Coping with corruption in Russia

1
Coping with corruption in Russia

• Center for Anti-corruption Research and
  Initiative
• Transparency International Russia
• Elena A. Panfilova

2
Major facts

• Russia ratified UNCAC in February 2006
• Russia ratified CoE Criminal Convention in June
  2006
• Russia joined G8 Fighting High Level Corruption
  Initiative
• President Putin declared in May 2006 that
  corruption still remain one of the main
  challenges for Russia and that all necessary
  steps should be undertaken to curb it
• Prosecutor General Mr. Ustinov is dismissed in
  May 2006 and replaced by former Minister of
  Justice Mr. Chaika who announced anti-corruption
  the main priority of his institution

3
Major facts

• Russia in BPI 2006 score 5.16 (28th place)
• GfK Group study 2006
• 66 of Russians say they never give bribes
• 41 of Russians say they consider corruption to
  be normal part of life
• 11 of Russians are ready to report bribery
• 61 of Russians believe that its useless to
  fight against corruption
• most corrupt institutions according to Russians
  are registration and licensing bodies (13),
  government (11) and health care (7)
• Levada Center poll (March 2006)
• Average petty bribe paid 5048 Roubles
  (around 200 USD)
• Maximum petty bribe 75000 Roubles (around
  2800 USD)
• Minimal petty bribe paid 20 Roubles (around
  1 USD)

4
Major facts

• Business (including foreign investors) more and
  more often informally
• reports about facts of extortion
• Case of Euroset and Motorola
• In March 2006 law enforcement officers arrested
  the shipment of mobile phones (for around 20
  million USD) declaring it contraband. The
  criminal case against Euroset was opened. We
  advised Euroset and Motorola to go public about
  the case and after the press-conference the
  shipment was declared counterfeit. After Motorola
  proved the shipment was absolutely legal mobile
  phones were declared environmentally unsafe.
  Motorola informed US Embassy. Information reached
  President Putin and was discussed at the meeting
  of the Government. In August 2006 the shipment
  was returned to Euroset with apologies that
  around 50 thousand phones were destroyed. The
  case against Euroset was dismissed.

5
Major challenges

• International AC instruments are not yet
  implemented in local legislation
• National AC legislation is insufficient and is
  poorly implemented
• Media campaign started recently that
  international AC initiatives are US sponsored and
  are against interests of Russia
• Business remains very passive about challenges of
  corruption and prefers to discuss it only out of
  record

6
Major challenges

• Different businesses (national or international,
  small or big) report increase of institutional
  administrative pressure
• There is little trust in law enforcement agencies
  and courts (scored 4.2 and 3.9 out of 5.0 in TI
  GCB 2005)
• There is little trust in sustainability of
  contracts and formal agreements with federal and
  regional governing bodies (conditions can be
  one-sidedly recalled)
• Business is not ready to go public about facts
  of extortion and bribery
• There is little support from business
  organisations and associations
• The problem of middleman

7
What to do

• To lobby for the fast and sufficient
  implementation of the international AC
  instruments in Russian legislation
• To lobby for the ratification of the OECD
  Convention
• To support consultations within business
  community about international and national AC
  instruments and collective actions against
  institutional administrative pressure
• To educate businesses of different types and
  sizes about international AC instruments and
  about practical ways to confront extortion
• To promote cases of success (IKEA, Euroset and
  Motorola, etc.)

8
Contact information

• Center Transparency International - Russia
• Tel/Fax [phone]
• Info_at_transparency.org.ru
• www. Transparency.org.ru