Russia has surpassed Pakistan and Zimbabwe in corruption levels, according to Transparency International’s 2010 report. Russian President Dmitry Medvedev’s administration says that in just one year corrupt government contracts drained the Russian economy of a trillion rubles ($35 billion). RELATED ARTICLE
"Russian Journalists Need Help in Exposing Corruption"
- Alexei Navalny and Maxim TrudolyubovVoice of America Russian Service correspondent Fatima Tlisova spoke with Transparent International’s Elena Panfilova, director of the Center for Anti-Corruption Research and Initiative Transparency International Russia. In the wide-ranging interview, Panfilova provides insight into the groups reaping rewards from corruption and the position of Russian authorities in relation to these groups. She also speaks about the corruption that has come to light as Russia prepares for the 2014 Olympic Games in Sochi. Panfilova says corruption creates a ripple effect that hurts those at the bottom of the economic ladder the most. RELATED ARTICLE
"Brutal Censorship: Targeting Russian Journalists"
- Fatima Tlisova
Read her interview in Russian »
Fatima Tlisova: What are the results for the year in Russia in terms of corruption processes?
Elena Panfilova: On a large scale over the past year, in terms of reducing corruption, was not very different from all the previous ones. Corruption persisted just as before, and actions taken by the authorities were similar to earlier ones. In other words, the greatest possible effort, under the circumstances, to combat low-level corruption, combined with an almost complete absence of resistance against large-scale corruption.
A notable trend last year was the spontaneous anti-corruption activism of non-organized peoples. We’ve seen it on blogs and at public demonstrations. It seems that over the past year people in Russia realized—or have found the courage to say—that corruption damages their interests. It was quite difficult, and it took a long time for us to convince people that even if we are talking about [complex] forms of corruption, like a financial pullback in government procurement, which may seem quite far from the individual interests of any particular citizen of Russia, that they nonetheless go against their interests. I think last year people started to understand. And this is, in my view, the main outcome of the year.
Grand Corruption
Tlisova: What meaning do you place in the words “grand corruption”?
Panfilova: The most banal definition, the root of everyday corruption, occurs with the collusion between a citizen and a public official. There is an exchange of state goods and services that a person should get from the office holder in exchange for the equivalent in tangible rewards. The beneficiaries of the low-scale bribes are doctors, teachers and employees of any institutions permitted to issue documents. In general, people can be robbed by any of the huge number of government structures.
Grand corruption in Russia is mainly associated with malpractice in federal budgetary allocations and in privatizing state-owned assets. Here, there is no direct bribe-giver and no bribe in the classical sense, but it is present in a more complex integrated format.
Tlisova: And what is “grand corruption” by Russian standards?
Panfilova: In 2010 there was a sea of facts on grand corruption. For example, blogger Alex Bulk wrote about the abuses of Transneft, one of Russia’s largest oil companies. There have been cases of corruption in the procurement of medical equipment, during registration of public contracts for the purchase of pharmaceuticals, and in construction. If you consult the official figures, the head of the Control Office of the President, speaking about the recent government procurements, estimated losses due to corruption are in the trillions of rubles. This is the most conservative estimate.
The problem is that grand corruption cases are united not only by scale but also by the fact that we never see the perpetrators. They say to us: a trillion rubles lost on public procurement. But I would like to see the people who became rich off this trillion. In Russia, there are reasons that these names are not announced.
Tandem Rulers
Tlisova: How consistent is the position of the ruling tandem [President Dmitry Medvedev and Prime Minister Vladimir Putin] with respect to corruption?
Panfilova: I'm completely dissatisfied with the level of activity demonstrated by the prime minister to curb corruption. The president until recently showed more enthusiasm. I’m not even talking about how to eliminate corruption, but at least stopping those who take public assets as quickly as a plow picks up snow—I do not see it. I cannot talk about anyone’s personal involvement in the corruption process, but the fact is that there is clear collusion.
Tlisova: A letter to President Medvedev from St. Petersburg businessman Sergei Kolesnikov has been widely discussed in the press and by bloggers. Kolesnikov said that a villa built in Sochi is intended for Putin. This was built at a cost of more than a billion dollars, using state funds. Is this letter authentic? How do you assess the information contained therein?
Panfilova: This is one of the pieces of the puzzle that folds into the overall picture. The environmentalists were the first to talk about its construction in Gelendzhik. The NGO Bellona sent queries concerning the construction of a building complex with a very extensive infrastructure. It was ostentatious and obviously very expensive. There were many questions in connection with its construction, and even then it was strange that absolutely no one could provide an answer to what it was they were actually building. Everyone tried RELATED ARTICLE
"Costs That Investors Seem Willing to Ignore"
- Alexei Navalny and Maxim Trudolyubovto distance themselves from the project. Mr. Kolesnikov’s version is that this construction is related to our current prime minister. Is the information authentic? I think a full-scale investigation should be carried out. And ultimately we must have official information about who the villa is for, who is paying for it, and who gave permission to build it. Answers are also needed because according to the environmentalists there have been more than 1001 environmental violations.
