Greco-Russian Wrestling

Russia hands over to the EU its review of the fight against corruption Officials say that there is progress

It's not for nothing, that Dmitry Medvedev makes officials and deputies to report the income. For example, a deputy from United Russia - Dmitry Saveliev - has an annual income of about 2 million rubles. At the time, in his 2009 declaration, published on the website of the Parliament, there was a car Maybach 57.Two years ago, according to the Saveliev's Declaration in 2007, which he handed over while running for election to the Duma, he did not have such a car. Maybachs like that cost anywhere from 10 to 20 million rubles. Another deputy, Vasily Tolstopyatov- also from United Russia - has acquired 54 plots of land during his time in the Duma. MP Adam Amirilaev lives on a parliamentary salary 1.9 million a year, but was able to acquire a Lexus and RangeRover.

In Europe, this disparity of income and expenditure would be under intense scrutiny and, at a minimum, an internal investigation. In Russia it is just a topic for conversation. But officials and experts say: the picture is beginning to change.

One source of change is that Russia has signed several international conventions on combating corruption, including those required for membership in GRECO. GRECO, short for Group of States against Corruption, is a structure established by the Council of Europe, which includes 45 European countries and the USA. GRECO experts gave Russia recommendations on how to fight corruption by European standards. Russia must report back by June 30. In December, the report will be considered at the meeting of GRECO's original examination board, and will deliver an assessment on Russia.

Specific sanctions for poor performance are not provided, but who wants to look like losers? This is necessary not only for the image, but also for investment, said the source in the presidential administration. Russia cannot implement all of GRECO's recommendations, and does not plan to. But even partial fulfillment is good enough, said Advisor to the Chairman of the Constitutional Court Vladimir Ovchinsky. Previously, these issues were not even discussed.

But most importantly, without the recognition of GRECO, it is not possible to join the OECD. Dmitry Medvedev has set a goal of joining the OECD in 2011. And preparations for the examination have been conducted on a rush basis.

The Process is Underway

GRECO gave Russia 26 recommendations: from the relatively concrete like the introduction of anti-corruption monitoring systems to extremely vague such as ensuring the reforms' coverage of a broad range of people. The Justice Ministry source is sure that the majority of recommendations will be rejected. It will not be easy, but the report will ultimately be passed, says Duma Deputy Mikhail Grishankov.

The vast majority of recommendations have been implemented in practice, according to Aleksandr Anikin, Chief of the Anti-Corruption Administration of the Prosecutor General. Under Presidential Decree of April 13, 2010, the National Strategy and National Plan for Countering Corruption were approved, and the Presidential Anti-Corruption Commission's membership was enlarged. The office of the Prosecutor General verifies the income and property declarations of police officers, while Finance Ministry officials are now required to report additional income to their superiors. Also, a commission on conflicts of interest has been created in the regions.

In reality, there are only a few who currently understand what this is and how it should work, according to Newsweek sources in various agencies. A typical situation: a wife or son of a mayor or governor are major economic actors in the region. Q: is their business a form of corruption or a conflict of interest? The answer of a source at MVD: most likely both. One of these scenarios recently occurred in the Kirov Oblast, where the son of the Profile Department (Профильный Департамент) Chief won a large logging tender. Under the law, it all seemed to be clean.

Officials say that the fight against conflicts of interest is already producing some results. For example, in Tuva, Mordovia, and the Rostov oblast, tax officials gave VAT tax refunds only to companies where their relatives and friends worked, says General Alexander Nazarov from the Department of Economic Security (DEB) of MVD. A criminal case was brought against one person, while another had to go before the ethics commission. The interviewer in the Ministry of Economic Development and Trade assures that there have already been cases where employees declared a conflict of interest of their own volition. The process has indeed started, confirm officials at RosTekhNadzor, where such occurrences are no longer rare.

Three Apartments and a Mercedes-Benz

However, GRECO's list of recommendations include several principles, on which it will not be easy to report. The first is to reduce the number of people with immunity from criminal prosecution to the minimum required in a democratic society. This has not been done. Immunity in Russia extends to around thirty kinds of public servants, including Senators, Deputies, Judges, and Prosecutors. Nowhere in the world, do investigators and prosecutors enjoy such luxuries, but all attempts at depriving them of immunity ends with the Prosecutor General responding with a request to do the same to Deputies, explains Deputy Mikhail Grishankov.

Every country has a unique definition of "immunity." For example, in South Korea deputies are protected only within the walls of Parliament. Once they are on the street, the immunity is gone. In Russia, the procedure for withdrawing immunity is slightly simplified: for example, initiating criminal proceedings against a judge no longer requires a conclusion from a three-judge panel of the Supreme Court. If GRECO thinks this is not enough, says the source in the Ministry of Justice, they will sacrifice registered deputy candidates for regional parliaments.

