This morning’s news about bribes in Russia reportedly doubling in size in the past six months, apparently in direct response to President Dmitry Medvedev’s crackdown on the corrupt officials caught my eye: by this logic, the continued success of these people, put to a test by the crackdown of the notoriously heavy handed law enforcement is almost comparable to cockroach survival skills: perversely impressive.
According to the Russian Ministry of Finance, bribes have become more expensive as “those engaged in the widespread practice are rejecting small bribes as too risky amid a Kremlin-led fight against corruption”. But does the official argument stand up and we just talking about a little political reshuffling masked as initiatives to get the house in order? And if so, is this a serious effort or just a little traditional spring cleaning? Finally, what is the Russian Government actually doing to solve the problem, and is it doing enough?
And, it would appear, the short answer to the last question is no:
“Analysts linked the trend to Kremlin-imposed restrictions on the number of checks that officials can conduct on businesses, which they said has increased officials’ appetites for bribes, and an overall failure in the Kremlin’s anti-corruption efforts.
Kirill Kabanov, head of the National Anti-Corruption Committee, a nongovernmental organisation, said the average bribe had to grow because the Interior Ministry only calculated cases that went to court and a growing number of senior officials — who take larger bribes than rank-and-file bureaucrats — are being prosecuted”.
Although independent surveys, such as ones conducted by Transparency International and Levada Centre, also noted an increase in prices of bribes (in addition to the Moscow Times article see this, admittedly slightly outdated post, to know how much for politicians and internationals – though a little out of date, it still shows times of gingerly proffering a bottle of whisky to “expedite” the creation of an official document appear to be well and truly over…). Evidence suggests that the government’s half hearted, and one could argue – selective effort in this direction will continue to be massively detrimental to the country’s social fabric, not just the economy.
To further elucidate what’s been recently happening in Russia, the Transparency International differentiation between “according to rule” corruption and “against the rule” corruption is useful: “Facilitation payments, where a bribe is paid to receive preferential treatment for something that the bribe receiver is required to do by law, constitute the former. The latter, on the other hand, is a bribe paid to obtain services the bribe receiver is prohibited from providing”.
Considering the increased risk of corrupt officials brought to justice, and given that it is easier to catch someone doing what they shouldn’t be, rather than find evidence of one profiting on the side from tasks constituting their usual activity, we would suggest that “according to rule” corruption is likely to prosper at the expense of the “against the rule”. The latter is likely to incur markedly higher prices because of the risk of prosecution and, if the independent researchers like Kabanov are correct in their predictions, only the ones caught make up the statistics. The rest of the corrupt officials, especially ones breaking the law “according to rule”, appear not to feature in the recent analysis, which is a cause for further worry.
And to throw in one last, admittedly extreme, example of an investor suffering the good old “according to rule” treatment is the tragically famous example of IKEA, which sought to stay above board in the murky waters of the Russian business. After the Russian authorities cut off all electricity in one of the larger chains of the shop, reportedly to show them ‘who’s boss’, IKEA had creatively circumvented the problem by buying an electricity generator, for which it turned out, they overpaid some US$200 million. For more details on the lawsuit between the furniture maker and the generators, see here.
For any Russian speakers, we also heartily recommend this account of the IKEA story (and some others). It is hard not to agree with the author’s analysis – corruption suits perfectly an irrational system of governance, which has become over-reliant on the internal logic of corruption to sustain itself. And what is being described here is the oxymoron that is “corruption according to rule”.
