On April 30, a seminar titled “Corruption in Russia: Executive, Judiciary and Legislative” was held in Washington, D.C. Participants in the seminar discussed the history of corruption in Russia and post-Soviet countries, Russian anti-corruption law, and the concerns of corporate and legal advisors working with Russia. IMR advisor Ekaterina Mishina spoke at the seminar about the essence and causes of Russian corruption.

 

 

A seminar titled “Corruption in Russia: Executive, Judiciary and Legislative” took place on April 30 in Washington, D.C. It was organized by the Russia & Eurasia Committee of the American Bar Association’s (ABA) Section of International Law and Arnold & Porter, an international law firm. The topics covered at the seminar included the history of corruption in Russia and the former Soviet Union, the status of Russian anti-corruption law, and the concerns of corporate and legal advisors working with Russia.

At the seminar, Ekaterina Mishina, assistant professor at the National Research University Higher School of Economics in Moscow, visiting professor at the University of Michigan, and IMR advisor, spoke about the essence and causes of corruption. In her presentation, Mishina used some of the findings from the Information Science for Democracy (INDEM) Foundation, a reputable Russian think-tank that, for approximately twenty years, has maintained an active research agenda on corruption.

According to Mishina, under Soviet rule, the main areas of corruption in Russia included healthcare, secondary and higher education, the traffic police force, and the process of obtaining driver’s licenses. With the disintegration of the Soviet Union, Russia faced not only an increase in corruption, but also a change in its nature. Corruption, Mishina explained, “assumed a market character and morphed into a variety of shadow administrative services.” In the absence of proper regulations, so-called “grey areas” started to emerge. The INDEM data shows that in the early 2000s, the second stage of corruption transformation began: organized corruption networks took shape. Between 2000 and 2005, there was a marked decrease in corruption levels; however, with the beginning of President Vladimir Putin’s second term, there came an “incredible growth of corruption.”

The INDEM Foundation has estimated that 10 percent of corruption deals in Russia during that time targeted the legislative and judicial branches, with the other 90 percent targeting the executive branch. Previously, officials were expected to turn a blind eye to illegal actions; now they sought bribes simply for performing their duties. For a number of government officials, corruption became a business.

According to Mishina, among the main causes of corruption growth were an absence of political competition; strong political parties; “real” separation of powers; transparency of state power; and the weakness of civil society. Mishina believes that in many cases, anti-corruption activities amount to little more than “window dressing.” One example she gave was the establishment of an anti-corruption agency as part of the presidential administration last year (article 6 of the United Nations Convention on Anti-Corruption states that that anti-corruption agencies are to be independent of the administration in power). “Setting up an agency inside the presidential administration, given the escalation of authoritarianism and other disturbing trends taking place in Russia—it just does not look like a real anti-corruption activity to me,” Mishina said.

The INDEM Foundation has estimated that 10 percent of corruption deals in Russia during that time targeted the legislative and judicial branches, with the other 90 percent targeting the executive branch.

As of today, a comprehensive legislative framework has been developed in Russia, but there remain many problems surrounding the implementation of anti-corruption measures—problems primarily related to selective application of law. Among the main challenges to implementing anti-corruption measures are the inconsistency of Russia’s anti-corruption strategy, an absence of political will, excessive regulation, and a lack of interest from those in charge of anti-corruption efforts in achieving specific results. Other important problems include Russian citizens’ excessive tolerance to corruption and, consequently, an absence of active public support for anti-corruption activities, a low level of professionalism and expertise among government officials in charge of anti-corruption efforts, and a lack of effective collaboration between the state and civil society.

Tom Firestone, senior counsel at the law firm Baker & McKenzie in London and former high-ranking official at the U.S. Department of Justice, shared his views on Russian corruption at the seminar as well. Firestone suggested that while many commentators have argued that corruption in Russia is a cultural problem, the true explanation might be different. Examples of corrupt practices can be found in a range of other countries, including the United States. The difference between the U.S. and Russia, however, lies in the fact that the institutions of free society that exist in the U.S., including free press, independent legislature, and the judiciary, render impossible the kind of corruption found in Russia. From the outset, America’s Founding Fathers sought to prevent abuses of power and introduced a system of checks and balances that has proven effective.

Firestone believes that corruption risks are manageable if certain controls are put in place. The U.S. Department of Justice strictly enforces the Foreign Corrupt Practices Act and is getting more aggressive in its enforcement, particularly in the former Soviet Union. Additionally, the recent arrest of Ukrainian businessman Dmytro Firtash in Austria, at the request of the U.S., was on charges under the U.S.’s Racketeer Influenced and Corrupt Organizations Act (RICO). According to Firestone, the Firtash case may set a precedent for future cases prosecuting foreign bribery.

Dmitri Evseev, a partner at Arnold & Porter LLP in London, focused his presentation on the “areas of highest corruption” in Russia. According to Evseev, these areas include customs, government contracts and procurement, licensing/permits/certificates, government safety inspections, law enforcement and courts, land distribution and land relations, and construction. Another representative of Arnold & Porter, Keith Korenchuk from the company’s Washington, D.C., office, spoke about challenges related to operating effective compliance programs in the Russian business environment. Among other questions discussed at the seminar were the interactions between the international companies and Russian government officials, corporate gift policies, and more.

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