Secondly, GRECO recommends that Russia adopt legislation establishing so-called in rem confiscation. It allows you to seize the property of those guilty of corruption crimes, if there is a suspicion that it constitutes the proceeds of a crime or when income declarations do not match expenses. In this case, the accused individual must prove the lawful origin of his wealth. For example, in Britain, those suspected of corruption are given a month to confirm that they honestly earned their income. The property of those who fail this task is handed over to the treasury. In Italy, such measures helped deal a serious blow to the mafia, which lost approximately EUR 6 billion and 10,000 pieces of real estate.

In Russia, the drug crime fighters from FSKN are most in favor of introducing such norms. A senior FSKN official explains, we are asked to undermine the economic basis of drug traffickers, but there is no mechanism for doing so. Not long ago the FSKN detained a major drug dealer. He was arrested and officials confiscated several thousand rubles of marked bills, which they used for a controlled purchase. Still, even though FSKN officials know that the dealer has a mansion, cars, a yacht, all of which he bought over 15 years of dealing drugs, they cannot be confiscated since the officials are unable to prove the criminal origin of the property.

Russia is only taking its first steps towards controlling the income of officials. Of course, problems arise. The Daimler case - where the car company admitted to bribing Russian officials for contracts to supply Mercedes automobiles for official use - proves that officials are lying on the declarations. Daimler admitted to transferring money to the bank accounts of officials at MVD, the FSO garage, the Defense Ministry, and the governments of Moscow, Ufa, and confirms that transferring money to staff MIA, garage FSO, the Defense Ministry, Government of Moscow, Ufa and Noviy Urengoi. But in the published declarations, we almost never see foreign accounts or property, says Elena Panfilov of Transparency International-Russia.

According to the Russian bureau of Interpol, there are a growing number of inquiries from foreign and Russian law enforcement bodies related to tracing the chain of funneling funds abroad, where they are then "legalized." Russians are buying land, hotels, apartments, and businesses in the Czech Republic, Bulgaria, Montenegro, Croatia, Spain, Germany, Egypt, and the UAE, says Interpol officer Tatiana Shishova. Or they are withdrawing money to offshore jurisdictions. Among the leading offshore destinations for Russian capital are the British Virgin Islands (BVI), Cyprus, and the Seychelles. For example, last year French police grew very interested in a Russian student that purchased an apartment in Paris for 2 million.

And what can be done with those, about which there are questions? The financial situation of MPs has become more transparent, but only because they were required to submit declarations when they registered as candidates. There is a basis for comparison. Last year, Duma Deputy Nikolai Gonchar's reported an income of 2 million rubles, the purchase of a 15 hectare plot, a house of453 square meters. m and rented a 3,200 square meter forest.Sergei Abeltsev of LDPR earned about 2 million rubles, bought 50 hectares of land, three apartments and a Mercedes-Benz.MP Dzhamaladin Gasanov, judging by

the declaration of 2007, generally had no income, but now lives in a gratuitous apartment of   835 square meters. Ivan Demchenko of United Russia, according to the declaration, lives solely on his parliamentary salary (1.9 million rubles per year), but over the past two years has acquired three apartments (two decorated for his wife and child). Farida Gainullina of United Russia, since becoming a deputy, lost income of almost 1.4 million rubles, but was able to buy a house of three   300 sqm. sections, with a total area of 26 hectares. The law does not require to officials to specify where the property was obtained, but even a mid-sized apartment somewhere in the provinces certainly costs more than the reported income of most deputies(according to Russian Realtors, the average market price of housing in Russia in 2009 amounted to 26,500 rubles/square meter).

The majority of the aforementioned deputies refused to comment. The assistant to Deputy Abeltsev stated that the property did not belong to him, but his whole family. Furthermore, the assistant added, the country is in danger and Deputy Abeltsev does not have the time to entertain such questions. Relatives may give apartments to deputies, or so explained Deputy Demchenko concerning the appearance of his three new apartments. Deputy Gainullina told Newsweek that her brother donated the house and plot of land, and that she has recorded the whole thing on the appropriate forms. Deputy Adam Amirilaev said that he is leasing the Lexus and Range Rover for five years, and his lack of income is due to his constant spending, without saving.

Income sources and property rights may differ. In the long run, one may receive an inheritance. Opponents of in rem confiscation insist that its adoption would aggravate the already murky status of property rights in Russia. Remember the case with "Rechnik," said Duma Security Committee Head Vladimir Vasilyev, the relatives cannot build a house in the country for their grandfather. To thrust the confiscation mechanism into such a situation is very dangerous. That is the opinion of Valentin Mikhailov, Chief Advisor of the Legal Department in the Kremlin. Mikhailkov says this poses the question: should a person gather this information over, for example, ten years, or is it easier to just buy the information? Would this not bring about a new round of corruption?

