Johnson's Russia List
#8037
28 January 2004
[log in to unmask]
A CDI Project
www.cdi.org
#13
Moscow Times
January 28, 2004
Kickback Culture Is a Way of Life
By Patrick Gill
Special to The Moscow Times
Greasing palms is an unavoidable element of business life in Russia that
shows no sign of disappearing, Muscovites and expatriates say.
Bribes are still an essential tool in business and everyday life, despite
the government's pledges to combat corruption and clamp down on kickbacks,
they say. Most businesspeople say paying inducements is as necessary as
ever, mainly because the time-honored culture of bribery still goes to the
top of state organizations and much of the private sector.
Although no figures are available for how many bribes change hands each
year, some estimates put the volume of bribery on a par with the federal
budget.
A 2002 survey carried out by corruption watchdog Transparency International
rated Moscow as the country's most corrupt business region. In 2001 the
Prosecutor General's Office said 50 percent of all illegal income came from
bribing officials.
Doing business with private companies and state organizations appears
equally likely to involve sweeteners.
"For sure, bribery at Moscow customs is still rife from top to bottom,"
said a British expatriate in the logistics business. "It can be a simple
matter of $50 to get your customs entry processed quickly, or you can be
talking thousands of dollars for importing cargoes without the importer
having to pay import tax and duty [at about a combined 25 percent of the
cargo's value]," he said. "Even if you pay to avoid paying full import
duty, you still get official paperwork that proves to the tax authorities
that the cargo has been imported legally."
He said he believes 50 percent of all cargo coming to Moscow by air, road
or rail enters in this manner, which would mean millions of dollars in
unpaid taxes entering the gray economy.
"This situation has not changed at all, despite customs authorities
claiming that they have clamped down on this type of tax evasion," he said.
"The scam goes right to the top of customs, each shift is on the take and a
percentage of what they make goes to the top, so it's not in anyone's
interest at customs to stop it. For a shipment worth $100,000, the combined
tax and duty would be in the region of $25,000. You can pay customs
something like $5,000 and your cargo is cleared, including supporting
documentation to prove it's been imported legally. The $5,000 would then be
split between the customs officers responsible."
Many businesspeople said the request for bribes, whether from officials or
businesspeople, is generally direct.
"Davaite reshim problemu po-drugomu" (Let's solve the problem another way)
has long been a common phrase in everyday life.
Much of the blame for the widespread culture of kickbacks is due to the
country's huge bureaucracy and weak legal system, said a Russian lawyer at
a U.S. law firm in Moscow, who said he had had to bribe the army to avoid
being conscripted.
Small-business owners continue to rate bribery as one of the main factors
stifling their growth. A common scam occurs when entrepreneurs apply to
banks for credit to start up a new business, said one man who tried to do
just that in the Volga region. The bank agreed to give him a loan, he said,
with the proviso that it was secured by the local administration. The
administration agreed to the deal, but with the stipulation that 20 percent
of the loan be paid to a senior official.
Most expatriates seem to join Russians in taking a resigned approach to the
issue of paying sweeteners.
"Bribery is certainly negative for the development of Russia," said one
expatriate, "but on the other hand you can easily solve problems this way."
*******
|