CORRUPTION Syndromes of Corruption

Oligarchs and Clans 125
Russia has attempted a massive (and massively uneven) dual transition
to democracy and a market economy, comprehensive assessment of
which lies well beyond the scope of this discussion. I will focus instead
on corruption in privatization processes, and on its links to organized
crime and violence, from the fall of the Soviet system through mid-2003.
That date is somewhat arbitrary, but does bring the analysis up to about
the time of the arrest of Mikhail Khodorkovsky, richest of the so-called
‘‘oligarchs’’ – a turning point of sorts whose implications will take some
time to become apparent. This first post-communist era saw a run on
former state assets, first by members of the old nomenklatura and then by
powerful oligarchs; declining state autonomy, administrative capacity,
and political credibility; and a pervasive climate of insecurity – problems
that encouraged further corruption and violence. While privatization
issues scarcely exhaust the full range of Russian corruption, they are
among the country’s most significant corruption problems (Shelley,
2001; Satter, 2003), and vividly illustrate the origins and consequences
of Oligarch and Clan corruption.
The sheer scope of Russian corruption is striking. Former Interior
Minister Boris Gryzlov estimated state revenues lost because of organized
crime at $1.57 billion for 2002, an increase of one-third over the previous
year (Lavelle, 2003). In early 2002 Transparency International and the
InDem (Information for Democracy) Foundation, the latter controversial
in its own right because of its political ties, surveyed citizens and
businesses in forty regions about experiences with corruption (Grigorian,
2003). Not surprisingly, they found considerable variation: Arkhangel’sk,
Bashkortostan, Karelia, and the regions of Krasnoyarsk and Novgorod
reported relatively low levels of corruption while the Altai, Volgograd,
Moscow, Rostov, and St. Petersburg ranked at the top of the table.
Annual bribe payments by citizens were estimated at 23 billion Rubles
(approximately $752 million) in Tambov region and R22.4 billion (about
$732.5 million) in Moscow, for example. 1 Business bribery in Moscow
alone was estimated at nearly R230 billion (roughly $7.5 billion).
Another InDem survey put corruption into comparative perspective:
the $3 billion in bribes by citizens are the equivalent of about half of
their income tax payments, while the $33 billion paid by businesses
equaled half of the federal government’s revenues in 2002. Education
employees were the biggest takers on aggregate ($449 million in 2002)
followed by traffic police at $368 million (Tavernise, 2003a). Irina
Hakamada, Deputy Speaker of the State Duma, told a 2003 gathering
1 Dollar figures based on the exchange rate of US$1.00 ¼ 30.58 Rubles as of September
18, 2003.