Russia's Corrupt Crackdown on Corruptionby
For the first time in its history, the Russian parliament is about to expel one of its members for mixing private interests with public service. The move would be a triumph, were it not aimed at one of the most vociferous opponents of President Vladimir Putin.
The legislator in question, Gennady Gudkov, has at least one thing in common with the president: Both are former KGB colonels. Before entering politics, Gudkov built a large private security company which employs 5,000. He now serves on the security committee in the State Duma, the lower house of parliament. Initially a member of the Kremlin-loyal United Russia party, Gudkov switched to the opposition Fair Russia party and has taken part in mass protests against Putin's authoritarian rule. In the current Duma, few have been as outspoken against the regime.
On Sept. 12, the Duma will vote on ejecting Gudkov for setting up and running a business while serving in the Duma -- an activity that, while technically against the rules, is widely practiced in the parliament and government. The Russian Investigative Committee, Russia's FBI, has accused Gudkov of managing a construction firm, investing in foreign companies and evading Russian taxes by moving his money offshore. Since the pro-government party United Russia holds a solid majority in the Duma, Gudkov is as good as gone.
Gudkov is certain his planned expulsion from the Duma is part of a Kremlin plot. “This is a plan that has been adopted by the presidential administration to work against opposition leaders,” he told the daily Kommersant.
He has good reason to believe he has been singled out. Back in March, Deputy Prime Minister Igor Shuvalov suffered no consequences when it became public knowledge that his family had made tens of millions of dollars co-investing funds with Russia's wealthiest businessmen. Gudkov's son and fellow Duma deputy, Dmitri, used his LiveJournal blog to publish evidence suggesting that five United Russia legislators have continued to do business while sitting in parliament.
Under Putin, the line between business and government has become particularly blurry. Many ambitious businesspeople have moved into the public sector, a function of the government's growing role in the economy and the lure of sloppily distributed, oil-fueled budgets. The country's anti-corruption laws, which require people joining any branch of government to divest themselves of business interests or at least place them in trust, are easy to circumvent. The most common practice is to hand assets over to wives or other family members. Shuvalov did that. So did Gudkov, whose wife now heads his security firm. Yet in many cases, the officials and parliament deputies still effectively run their businesses.
The younger Gudkov has focused on exposing the business activities of his father's harshest critics. His analysis of the property and income declarations of United Russia member Andrei Isayev -- whom he quoted as saying "I believe that all citizens must be equal before the law” -- showed that the legislator had acquired shares in a company called IGP Group and real estate in Russia and Germany worth much more than his Duma salary allowed. Another United Russia deputy, Grigory Anikeyev, openly declared an income of 2.7 billion rubles ($90 million) in 2011, clearly from his numerous business interests.
“In five years of working in the Duma he has introduced two amendments and put his signature to two bills, both introduced by groups of deputies,” the younger Gudkov wrote. “Should we ever happen to see him in the State Duma, we will shake his courageous hand."
Independently, Sergei Mitrokhin, leader of the opposition movement Yabloko, published a list of 13 United Russia members who allegedly ran private businesses while serving in the Duma. His accusations, like Gudkov's, were based on official information from the Russian companies register. “It is clear that if Gudkov is stripped of his mandate, the same should happen to members of United Russia,” Mitrokhin wrote. “Otherwise this is selective use of the law.”
United Russia members were unrepentant. “There is nothing illegal in the activities of members of our faction,” deputy Vladimir Burmatov announced on the party's official website. “Deputies are allowed to own property and be wealthy people,” Some of the legislators named by Gudkov and Mitrokhin stressed that they no longer ran the companies in question or that the firms were no longer going concerns. “The only asset of that firm is a corporate seal,” Isayev told Business FM radio, referring to IGP Group. Yet, in comments for the same story, lawyer Vladimir Yurasov stated that “Duma deputies are forbidden to own any type of commercial structure,” whether active or not. Parliament members who were directly accused in the two LiveJournal posts of setting up companies while in the Duma made no public comment on the matter.
The main message sent by Gudkov's expulsion is that if you want to break the rules, you’d better be loyal to Putin. It might, though, also have some desirable effect on other officials. Although the Putin-era political elite is undeniably corrupt and contemptuous of the very idea of public control, open criticism has at times forced government departments to cancel rigged procurement tenders. There is even some anecdotal evidence that, in recent months, bureaucrats have been wary of demanding kickbacks for fear of being caught. Now that legislators' private businesses have become the subject of public discussion, the more far-sighted of them might be compelled to clean up their acts.
(Leonid Bershidsky, an editor and novelist, is Moscow and Kiev correspondent for World View. Opinions expressed are his own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author of this story:
Leonid Bershidsky at email@example.com
To contact the editor responsible for this story:
Mark Whitehouse at firstname.lastname@example.org