2014 Olympic Games: Corruption in Sochi
Tlisova: This is not the first time that Sochi appeared in a corruption scandal. Russia’s Audit Chamber revealed major abuses in construction for the 2014 Olympics. Did you conduct corruption monitoring in preparation for the Olympics in Sochi?
Panfilova: Evidence suggests that the Krasnodar region has many problems in connection with the di
stribution of land and construction. With regard to the Olympics, we are currently working on a program of anti-corruption monitoring for the games from different angles—environmental, financial, procedural and legal. We are gathering the data, and after the processing of this information we will inform the world about it.
Tlisova: Is there any information that you are ready to disclose now?
Panfilova: The information I am ready to make public is that to get data that reconciles what we see in official documents with what is going on in practice is difficult. There are the official reports of Olympstroy [the government organization responsible for Olympic buildings] and there are reports by the commissions that control the activities of all entities involved in preparation for the Olympics. But our attempts to reconcile these reports with the reality are confronted by a lot of obstacles.
Information Void
Tlisova: What is the role of law enforcement agencies in accessing and verifying information on corruption? How much are they involved in this process?
Panfilova: All suspicious information is automatically transmitted for investigation to the law enforcement bodies, the Accounting Chamber, and the Prosecutor’s Office. That is how the work of most organizations that deal with civilian control is constructed. But the question is how do they react to such information?
Tlisova: Do you have any experience of an active, positive response when such requests were made and then actually investigated?
Panfilova: In practice, the proportion is one out of 10. Unfortunately, the reality is that police do not take civil control to be full participants in the process of corruption control, and they have barely scratched the surface of necessary levels of cooperation. But we will continue to push this creaking buggy further.
Ignoring Media Investigations
Tlisova: In the West, the media plays a key role in anti-corruption investigations. What is the role of media in Russia?
Panfilova: The problem is that almost nothing really obliges our government to respond to media publications on corruption. In general, legislation provides for the necessity of responding to reports on corruption crimes but not directly and with a very blurred authority. And there is a complete absence of sanctions for failure to respond to such reports. Boris Yeltsin [the first freely elected leader of Russia] issued a decree that set very clear standards for responding to such reports, but it was never signed by [then] President Putin. It would be nice now to revive that rule in a more rigid form because the publications by investigative journalists usually contain information sufficient to start a criminal investigation. Unfortunately, however, publications on corruption never get an adequate response.
The media is the key in any fight against corruption. And if this key element does not work, and if the authorities act as if nothing is happening, citizens of Russia are deprived of the truth. On the other hand, it also greatly reduces the enthusiasm of journalists.
Extortion Replaces Work
Tlisova: How does corruption affect society?
Panfilova: The lower type of brutal corruption hits the most vulnerable and the least educated segments of the population, thereby increasing the gap between the poor and the middle class and more prosperous. Often we see that bribes are extorted and paid inside the poorest sections of the population to a much greater extent than among more affluent citizens. It is easier to cheat and blackmail poor people. Of course this only contributes to the stratification of society.
On the other hand, enrichment through corruption is decomposing the country’s top management. We have a whole class of people who do not make a living through work but through extortion. And it’s not just the bureaucrats—it is their families, their children, and their social circles that are piggybacking on the corruption. They absolutely cannot even imagine what the point of working is when money falls into their hands regardless. Corruption is the most profitable business—a business where money is made out of thin air, through finding one or another official in a [official] position.
Corruption is even more profitable than the oil industry because oil and gas come from nature but still must be obtained and delivered to the consumer. We have entire clans that are piggybacking on corruption flows. This is a completely different part of society, which is completely lacking in any sort of respect for work, respect for others, or respect for the country. And it is, mildly speaking, unprofitable for the future of our country.
Private Profit
Tlisova: Today the West and Russia are actively discussing two opposing concepts. The first is that Russia is disintegrating. According to the second, Russia is undergoing a revival. Where is the place for corruption as a factor in these discussions?
Panfilova: Even a single bribe given to a traffic cop is bad for Russia’s future. In reality the national wealth is being taken and put into private pockets. As a result of corruption, our economy suffers. Money does not go to development or to modernization, but to the private accounts of individuals. These [accounts] are not in Russia, but in foreign banks, enriching overseas economies. As a result of corruption the possibility of managing the country is lost. A corrupt official is not eager to carry out those duties that are intended to benefit the country rather than his personal benefit.
The ineffectiveness of government is primarily related to corrupt interests, with the personal interests of people who must implement governance. And if you do not cut off the channels of illegal enrichment as the main mover of our system of governance, then no development will happen. And where there is no development, there is stagnation. Where there is stagnation, there is an inevitable possibility of a variety of shocks—both political and economic.
