Ethan S. Burger, Esq. Adjunct Professor Georgetown University Law Center E:Mails: [email_address] [email_address] Implementing Russian Law, No. 273-FZ “On Counteracting Corruption,” December 25, 2008: Should We Fight A Rush to Judgment?

Predictions (In General) Everyone can make predictions, but not everyone can be correct. Speculation about the future should be based on supportable, logical analysis. There are an infinite number of unpredictable factors that can influence or determine outcomes. How does one determine the amount of time to determine if there has been a discernable change in response to new policies?

Everyone can make predictions, but not everyone can be correct.

Speculation about the future should be based on supportable, logical analysis.

There are an infinite number of unpredictable factors that can influence or determine outcomes.

How does one determine the amount of time to determine if there has been a discernable change in response to new policies?

Some Comparative Perspective Former French President Jacques Chirac indicted for misuse of public funds for period 1983-95 (became President in 1995). Others French officials indicted in connection to illegal arm sales to Angola. Former Illinois Governor Rod R. Blagojevich of Illinois was impeached after his indictment for seek to selling political favors in exchange for campaign contributions. In connection with post-Katrina governmental efforts, a special government task force -- at least 1,300 individuals indicted. V.P. Cheney’s advisor Scooter Libber convicted of perjury; former Republican congressional leader Tom DeLay (TX) resigned after indictment; his spokesman, Michael Scanlon, pled guilty to bribery charges and cooperated to convict of Republican lobbyist Jack Abramoff. Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable, crimes in America.

Former French President Jacques Chirac indicted for misuse of public funds for period 1983-95 (became President in 1995). Others French officials indicted in connection to illegal arm sales to Angola.

Former Illinois Governor Rod R. Blagojevich of Illinois was impeached after his indictment for seek to selling political favors in exchange for campaign contributions.

In connection with post-Katrina governmental efforts, a special government task force -- at least 1,300 individuals indicted.

V.P. Cheney’s advisor Scooter Libber convicted of perjury; former Republican congressional leader Tom DeLay (TX) resigned after indictment; his spokesman, Michael Scanlon, pled guilty to bribery charges and cooperated to convict of Republican lobbyist Jack Abramoff.

Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable, crimes in America.

Categories of Corruption Routine – ‘low’ stakes (e.g. avoid “speeding” ticket; minor health/safety violations). Functional – ‘medium’ stakes (governmental approvals where recipient is entitled to sought action, getting documents notarized, education-related bribery). Vital – ‘high’ stakes (fixing of major court case, governmental approvals where recipient is not entitled to sought action, awarding of contracts, etc.).

Routine – ‘low’ stakes (e.g. avoid “speeding” ticket; minor health/safety violations).

Functional – ‘medium’ stakes (governmental approvals where recipient is entitled to sought action, getting documents notarized, education-related bribery).

Vital – ‘high’ stakes (fixing of major court case, governmental approvals where recipient is not entitled to sought action, awarding of contracts, etc.).

Medvedev’s Best Laid Plans May 2008, Medvedev issued edict creating Presidential Anti-Corruption Council. September 2008, Council’s Presidium detailed National Plan for Countering Corruption containing systematic action plan. November 2008, Medvedev identifies combating corruption as major priority in his First Annual Address to the Federal Assembly as President. December 25, 2008, Law enacted -- milestone or missed opportunity? Procuracy, FSB, non-governmental specialists want to leave their imprint on the forthcoming laws. Future legislative and administrative changes anticipated as “gap fillers.” March 2009, Medvedev in an interview candidly acknowledged that Russia is not ready to implement new anti-corruption laws, but he will declare his income.

May 2008, Medvedev issued edict creating Presidential Anti-Corruption Council.

September 2008, Council’s Presidium detailed National Plan for Countering Corruption containing systematic action plan.

November 2008, Medvedev identifies combating corruption as major priority in his First Annual Address to the Federal Assembly as President.

December 25, 2008, Law enacted -- milestone or missed opportunity?

Procuracy, FSB, non-governmental specialists want to leave their imprint on the forthcoming laws.

Future legislative and administrative changes anticipated as “gap fillers.”

March 2009, Medvedev in an interview candidly acknowledged that Russia is not ready to implement new anti-corruption laws, but he will declare his income.

