almost two decades of inaction, the fact that it is going at all is good news.

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