Corruption and Organised Crime in Putin's Russia

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Notes

I am indebted to the Australian Research Council (ARC) for funding that has greatly facilitated the research for this project (ARC Large Grant No. A79930728 and ARC Discovery Grant No.DP0558453).

See http://www.kremlin.ru/eng/speeches/2008/02/14/1011_type82915_160266.shtml, accessed 19 February 2008.

For example, Kommersant, 27 September 2007.

See note 2 to Table 1 for an explanation of these scores.

A good example of the slowdown in comparative empirical research generally in the area of criminality is the delay in what should have been the 2004 International Crime Victim Survey (ICVS), run by the United Nations Interregional Crime and Justice Research Institute (UNICRI). This eventually became the 2004–2005 ICVS. Parts of this, including the Australian section, have been completed and the results published (http://www.aic.gov.au/research/projects/0088.html, accessed 28 January 2008)—whereas the main official website for the whole project includes data and statistics only for the 1989, 1992, 1996 and 2000 surveys (http://www.unicri.it/wwd/analysis/icvs/data.php, accessed 28 January 2008 and checked again 20 March 2008). However, for a detailed overview of some of the 2004–2005 survey results see Van Dijk et al. (2007); unfortunately, this contains no results for Russia.

The term mafia is used here in the technically inaccurate but more common way, to refer not only to the true, Sicilian mafia, but also to other major organised crime groups in Italy, such as the Calabrian 'Ndrangheta (Paoli 2000), the Neapolitan Camorra (Di Fiore 2005) and the Puglia-based Sacra Corona Unita (Massari 1998). On the Sicilian mafia see Gambetta (1993) and Hess (1998).

Moscow News Weekly, 27 November 2007.

An amendment to the 2001 law became effective in July 2004.

All available at: http://www.gks.ru/wps/portal/!ut/p/.cmd/cs/.ce/7_0_A/.s/7_0_332/_th/J_0_CH/_s.7_0_A/7_0_FL/_s.7_0_A/7_0_332, accessed 21 January 2008.

ITAR-TASS, 6 February 2008.

ITAR-TASS, 6 February 2008.

All available at: http://www.gks.ru/wps/portal/!ut/p/.cmd/cs/.ce/7_0_A/.s/7_0_332/_th/J_0_CH/_s.7_0_A/7_0_FL/_s.7_0_A/7_0_332, accessed 21 January 2008.

Interfax Russia and CIS General Newswire, 20 August 2007.

For Putin's speech at this meeting see: http://www.kremlin.ru/appears/2004/01/12/1844_type63374type63378_58986.shtml, accessed 14 March 2008.

See http://en.rian.ru/russia/20070914/78778373.html, accessed 14 March 2008.

Unfortunately, FH's method for assessing a country's corruption level varies over time. In the 2007 edition of Nations in Transit, the rating is based on ‘public perceptions of corruption, the business interests of top policy makers, laws on financial disclosure and conflict of interest, and the efficacy of anticorruption initiatives’, available at: http://www.freedomhouse.hu/images/fdh_galleries/NIT2007/nit%2007%20methodology.pdf, accessed 21 January 2008.

See http://www.freedomhouse.org/template.cfm?page=47&nit=406&year=2006, accessed 21 January 2008.

For a pre-1999 FH rating, which uses a different form of scaling, see Karatnycky (1999, p. 13).

Kommersant, 31 October 2006. A newspaper report on this survey is presented here because the full report was still not available electronically on the INDEM website at the time of writing (but see for example, Georgy Satarov's presentation of 18 October 2006 available at: http://www.anti-corr.ru/cipebc2.htm, accessed 17 March 2008). For a slightly earlier (2004) and fuller report see Golovshchinskii et al. (2004); survey results are mainly on pp. 22–34.

‘Corruption in Russian Business Worsens: Survey’, Reuters, 18 October 2007. Unfortunately, the Reuters article from which this information is taken treats corporate crime and corruption interchangeably, and I was unable to locate this survey on the PricewaterhouseCoopers website. Thus it is not possible to be absolutely certain that the survey indicated an increase in the number or scale of bribes to state officials, despite the article's wording.

The number of surveys used in the 2007 CPI varied from three in countries such as Cyprus, East Timor and Vanuatu to 11 in Indonesia, while the confidence range varied from 0.1 in East Timor to 3.1 in St Vincent and the Grenadines. Conversely, and as an advantage of the 2007 CPI over the 2007 GCB, the former assessed 179 countries and territories, whereas the latter evaluated only 60.

I have slightly modified this question from the actual wording in the GCB Report, since the original is incorrectly worded (it says to each[emphasis added—LTH] of the following institution/organisation [singular]; it is highly unlikely that anyone anywhere paid a bribe to all of the 11 institutions listed). I have—perhaps naively—assumed that the intended meaning was included whenever the English version was translated into another language and/or that respondents were intelligent enough to assume that they were being asked about any one or more of the 11 institutions.

The year 2004 was the first in which the GCB asked this directly experiential question. It is also noted here that only 8% of respondents admitted that they or members of their household had paid a bribe in 2006; this made Russia look much better than in other years compared with many other countries.

All results cited from the various editions of the GCB are from Galtung et al. (2003, p. 28), Hodess and Wolkers (2004, p. 22), Hodess and Lavers (2006, pp. 7, 18), and Transparency International (2007, pp. 4, 21, 23).