"Russian Journalists Need Help in Exposing Corruption"
- Alexei Navalny and Maxim TrudolyubovVoice of America Russian Service correspondent Fatima Tlisova spoke with Transparent International’s Elena Panfilova, director of the Center for Anti-Corruption Research and Initiative Transparency International Russia. In the wide-ranging interview, Panfilova provides insight into the groups reaping rewards from corruption and the position of Russian authorities in relation to these groups. She also speaks about the corruption that has come to light as Russia prepares for the 2014 Olympic Games in Sochi. Panfilova says corruption creates a ripple effect that hurts those at the bottom of the economic ladder the most. RELATED ARTICLE
"Brutal Censorship: Targeting Russian Journalists"
- Fatima Tlisova
Read her interview in Russian »
Fatima Tlisova: What are the results for the year in Russia in terms of corruption processes?
Elena Panfilova: On a large scale over the past year, in terms of reducing corruption, was not very different from all the previous ones. Corruption persisted just as before, and actions taken by the authorities were similar to earlier ones. In other words, the greatest possible effort, under the circumstances, to combat low-level corruption, combined with an almost complete absence of resistance against large-scale corruption.
A notable trend last year was the spontaneous anti-corruption activism of non-organized peoples. We’ve seen it on blogs and at public demonstrations. It seems that over the past year people in Russia realized—or have found the courage to say—that corruption damages their interests. It was quite difficult, and it took a long time for us to convince people that even if we are talking about [complex] forms of corruption, like a financial pullback in government procurement, which may seem quite far from the individual interests of any particular citizen of Russia, that they nonetheless go against their interests. I think last year people started to understand. And this is, in my view, the main outcome of the year.
Grand Corruption
Tlisova: What meaning do you place in the words “grand corruption”?
Panfilova: The most banal definition, the root of everyday corruption, occurs with the collusion between a citizen and a public official. There is an exchange of state goods and services that a person should get from the office holder in exchange for the equivalent in tangible rewards. The beneficiaries of the low-scale bribes are doctors, teachers and employees of any institutions permitted to issue documents. In general, people can be robbed by any of the huge number of government structures.
Grand corruption in Russia is mainly associated with malpractice in federal budgetary allocations and in privatizing state-owned assets. Here, there is no direct bribe-giver and no bribe in the classical sense, but it is present in a more complex integrated format.
Tlisova: And what is “grand corruption” by Russian standards?
Panfilova: In 2010 there was a sea of facts on grand corruption. For example, blogger Alex Bulk wrote about the abuses of Transneft, one of Russia’s largest oil companies. There have been cases of corruption in the procurement of medical equipment, during registration of public contracts for the purchase of pharmaceuticals, and in construction. If you consult the official figures, the head of the Control Office of the President, speaking about the recent government procurements, estimated losses due to corruption are in the trillions of rubles. This is the most conservative estimate.
The problem is that grand corruption cases are united not only by scale but also by the fact that we never see the perpetrators. They say to us: a trillion rubles lost on public procurement. But I would like to see the people who became rich off this trillion. In Russia, there are reasons that these names are not announced.
Tandem Rulers
Tlisova: How consistent is the position of the ruling tandem [President Dmitry Medvedev and Prime Minister Vladimir Putin] with respect to corruption?
Panfilova: I'm completely dissatisfied with the level of activity demonstrated by the prime minister to curb corruption. The president until recently showed more enthusiasm. I’m not even talking about how to eliminate corruption, but at least stopping those who take public assets as quickly as a plow picks up snow—I do not see it. I cannot talk about anyone’s personal involvement in the corruption process, but the fact is that there is clear collusion.
Tlisova: A letter to President Medvedev from St. Petersburg businessman Sergei Kolesnikov has been widely discussed in the press and by bloggers. Kolesnikov said that a villa built in Sochi is intended for Putin. This was built at a cost of more than a billion dollars, using state funds. Is this letter authentic? How do you assess the information contained therein?
Panfilova: This is one of the pieces of the puzzle that folds into the overall picture. The environmentalists were the first to talk about its construction in Gelendzhik. The NGO Bellona sent queries concerning the construction of a building complex with a very extensive infrastructure. It was ostentatious and obviously very expensive. There were many questions in connection with its construction, and even then it was strange that absolutely no one could provide an answer to what it was they were actually building. Everyone tried RELATED ARTICLE
"Costs That Investors Seem Willing to Ignore"
- Alexei Navalny and Maxim Trudolyubovto distance themselves from the project. Mr. Kolesnikov’s version is that this construction is related to our current prime minister. Is the information authentic? I think a full-scale investigation should be carried out. And ultimately we must have official information about who the villa is for, who is paying for it, and who gave permission to build it. Answers are also needed because according to the environmentalists there have been more than 1001 environmental violations.
