Palm-greasers beware: Russia raises the stakes on corruption

Adding teeth to his anti-corruption campaign, President Dmitry Medvedev is looking to substantially increase the penalty for individuals found guilty of corruption.

­Medvedev on Wednesday introduced a bill amending the Criminal Code of the Russian Federation and the Code of Administrative Offenses "with the view of perfecting state governance in the field of counteracting corruption."

The bill, which has already been favorably reviewed by government members and the Supreme Court, would allow Russia’s judicial system to come down hard on individuals engaged in corrupt business practices, including “bribe-giving, bribe-taking and bribery mediation.”

The Russian leader's initiative promises to create some aftershocks across the country, where the wheels of the economy continue to be greased by under-the-table envelopes.

According to a recent report by the Russian Interior Ministry, the average size of a bribe nearly tripled between 2008 and 2009 – despite, or because of, a weakened global economic climate. Ironically, this may turn out to be good news for Russia.

Medvedev’s corruption bill introduces provisions that will increase fines for “crimes related to bribery” to 100-times the sum of the bribe, but not more than 500 million rubles. Considering that bribes in Russia are becoming more expensive, the new law would work to boost state coffers, thus helping to pay for the president’s extensive police reform announced last month.

Clearly, the Russian is government is looking to get some traction against palm-greasers. Despite the government’s efforts to weed out bribery, Russia managed to slip eight places in Transparency International’s corruption index.

The report, which was released in October, placed Russia 154th out of 178 – 20 places behind Ukraine and 27 below Belarus.

In light of Russia’s efforts to become a member of the World Trade Organization, such rankings could scuttle those plans, not to mention discourage international investment in the country. Meanwhile, Russia is looking to polish its reputation as it prepares to host several major international events, including the Winter Olympic Games in Sochi in 2014, and the FIFA World Cup in 2018.

Although Russia is making headway against the age-old “tradition” of giving and taking bribes – once described by Medvedev as “legal nihilism,” which permits under-the-table buyoffs for everything from traffic violations to lucrative business contracts – the black market industry continues to thrive, costing Russia billions of dollars every year.

According to Dr. Deborah Swallow, an international business consultant from the United Kingdom, the black market economy in Russia “is a huge industry, estimated to be the equivalent of the GDP of Denmark – some $300 billion.” 

Since not all of the offenses are committed on the territory of Russia, the bill foresees a new chapter on dealing with administrative offenses that are initiated on the territory of a foreign state, specifically against legal entities involved in bribery.

Dr. Wilfried R. Vanhonacker, the Dean of Skolkovo Business School in Moscow, told RT in an interview that corruption is an international problem that is not just relegated to Russia.

“The fact is, [corruption] is part of reality,” he said. “It’s everywhere in the world.”

Dr. Vanhonacker said he regretted that for too many business school students, their world has become distorted and this can naturally lead to corruption.

“All of a sudden,” he said, “that’s what this world is all about. And now we are surprised that there is greed, and that there is funny behavior. They’ve lost their grounding.

“You talk to these kids about corruption, but how can they relate to that? You can’t even talk about it.”

In addressing the universal problem of corruption, Vonhacker said it is the duty of business schools to

“make students aware of the reality, make them aware of the situations, because they are going to face those decisions.”

Last month, Medvedev told attendees at the World Economic Forum in Davos, Switzerland that he was confident Russia would eventually emerge victorious in war against corruption.

"I have no illusions that this will happen in one or two years, but I'm happy that we've begun this job. I'm sure that we will stamp out corruption," the Russian president said in his opening speech at the forum.

Robert Bridge, RT