According to the Energy Information Administration, Russia was the world's second largest oil producer and second largest oil exporter in 2006, in both cases behind Saudi Arabia.

Though for evidence that Putin was not as anxious as might be expected to address the alcoholism that is one of Russia's worst social problems see Parfitt (2006).

For criticism of this situation by the head of INDEM, Georgy Satarov, see Moscow News, 11–17 January 2006; see too Aslakhanov (2004, p. 403).

Kommersant, 27 September 2007.

See http://www.kremlin.ru/eng/speeches/2008/02/14/1011_type82915_160266.shtml, accessed 19 February 2008.

The problem was so acute that one Western commentator argued that the inability of the Russian state to raise taxes was by the late-1990s ‘… rapidly becoming the greatest threat to economic and political stability in Russia’ (Treisman 1998, p. 55).

Johnson's Russia List, 6 June 2004, item 6.

See the January 2008 criticisms of it by Speaker of the Federation Council Sergei Mironov, in Johnsons Russia List, 4 January 2008, item 9. The amnesty was effective March–December 2007, and raised less than 3.7 billion rubles (approx. $150 million)—a small sum relative to the size of the Russian economy (figures from RIA-Novosti, 25 January 2008, available at: http://en.rian.ru/russia/20080125/97747716.html accessed 17 March 2008).

Gazprom, Russia's main gas-producing company, is the world's largest gas production company, and accounts for approximately one quarter of all tax revenues to the Russian Federation.

The Three Whales case is complex, and cannot be examined in detail here. It centred on a furniture import company (‘Three Whales’) that was accused of weapons and oil smuggling, as well as money laundering, in which senior members of the FSB and Customs were alleged to have been involved. Senior FSB and Procuracy officials halted an investigation into the matter by more junior officers, in an alleged cover-up. This eventually came to light, and resulted in a string of resignations by senior FSB and Customs officers and the former Prosecutor General between June and September 2006. Moreover, a number of people related to the case were murdered or died in mysterious circumstances, while others received death threats or lost their jobs. For details see Yasmann (2006).

One aspect of corruption not considered in this essay is electoral fraud, which, in the Russian case, deserves its own detailed study. Here, it can be noted that despite many claims of widespread fraud (see for example, Moscow News, 27 November 2007, p. 1), proven cases remain relatively few in post-Soviet Russian elections. Questionable practices, on the other hand—such as highly unequal and inequitable amounts of campaign funding and airtime—are common.

Until 1992, Freedom House ranked the USSR, but not individual component parts. The USSR had been ranked Not Free until 1991, but then Partly Free in 1991 and 1992.

See for example, ‘Putin podpisal zakon o protivodeistvii ekstremizmu: “Reportery bez granits” opasayutsya, chto eto privedet k napadkam na svobodu slova’, Reporters Without Borders, 27 July 2007, available at: http://www.rsf.org/article.php3?id_article=23077; ‘Report: Press Freedom Declines in Russia’, The Other Russia, 7 May 2007, available at: http://www.theotherrussia.org/2007/05/07/report-press-freedom-declines-in-russia/, both accessed 16 March 2008.

For a wide-ranging set of analyses of various aspects of the Russian media see the recent special section of Europe-Asia Studies dedicated to this topic (59, 8, December 2007).

In its June 2007 assessment of Bulgaria's and Romania's first five months of membership of the EU, the EU Commission was highly critical of the two countries' lacklustre efforts against corruption, and threatened to impose sanctions in 2008 unless they demonstrated a higher level of commitment. In January 2008, the EU did freeze Bulgaria's infrastructure subsidies because of a corruption scandal (Southeast European Times, 27 January 2008). However, the EU announced in early February 2008 that, despite its ongoing and serious concern about the levels of corruption in both countries, and organised crime in Bulgaria, it would not impose sanctions at present. See http://euobserver.com/9/25587/?rk=1 accessed 19 February 2008.

It is acknowledged that the EU does have projects designed to combat corruption in Russia, such as RUCOLA-2 that ran from July 2006 to November 2007, but the EU simply does not have the leverage over Russia that it has had over recent applicants for membership.

It is ironic that, during the negotiations on the UN Convention, Russia endorsed a proposal for compulsory transparency in the funding of political parties while the US vetoed it. As is often the case, the United States' approach to democracy was shown to be at least ambiguous, and arguably hypocritical.

Yakovenko (2007, p. 3); ITAR-TASS, 28 November 2007.

Russia began negotiations for membership of the WTO in 1993. In April 2006, its chief negotiator (Maksim Medvedkov) suggested that Russia could well be admitted in March 2007, but this still had not occurred by early 2008.

Economist, 1 April 2000; Goldman (2005, pp. 316–17); Newsweek, 23 October 2006. There are far fewer examples of corporations playing this good citizen role than of companies that have been accused of offering bribes to secure contracts, licences, permits, etc. But other ‘good guy’ examples from the post-communist world include Motorola in Ukraine and Unilever in Bulgaria.

See http://www.medvedev2008.ru/performance_2008_01_22.htm, accessed 19 February 2008.

Ariel Cohen (1995, p. 40) has pointed out that Yel'tsin launched seven anti-crime campaigns between 1991 and mid-1994, apparently to little effect. To his credit, Putin acknowledged that anti-corruption campaigns are often a waste of time and effort.