In Russia, bribes drive up the cost of living
MOSCOW (AP) — The Moscow construction company executive ticks off bribes typically paid by construction companies here for a long list of permits and inspections needed to build a residential apartment building — or anything else in Russia.
As a result, he estimates that every apartment ends up being 10 to 15 percent more expensive than it should be, with the additional — but largely hidden — cost ultimately passed on to the consumer.
Russia has long been seen as extremely corrupt, an assessment backed up by international corruption ratings, with bribery engrained in society. Even before the collapse of communism, a bottle of vodka could smooth the way for a visa or official document and favors to those wielding influence could lead to a good apartment or job. But ask average Russians today how often they give bribes, and the answer is “never” or “not often.”
The reason: Corruption in Russia has become institutionalized and is invisible to most, but it weighs on the price of almost everything, from apples to subway tickets to medical care.
Bribes are priced into groceries and other goods, for example, since truck drivers say they have to pay off policemen along their route. Many imported goods are more expensive not only because of duties but because importers complain of having to pay customs officials under the table to speed up clearance of their cargo.
Georgy Satarov, a former Kremlin adviser and political scientist who studies corruption, said there has been no comprehensive research in Russia to establish how corruption affects the end price of goods. But studies in Kyrgyzstan by his Indem research institute show that corruption accounts for nearly half the cost of retail goods in that former Soviet republic. He said he would expect the impact on prices to be about the same in Russia.
Ordinary Russians still pay bribes, of course, and the Associated Press talked to more than two dozen people who recounted payments they had made — to secure a cemetery plot, to jump the queue for surgery covered by the national health care system or to avoid a traffic ticket.
But few people will speak publicly about paying bribes because it is tantamount to confessing to a crime, punishable by a prison term of up to 12 years.
Moscow police said that the average amount of the bribes paid by people they arrested in 2015 had doubled over the year before to reach 654,000 rubles ($9,300) per bribe. Some of the more publicized cases involved government kickbacks and bribes at that level reflect what’s being paid by companies to pass bureaucratic hurdles. Bribes paid by individuals in more everyday situations are more often in the range of 1,000 rubles ($15) and 15,000 rubles ($220).
Gone are the days when money was slipped into someone’s hand or passed in an envelope. The potential for arrest helps to explain why. Instead, payments are usually made through a third party.
“A while ago, people accepted envelopes, but nowadays no one will take an envelope,” said the construction company executive, Andrei, who spoke on condition that his last name was not published for fear of repercussions for his company and clients. “You’d be caught red-handed. It’s all done with the help of shell companies now.”
Satarov said this “institution of intermediaries” has developed to “lower the risk and discomfort of paying a bribe.”
For example, an official will suggest wiring money to a separate company, or a hospital will put a patient in touch with a middleman who can get around waiting lists and arrange payment.
Talk to Russians about their experience getting a driver’s license and many will recall how the examiner at the department of motor vehicles passed along the number of a retired policeman, who then took their money and made sure that they passed the driving test the next time around.
In Russia, paying a bribe also can help people get around a law that makes no sense or flout laws they find inconvenient, like speed limits.
The construction company executive said paying bribes is the only way his business can survive.
“The system works in such a way that it is easier for you like this, to pay money to the officials,” Andrei said. “It’s faster and cheaper than doing this without the bribes.”
Any delay in obtaining a permit would put a drag on construction, requiring developers to pay more in wages and in interest on loans, he said.
The advent of a market economy after the 1991 Soviet collapse brought in investment and spurred a construction boom in Moscow and other big cities. But the Soviet-era regulating agencies largely stayed in place, with their outdated requirements and myriad inspections.
Andrei described an elaborate system of obtaining permits and passing inspections, with at least 12 stages where construction firms typically pay bribes. He said there are layers of state agencies with overlapping responsibilities, creating situations where some inspectors are issuing certificates for activities that have already been vetted by other agencies.
While the government has taken steps to address such corruption, it is proving difficult to squash.
In an address to the presidential Council to Fight Corruption, Russian President Vladimir Putin last month praised police and prosecutors for their efforts to battle corruption. To back up his point, Putin noted that more than 8,800 people were convicted of corruption between January and September last year and 11,000 officials were penalized for “violating anti-corruption standards.”
Putin warned, however, that it may take a long time to eradicate everyday corruption and bribery.
“We’re not talking about defeating it today or tomorrow. It is a difficult task, very hard to achieve but if we stop, things will only get worse,” he said.
Russia’s truck drivers say paying bribes is just part of doing their jobs.
“Every step of the way you have to pay,” said Andrei Bazhutin, a long haul trucker. “How much depends on the appetites of traffic policemen on the road.”
“I’ve left St. Petersburg and I’m en route to Irkutsk, 5,000 kilometers (3,000 miles) away, and if a traffic policeman starts extorting a bribe from me halfway, what am I supposed to do? Turn back?” he said.
According to Bazhutin and other truckers who spoke to the AP, a driver can expect to fork out from 50,000 ($715) to 70,000 rubles ($1,000) in bribes on a 5,000-kilometer route for things ranging from charges of being overweight to poor maintenance of the truck.
They were among about two dozen truckers who have been parked for months at a shopping mall on the outskirts of Moscow to protest a new road tax. They say that the tax, coming on top of all the bribes they already have to pay, was the last straw.
Lyubov Sobol is an associate of Russia’s best known anti-corruption crusader, opposition leader Alexei Navalny. As part of his team, she has been investigating contracts that the Moscow city government has signed either with companies affiliated with government officials or involving suspected violations of the law.
“Everyone who lives in Moscow does not receive the services they are entitled to since a significant percentage (of the budget) gets eaten because the government pays higher prices for goods and services because of corruption and kickbacks,” she said.
In one of the contracts she investigated, the city committed to buying subway cars for the next 30 years from Transmashholding, a company in which the chief of the Moscow transportation department used to hold a stake.
Before the company won two contracts totaling 277 billion rubles ($4 billion), several other potential bidders, including major foreign companies, sent a complaint to the anti-monopoly agency claiming that the tender requirements favored Transmashholding. The agency found violations in the tender, but still declared it valid.
The transportation department chief, Maxim Liksutov, initially said that his lawyers had made a mistake by not disposing of his stake in time. Later, the stake, estimated to be less than 50 percent, ended up in the hands of his wife, whom he subsequently divorced. Liksutov denied any wrongdoing.
Sobol said the subway cars cost the city more than they should have. “So every time the fares increase, Muscovites pay for this,” she said.