Finally, there is the confiscation of property as such. GRECO experts insist that the list of articles in the Penal Code where confiscation applies must be significantly expanded. World practice has shown that confiscation is one of the most effective methods of combating corruption: an official would not steal or take bribes, if he knows there is a great risk of losing not only freedom but also property. Currently, Art. 104.1 of the Criminal Code describes 51 crimes. Not enough, say the Europeans. The list, for example, does not include fraud, money laundering, or tax crimes.

The Duma Committee on Security agrees: confiscation needs to be applied to all types of corruption crimes. The office of the Prosecutor General and the MVD are ready to include fraud and money laundering. The Ministry of Justice objected, asserting that only money laundering should be included. As always, the customary fears are cited: adding a new whip to a thoroughly corrupt system will only serve to create another mechanism of corruption. We must first expand confiscation, and then look and figure out how it will

work. Only then can Russia begin to think about confiscation in rem, said Nazarov of DEB.

The Most Malicious Criminals

Last year, prosecutors initiated 43,000 criminal cases for corruption crimes. The truth is that there was not even a single understanding of what corruption is. The security structures each like to rely on their own personal sense of the concept. The Investigation Committee of the Prosecutor's General Office, for example, considers the nonpayment of wages a "corruption crime."

And then in late-April, the Prosecutor General and MVD agreed on and approved a single list of corruption crimes. Newsweek has obtained a copy of the list. Aside from the traditional public and private sector bribery, they have included fraud, embezzlement, money laundering, and they've even thrown in the intimidation of witnesses and interference with justice when done with a self-interested intent.

They will try out the new list starting in July. The Prosecutor's General Office assures us, the list is only needed for an objective measurement of how the war on corruption is going. Those in the MVD have their own views. Since April, pre-trial detention of those accused of economic crimes has been possible only in exceptional cases. But in the case of corruption crimes, the accused must be kept behind bars, and a source at MVD states that they will struggle for this.

Current statistics on the war against corruption only have an inferential relationship to the actual war on corruption. Consider last week's events. Kotlassky City Court sentenced Sergei Hadrian to two years with a probationary license, after he was stopped on the Ust-VagaYadrikha highway for speeding and tried to resolve the issue for 50 rubles. In Kirov, a criminal case was brought against a marshrutka driver who offered vehicle inspectors 100 rubles. In Stavropol, a shopkeeper received 2.5 years probation for paying a 300 ruble bribe to a local police officer.

Today, by far the most egregiously corrupt group in Russia are undocumented immigrants, traffic law violators, and small business owners with expired medical documents. They get busted for bribes ranging from 100 to 1,500 rubles. The most common corruption crime is the "giving of bribes." Here are last year's statistics from the Judicial Department of the Supreme Court: 3,700 criminal cases for giving bribes and 2,100 for receiving bribes. In Moscow, for example, the statistics show that people give bribes five times more often than they receive them. Instead of going after corrupt officials, law enforcement bodies caught ordinary people solving their problems through petty corruption, says one Moscow prosecutor. Kirill Kabanov from the National Anticorruption Committee believes that the statistics are filled up by a wave of enforcement against small criminals, and the result is an imitation war on corruption.

For example, the officer comes to the first apartment with migrants, collects his usual rents, but registers it as a bribe. Occasionally, curious things happen. In one of the police

reports I heard how some Tajiks revealed their relationship with the officer. "Why did you always take it, and now you call it a bribe?" asked an investigator at the Capital Investigative Committee. The policeman later explained that they were talking about inventory, which he took from them to clean his office.

Regarding the receipt of bribes, the same problem exists. In Chelyabinsk, a traffic policeman was detained after he took a bribe of 2,500 rubles. In the Petukhovsk area of Kurgan oblast, a criminal case was brought against a doctor who illegally extorted 3,500 rubles from the hospital. In Novosibirsk, there was a penal officer who faced criminal charges for receiving 4,000 rubles from an inmate, to whom he promised early release in exchange. In another case, officers went to a warehouse and, after finding some small deficiency, accused the shopkeeper of fraud. The case is likely to fall apart in court, but the investigators have already received credit for the arrest.

Still, General Alexander Nazarov of the Department of Economic Security at MVD claims that the trend is changing, with more big corruption cases with a higher number of participants. These cases are for receiving bribes under Article 290 of the Criminal Code, here committed by a group of persons under a prior agreement. Such cases have grown by four times since the beginning of the year. This is at least not the driver, who has 100 rubles extorted from him by traffic police.