Dmitry Medvedev backed Vladimir Putin’s burst of enthusiasm for fighting corruption in state companies. On Tuesday, the president “ordered” the government to provide information on the incomes and property of the executives (and their relatives) of all state companies and corporations by 1 April 2012. Medvedev also “ordered” Putin to take steps to not allow “affiliated entities participate in contracts signed by state corporations and companies.” This means that we, in the best case scenario, will find out the outcome of this order only after the 4 March elections. Meanwhile, the fight against corruption, it seems, is going to become a part of presidential candidate Putin’s election campaign rhetoric.
“You’ve gone way over the line,” Vladimir Putin said on the eve of the New Year’s holiday, criticising the business practices of several executives as state energy corporations that had signed dubious deals and shipped the money into offshore accounts.
These unknown executives were soon after fired and the prime minister ordered all state companies to report on the incomes of their executives (and their relatives), as well as disclose the beneficiaries of their counterparties. It’s clear as day why the campaign to fight corruption in state companies was announced with the presidential elections just months away. It’s also clear why President Medvedev has moved the deadline for fulfilling his order to fight corruption to after the elections. If information about executive incomes and the deals they have signed are to be made public any sooner, then they are unlikely to help presidential candidate Putin’s rating (taking into account how many of these people are his friends, colleagues and neighbours from the infamous Ozero summer house cooperative). The only thing that isn’t clear is also the most important thing: how is this order going to be carried out?
Let’s consider the collection of income and property declarations of state company executives. This seems like the right thing to do, and experts, journalists and anti-corruptions activists have been talking about them for a long time. The president and prime minister’s orders, however, for some reason don’t mention anything about whether this information will be available to the public, whether they will be published in the Internet, who will check them and what will become of those who do not reveal their income and property. If they don’t make their income declarations available to the public, then any value from this information is neutralised, turning them into reports from executives to the bureaucrats in special ministries that both guide and protect them.
How they are supposed to report on the beneficiaries of counterparties is also not clear. Take, for example, Russian Railways, a company with hundreds or even thousands of counterparties. If every company that supplies Russian Railways were to disclose their proprietors, then several Khimki forests would need to be chopped down to handle the entire load of paperwork. And who is going to check this heap of paperwork, not to mention how well? It would be much more logical to establish a benchmark, such as, for example, in order for the obligation to reveal beneficiaries to apply to only the parties in a deal worth, we’ll say, more than 5 million roubles. This restriction would allow for small and medium businesses to rid themselves of paperwork they don’t need. Moreover, it is hard to fathom seeing some small towel suppliers for Russian Railways being affiliated with the monopoly’s executives.
It’s not clear what the meaning of affiliation means in this case and what deals this ban could apply to? Of course, there are some trite examples when a member of the board at a state company (or his wife, children, etc.) at the same time owns a private enterprise that gets its business from the state company. But what should be done with, for example, Russian Railways President Vladimir Yakunin, whose hunting buddies and co-owners of hunting land are at the same time contractors for Russian Railways? Or what should be done with Prime Minister Putin himself, whose friends for many years now have been living off of Gazprom, Rosneft and other state monopolies? Do the president and prime minister’s orders provision for such affiliated relationships and will similar deals become categorised as conflicts of interests?
As long as all these questions remain unanswered, it will be difficult to believe that the war against corruption in state companies is for real, and not just an election campaign trick. Putin, however, as a presidential candidate does have another chance to convince us of the seriousness of his intentions. To do this, all he needs to do is go on live television, set the table and invite all of his numerous friends, KGB colleagues, judo partners, Ozero cooperative neighbours, etc. – in short, all those outstanding people who became billionaires overnight by doing business with the state – and say to them, “That’s enough. You guys have gone way over the line!”