2014 Olympic Games: Corruption in Sochi
Tlisova: This is not the first time that Sochi appeared in a corruption scandal. Russia’s Audit Chamber revealed major abuses in construction for the 2014 Olympics. Did you conduct corruption monitoring in preparation for the Olympics in Sochi?
Panfilova: Evidence suggests that the Krasnodar region has many problems in connection with the di
stribution of land and construction. With regard to the Olympics, we are currently working on a program of anti-corruption monitoring for the games from different angles—environmental, financial, procedural and legal. We are gathering the data, and after the processing of this information we will inform the world about it.
Tlisova: Is there any information that you are ready to disclose now?
Panfilova: The information I am ready to make public is that to get data that reconciles what we see in official documents with what is going on in practice is difficult. There are the official reports of Olympstroy [the government organization responsible for Olympic buildings] and there are reports by the commissions that control the activities of all entities involved in preparation for the Olympics. But our attempts to reconcile these reports with the reality are confronted by a lot of obstacles.
Information Void
Tlisova: What is the role of law enforcement agencies in accessing and verifying information on corruption? How much are they involved in this process?
Panfilova: All suspicious information is automatically transmitted for investigation to the law enforcement bodies, the Accounting Chamber, and the Prosecutor’s Office. That is how the work of most organizations that deal with civilian control is constructed. But the question is how do they react to such information?
Tlisova: Do you have any experience of an active, positive response when such requests were made and then actually investigated?
Panfilova: In practice, the proportion is one out of 10. Unfortunately, the reality is that police do not take civil control to be full participants in the process of corruption control, and they have barely scratched the surface of necessary levels of cooperation. But we will continue to push this creaking buggy further.
Ignoring Media Investigations
Tlisova: In the West, the media plays a key role in anti-corruption investigations. What is the role of media in Russia?
Panfilova: The problem is that almost nothing really obliges our government to respond to media publications on corruption. In general, legislation provides for the necessity of responding to reports on corruption crimes but not directly and with a very blurred authority. And there is a complete absence of sanctions for failure to respond to such reports. Boris Yeltsin [the first freely elected leader of Russia] issued a decree that set very clear standards for responding to such reports, but it was never signed by [then] President Putin. It would be nice now to revive that rule in a more rigid form because the publications by investigative journalists usually contain information sufficient to start a criminal investigation. Unfortunately, however, publications on corruption never get an adequate response.
The media is the key in any fight against corruption. And if this key element does not work, and if the authorities act as if nothing is happening, citizens of Russia are deprived of the truth. On the other hand, it also greatly reduces the enthusiasm of journalists.
Extortion Replaces Work
Tlisova: How does corruption affect society?
Panfilova: The lower type of brutal corruption hits the most vulnerable and the least educated segments of the population, thereby increasing the gap between the poor and the middle class and more prosperous. Often we see that bribes are extorted and paid inside the poorest sections of the population to a much greater extent than among more affluent citizens. It is easier to cheat and blackmail poor people. Of course this only contributes to the stratification of society.
On the other hand, enrichment through corruption is decomposing the country’s top management. We have a whole class of people who do not make a living through work but through extortion. And it’s not just the bureaucrats—it is their families, their children, and their social circles that are piggybacking on the corruption. They absolutely cannot even imagine what the point of working is when money falls into their hands regardless. Corruption is the most profitable business—a business where money is made out of thin air, through finding one or another official in a [official] position.
Corruption is even more profitable than the oil industry because oil and gas come from nature but still must be obtained and delivered to the consumer. We have entire clans that are piggybacking on corruption flows. This is a completely different part of society, which is completely lacking in any sort of respect for work, respect for others, or respect for the country. And it is, mildly speaking, unprofitable for the future of our country.
Private Profit
Tlisova: Today the West and Russia are actively discussing two opposing concepts. The first is that Russia is disintegrating. According to the second, Russia is undergoing a revival. Where is the place for corruption as a factor in these discussions?
Panfilova: Even a single bribe given to a traffic cop is bad for Russia’s future. In reality the national wealth is being taken and put into private pockets. As a result of corruption, our economy suffers. Money does not go to development or to modernization, but to the private accounts of individuals. These [accounts] are not in Russia, but in foreign banks, enriching overseas economies. As a result of corruption the possibility of managing the country is lost. A corrupt official is not eager to carry out those duties that are intended to benefit the country rather than his personal benefit.
The ineffectiveness of government is primarily related to corrupt interests, with the personal interests of people who must implement governance. And if you do not cut off the channels of illegal enrichment as the main mover of our system of governance, then no development will happen. And where there is no development, there is stagnation. Where there is stagnation, there is an inevitable possibility of a variety of shocks—both political and economic.