What Does the Law Supposed to Do? Systematize and enforce existing “Black Letter” law dealing with state service and criminal law. Some Significant Features: (i) require state officials must declare income & net wealth (existing requirement); (ii) add “ratting” provision, i.e. inform on others’ unlawful conduct (innovation); (iii) refine concept of conflict of interests (innovation) , and (iv) make tenders for state purchases competitive (eliminate loopholes and give teeth to existing rules and procedures). BUT WITHOUT FOLLOW-UP (E.G., SEEING WHETHER TAXES WERE PROPERLY PAID AND THAT OTHER LAWS HAVE NOT BEEN VIOLATED) THE NEW LAW HAS BEEN CHARACTERIZED BY IRINA GRANIK AS “TOOTHLESS.”

Systematize and enforce existing “Black Letter” law dealing with state service and criminal law.

Some Significant Features:

(i) require state officials must declare income & net wealth (existing requirement);

(ii) add “ratting” provision, i.e. inform on others’ unlawful conduct (innovation);

(iii) refine concept of conflict of interests (innovation) , and

(iv) make tenders for state purchases competitive (eliminate loopholes and give teeth to existing rules and procedures).

BUT WITHOUT FOLLOW-UP (E.G., SEEING WHETHER TAXES WERE PROPERLY PAID AND THAT OTHER LAWS HAVE NOT BEEN VIOLATED) THE NEW LAW HAS BEEN CHARACTERIZED BY IRINA GRANIK AS “TOOTHLESS.”

Further Refinement of the Program Edict No. 558 -- presentation of information by persons seeking to become or serving as state officials about their income, property and obligations of a property character (hereinafter “financial data”). Edict No. 557 – on the approval of the list of federal positions subject to mandatory presentation of their financial data (as well as spouses and children). Edict No. 559 -- presentation of information by persons seeking or serving in positions with federal state agencies about their financial data. Edict No. 561 -- on the approval of the procedure for the presentation of financial data of federal state officials on state websites and to means of mass communication for publication. Edict No. 560 -- presentation of information by persons seeking or serving in positions in state enterprises, foundations, etc. of financial data (as well as spouses and children).

Edict No. 558 -- presentation of information by persons seeking to become or serving as state officials about their income, property and obligations of a property character (hereinafter “financial data”).

Edict No. 557 – on the approval of the list of federal positions subject to mandatory presentation of their financial data (as well as spouses and children).

Edict No. 559 -- presentation of information by persons seeking or serving in positions with federal state agencies about their financial data.

Edict No. 561 -- on the approval of the procedure for the presentation of financial data of federal state officials on state websites and to means of mass communication for publication.

Edict No. 560 -- presentation of information by persons seeking or serving in positions in state enterprises, foundations, etc. of financial data (as well as spouses and children).

Perhaps Some Reasons Not to Be Too Cynical Enactment of Federal Law "On Anti-Corruption Examination of Regulatory Acts and their Drafts,“ July 17, 2009, pursuant to which “independent examination of regulatory acts" will issue advisory opinions on the implications for corruption, but the Justice Ministry and Procuracy will play a leading role in the process. Investigative Committee head Alexander Bastrykin claims that 12 corruption cases were more than 896 billion rubles ($29 billion) allegedly were involved recently sent to prosecution. BUT was the Investigative Committee’s arrest and detention of Deputy Finance Minister Sergei Storchak, (a protégé of Russian Finance Minister Alexei Kudrin), who alleged was involved in embezzling funds from the Russian $147 Stabilization Fund (he was eventually released from prison but the case continues and the prosecution of Procuracy Investigator Dmitrii Dolgy’s (who opposed the investigation of Storchak) for accepting a bribe more political than legal.

Enactment of Federal Law "On Anti-Corruption Examination of Regulatory Acts and their Drafts,“ July 17, 2009, pursuant to which “independent examination of regulatory acts" will issue advisory opinions on the implications for corruption, but the Justice Ministry and Procuracy will play a leading role in the process.

Investigative Committee head Alexander Bastrykin claims that 12 corruption cases were more than 896 billion rubles ($29 billion) allegedly were involved recently sent to prosecution.

BUT was the Investigative Committee’s arrest and detention of Deputy Finance Minister Sergei Storchak, (a protégé of Russian Finance Minister Alexei Kudrin), who alleged was involved in embezzling funds from the Russian $147 Stabilization Fund (he was eventually released from prison but the case continues and the prosecution of Procuracy Investigator Dmitrii Dolgy’s (who opposed the investigation of Storchak) for accepting a bribe more political than legal.

