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4 Jun, 2009 06:17

Sold to the highest kickback!

Even during times of financial strain, state officials are buying luxury vehicles, and calling them necessities.

That is how lucrative government contracts are often won in Russia. But one agency is investigating fraudulent bids, and forcing offenders to pay-up.

Powerful, shiny and expensive – a new Cadillac Escalade is a true luxury. But for the Sochi branch of the Russian education academy, the car is a necessity. Its managers were happy to spend taxpayers’ money to purchase a “Caddy”.

Transparency International – a worldwide corruption watchdog – says “kickback” is the key word here.

“In wholesale, in purchases for clinics, hospitals and schools it’s 10-15 percent, but in areas like construction, the kickbacks can reach up to 40 percent,” Elena Panfilova from Transparency International Russia explains.

And if buying an Escalade in order to drive teachers to the beach is not impressive enough, more examples are available.

A custom-built, million-dollar bus was bought by local administrators in central Russia's Volgograd region, to be used on a picnic ride.

“It's equipped with a shower, beds, conference room, a bar and several plasma TVs,” said a lawyer, Roman Danilov.

The city’s authorities registered the bus as public transport, but it was never available for ordinary people. A recent probe into the case resulted in fines. The bus has been turned back into a regular economy-class coach.

“We pass corruption cases to the law enforcement agencies, especially when there are serious violations. Plus we file lawsuits against organizations to cancel these contracts. If it happens, the auction process for tenders will be re-run in accordance with the law,” Mikhail Evraev of Russia’s Federal Antimonopoly Service has said.

Some studies suggest 1.3% of the country’s gross domestic product is being paid as kickbacks.

President Medvedev has made corruption a target and introduced new laws to combat graft in the Russian bureaucracy.

Even though electronic auctions were introduced in Russia to prevent embezzlement, it still occurs. But as more cases of fraud involving officials and company executives are taken to courts and stiffer sanctions are imposed, the hope is that public life will become more transparent, and accountable, before the law.