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.