Russian authorities step up anti-corruption rhetoric

By bne IntelliNews January 18, 2012

bne -

In the face of the recent wave of protests against the ruling elite, Russia's top officials have started calling for anti-corruption measures at state companies. With corruption near the top of the list of complaints by ordinary Russians, the demands for transparency are similar to those implemented in the world of politics a few years ago - yet those earlier measures convinced few.

Following on from Prime Minister Vladimir Putin's demand on New Year's Eve that state company managers disclose their assets and income, and the companies disclose the beneficiaries of their counter-agents, energy tsar and Deputy Prime Minister Igor Sechin has detailed in a letter to the state companies how this is to be done.

On December 31, Putin prescribed a new year resolution for 21 energy and infrastructure companies owned by the government, along with the state-owned banks. The PM insisted that they must immediately come into line with the income reporting rules implemented on politicians in 2008 and disclose the incomes of top managers and their families. Predictably, this struck horror into the hearts of both the companies and managers, who claimed this could put them in violation of commercial secrecy norms and non-disclosure agreements relating to their counter-agents.

However, in a letter dated January 13, which has miraculously wound up in the hands of Vedomosti, Sechin insists there will be no exceptions. Except, critics note, that Rosneft - Russia's largest oil company at which Sechin was previously chairman - is not on the list of companies forced to make disclosures.

Such omissions mirror the situation in the world of politics, where individual members of the legislative bodies regularly fail to provide full, or even partial, declarations concerning their income without meeting censure, despite the insistence of the authorities that it is mandatory. A poll in March 2011 revealed that no more than 1% of the population believes that the income declarations that state officials make are true.

According to Vedomosti, Sechin's letter insists that top managers of state companies and their families will have to disclose not only income, but also shareholdings and all companies of which they are beneficiaries. Companies must reveal considerable detail about the beneficiaries of their counter-agents, including passport details and tax-payer numbers.

President Dmitry Medvedev - who had made the fight against corruption a leading edge of his ultimately doomed term in office - isn't of course content to be left out, and announced on January 17 that he will insist that all companies where the state holds more than a 25% share will have to comply with the new requirements. He added that all such companies will also be prohibited from contracting with affiliated structures. The president said he has instructed the government to execute the order by April 1.

Interfax quoted Medvedev adviser Arkady Dvorkovich as saying this was a logical continuation of the campaign against corruption, and that all the new stipulations contained in the presidential and government orders would be included in new legislation, including the prohibition on state companies contracting with affiliated companies.

Government new boy Dmitry Rogozin, recently appointed deputy prime minister for the defence sector, also moved to get in on the act the same day, saying that private companies receiving state defence orders would also have to declare the income of their top managers. The requirement will not only affect the contracted companies, but also their suppliers, he insisted.

Transparency International Russia's head Elena Panfilova suggested the measures are a response to the recent protests. "International standards require the same level of disclosure for state companies as for state officials," she suggested. "Now in the heat of the political season, the scale of theft in state companies has reached such a level that it is starting to conflict with the political interests of the authorities."

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