A Nation Infected by Worms and Leeches

Gleb Pavlovsky, a longtime Kremlin insider and pundit, hit the nail on the head when he described the pervasive corruption among Russia’s bureaucrats: “For the last 20 years, no one in the high levels of government has discussed whether this or that top bureaucrat abuses his official position for personal gain. It is taken as a given. They are all corrupt.”

That is why Russia — unlike China, Singapore, Japan and France — has not prosecuted a single high-ranking official on corruption charges in the entire 20 years of the post-Soviet period. The government’s whole “fight against corruption” boils down to nothing but empty speeches, useless anti-corruption legislation, amusing but meaningless “strategies” to combat the problem and occasional arrests on corruption charges of middle- and low-ranking officials — scapegoats who have no impact on solving the larger, systemic problem of corruption in government.

While the economy was growing in the 2000s thanks to high energy prices and business expansion fueled by a seemingly endless flow of cheap corporate credit, there was another boom taking place in Russia — the sharp rise in the number of bureaucrats since Vladimir Putin became president in 2000.

As the number of bureaucrats increased, so did the level of corruption. Corruption has grown by a factor of 10 in the past decade, depriving Russia of up to one-fourth of its gross domestic product, or roughly $300 billion annually. When the so-called “wild ’90s” ended, Russia ranked 82nd in Transparency International’s global corruption rating. By the end of “booming 2000s,” however, Russia had plummeted to 146th place, which is much worse than its main economic rivals and fellow BRIC countries of Brazil, India and China.

Like worms devouring a corpse or leeches sucking blood, millions of corrupt officials gobble up the country’s wealth and cripple the country with their parasitism. Millions of siloviki, managers of state corporations and other bureaucrats have created thousands of sophisticated and complex criminal schemes that are worth collecting in several weighty volumes and publishing as a useful handbook for wannabe gangsters: “How to Get Rich Through Blackmail, Extortion, Larceny, Tax Evasion, Money Laundering and Organized Crime.”

Officials and civil servants steal from the budget, state corporations, government agencies, roads and housing projects and government procurement contracts. In short, they steal everywhere that budgetary funds or state and municipal property are found. They usually commit extortion in collusion with businesses and most often in collusion with businesses that have ties to specific officials. One of my acquaintances in Grozny with inside information tells me that officials there immediately pocket as much as 80 percent of federal investment funds as soon as the cash arrives in Chechnya. It therefore comes as no surprise that state investment expenditures are rising rapidly, even as the real benefit of those investments are declining just as rapidly.

As absurd as it sounds, bureaucrats often consider bribe-taking and extortion as a well-earned, legitimate perk of being a “civil servant” — a term that is ludicrous when used in the Russian setting. The biggest offenders among bureaucrats are the siloviki — the Federal Security Service, prosecutors and police — who specialize in extorting money and seizing property and businesses that legally belong to others, a practice otherwise known as raiding. These incidents occur every day. Two recent examples were the arrest of senior federal prison officials in Nizhny Novgorod for extorting 40 million rubles ($1.17 million) to release individuals suspected of smuggling automobiles and the arrest near Moscow of an investigator for soliciting a bribe of $500,000 to close a case under her jurisdiction.

Corrupt Russians of all stripes do not even bother hiding their illicit funds. They drive fancy cars, live in luxurious houses and dine at the most expensive restaurants, while hiding their assets and income by filing phony declarations.

What can President Dmitry Medvedev claim as results after announcing his much-proclaimed all-out war against corruption two years ago? According to official data, only 800 officials — all of whom are mid or low rank — were arrested on corruption charges in 2009. That works out to just 0.04 percent of all Russian officials — “nanoresults” you could say.

Even when Western companies are implicated in corrupt dealings in Russia and prosecutors from the West present the Prosecutor General’s Office with full details of the crimes, including the names and positions of the Russian accomplices, the authorities do nothing more than conduct a pro-forma investigation that rarely leads to a prosecution. For example, there was no follow-up after two IKEA managers were fired for tolerating bribes given to ensure that one of IKEA’s shopping centers was hooked up to a electrical grid in St. Petersburg. And no progress has been made in the case involving the death of lawyer Sergei Magnitsky, who uncovered a scam by officials to defraud the government of $230 million.

After the U.S. Justice Department claimed that Daimler had bribed Russian officials in the Federal Guard Service, the Interior Ministry, the Prosecutor General’s Office and other siloviki agencies to buy Mercedes-Benz automobiles at inflated prices, it took Medvedev almost a full month before he ordered a review of the case. But the investigation is being carried out internally and out of the public eye. This should be an open-and-shut case since Russia has been given complete information regarding the identities of the officials who accepted the bribes from Daimler.

After a series of high-profile corruption scandals involving Western companies in Russia, Daimler, Siemens and roughly 50 other companies with operations in Russia recently signed a corporate code of conduct that pledges zero tolerance for corruption. Even if these corporations uphold their pledge, it will be a drop in the bucket, unfortunately. Until the Kremlin gets serious about fighting corruption — and starts the battle by taking on their comrades-in-arms among the highest-ranked bureaucrats in government — Russia will remain one of the most corrupt nations in the world.

Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy radio.