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Analysis & Opinion
01.12.11 Anti-Corruption Vigilante
By Tai Adelaja

Russian business elites have taken their anti-corruption battle to a new level in the latest sign of their frustration at the lack of credible efforts by the Kremlin to deliver on its fight against corruption. Business lobby group Delovaya Rossiya declared on Wednesday that it has set up a “Business against Corruption” center that will serve to counterbalance Russia's notorious bureaucracy and compel government officials and law enforcement agencies to fight corruption in earnest. The move, experts say, also reflects increasing signs of public impatience with the Kremlin and its inability to show evidence of concrete achievements of its anti-corruption policies.

Delovaya Rossiya said the new center, which will process fraud and corruption complaints from businesspeople, will partner with the Ministry of Economic Development as well as other law enforcement agencies. "The center will process all complaints referred to it and make decisions about who's right and who's wrong," said Boris Titov, who heads the business lobby. "The complaints will then be turned over to the Center's Supervisory Board, which will include representatives from all law enforcement agencies." Efforts to combat corruption are at best half-hearted and are not bringing any apparent results, said Yana Yakovleva, the president of Business Solidarity, a lobby group for small businesses. "The idea here is compel state agencies to really expose corruption in society rather than pretending to do so," Yakovleva said.

A report released by Transparency International on Wednesday showed that Russia’s ranking among the world’s most corrupt nations fell to the lowest level since 2007, the year before President Dmitry Medvedev came to office. Russia was classified as the 143rd most-corrupt country out of 182 surveyed in Transparency International’s 2011 Corruption Perceptions Index, an improvement on its 154th place the previous year. Despite the improved ranking, however, the country remains the world’s most corrupt major economy, with a score of 2.4 on a scale from zero (highly corrupt) to ten (highly clean) and the level of graft equal to those of Uganda and Nigeria. Yelena Panfilova, the head of Transparency International's Russian branch, told RIA Novosti earlier that a score below three describes the level of corruption in a country as extremely high. The 2011 index shows that nearly two thirds of the listed countries score below five. New Zealand is the least corrupt country and Somalia – the most, according to the Berlin-based anti-corruption watchdog.

Russian President Dmitry Medvedev has repeatedly declared the fight against corruption as one of the cornerstones of his domestic policies. But in the latest acknowledgement of the severity of the problem, Medvedev told some 11,000 supporters of the pro-Kremlin United Russia party on Sunday that "everybody is fed up with corruption and with the system's stupidity." Russians paid at least 164 billion rubles ($5.35 billion) in bribes last year to buy off teachers, traffic policemen and others in “everyday” situations, almost double the level in 2001, the Economy Ministry said in June.

Along with their Russian counterparts, many foreign investors said they are losing confidence in the worsening Russian investment climate, which is plagued with corruption and bureaucracy, according to a survey conducted by Nezavisimaya Gazeta this week. European and Asian entrepreneurs who work in Russia cite the lack of clarity in business legislation and the lack of transparency in political decisions as their main problems in doing business in Russia, the report said. Other foreign entrepreneurs said that despite years of efforts by the Kremlin, the business climate remains unpredictable, while bureaucracy and corruption remained entrenched.

While it is both promising and full of opportunities, only foreign investors with solid nerves and patience can survive the harsh Russian investment climate and reap benefits from it, the report said. "There are business opportunities, but there are also complications working here," said Rajinder Sethi, the chairman of SREI Infrastructure and Leasing, one of the foreign businessmen polled by Nezavisimaya Gazeta. Just about every foreign company operating in Russia has a horror story about Russian bureaucracy, "which is so ubiquitous that it is practically unavoidable."

Frank Muller, the managing director of Swiss Asstra, believes that the Russian government functions as a controlling organ with regard to businesses, rather than as a friend or partner. Muller, whose company specializes in road haulage services between Western and Eastern Europe, said excessive bureaucratization and numerous checks instill a sense of insecurity in the business community. "In Russia, people still believe in miracles and thanks to that, the miracles sometimes happen," Muller was quoted by Nezavisimaya Gazeta as saying. "Sometimes, some things do happen that are totally illogical and completely inexplicable, but which people nonetheless intuitively anticipate. That is the riddle of Russia."
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