Federal Executive Authorities Control over Natural Resources & Licenses (January 2009 law in contradiction to Constitution eliminates regional/local control over natural resources and environment. Control over the Investigative Committee (in theory). Control over the Courts (in theory). Control over FSB, MVD & Military (in theory). Fatalistic and naïve [and perhaps well-intentioned] hope of Medvedev’s Chief Economics Advisor, Arkady Dvorkovich, sees progress if corrupt state officials can be encouraged to quit government jobs.

Control over Natural Resources & Licenses (January 2009 law in contradiction to Constitution eliminates regional/local control over natural resources and environment.

Control over the Investigative Committee (in theory).

Control over the Courts (in theory).

Control over FSB, MVD & Military (in theory).

Fatalistic and naïve [and perhaps well-intentioned] hope of Medvedev’s Chief Economics Advisor, Arkady Dvorkovich, sees progress if corrupt state officials can be encouraged to quit government jobs.

Federal Districts & The Power Vertical Central District– Moscow Southern District - Rostov -on-Don (Caucasus) Northwestern District - Saint Petersburg Far Eastern District – Khabarovsk /( Vladivostok & Nakhodka) Siberian Federal – Novosibirsk /( Omsk) Urals Federal – Yekatrinburg Volga Federal -- Nizhny Novgorod

Central District– Moscow

Southern District - Rostov -on-Don (Caucasus)

Northwestern District - Saint Petersburg

Far Eastern District – Khabarovsk /( Vladivostok & Nakhodka)

Siberian Federal – Novosibirsk /( Omsk)

Urals Federal – Yekatrinburg

Volga Federal -- Nizhny Novgorod

Regional Corruption & Power Sharing The Federal District Model with Centralized Vertical Power Has Failed – Medvedev & Putin have not completely given up (Bashkortostan President Murtaza Rakhimov sees power vertical as a reality – perhaps only in potentially separatist areas?). The regional heads have given Moscow governmental elite (and their favorites) a free hand in activities broad. Regional Governors are kings in their own realm – today’s Obkom Secretary – Regional Heads “outlast” bureaucrats, and many federal officials follow their instructions rather than Moscow’s. At the same time, the Russian Duma has not acted most of regional assemblies’ proposed legislation – showing the one-way nature of Vladimir Putin’s “power vertical.” As a result, many officials in the regions and republics are offended since they believe they better understand local conditions and popular attitudes than Moscow.

The Federal District Model with Centralized Vertical Power Has Failed – Medvedev & Putin have not completely given up (Bashkortostan President Murtaza Rakhimov sees power vertical as a reality – perhaps only in potentially separatist areas?).

The regional heads have given Moscow governmental elite (and their favorites) a free hand in activities broad.

Regional Governors are kings in their own realm – today’s Obkom Secretary – Regional Heads “outlast” bureaucrats, and many federal officials follow their instructions rather than Moscow’s.

At the same time, the Russian Duma has not acted most of regional assemblies’ proposed legislation – showing the one-way nature of Vladimir Putin’s “power vertical.” As a result, many officials in the regions and republics are offended since they believe they better understand local conditions and popular attitudes than Moscow.

Winners and Losers After the onset of the economic crisis, the power of “autonomous oligarchs” has largely ended. The state may have “encourage” investment to further foreign policy goals. Given that there is only a limited amount of loans and subsidies to distribute, the leadership can further use the economy for political purposes – but is that “corruption.” Reports that some oligarchs who own firms in “one company” towns may be covertly organizing strikes in order to extract money from a central Russian government that is increasingly fearful that such protests could spread. The “Dictatorship of Law” that weakened the Oligarchs was carried out by the Siloviki , but now we have a Dictatorship of “Ments” (term popularized by Leonid Nikitinsky].

After the onset of the economic crisis, the power of “autonomous oligarchs” has largely ended. The state may have “encourage” investment to further foreign policy goals.

Given that there is only a limited amount of loans and subsidies to distribute, the leadership can further use the economy for political purposes – but is that “corruption.”

Reports that some oligarchs who own firms in “one company” towns may be covertly organizing strikes in order to extract money from a central Russian government that is increasingly fearful that such protests could spread.

The “Dictatorship of Law” that weakened the Oligarchs was carried out by the Siloviki , but now we have a Dictatorship of “Ments” (term popularized by Leonid Nikitinsky].

Political Techniques Center Study on "Russian Judiciary Pres. Medvedev Chairs the Board of the Institute. Judges are only okay when they pass the decisions that have little if anything to do with the law or justice but that tally with the interests of the movers and shakers. Courts are mostly impartial in the cases where interests of state structures or major businesses are not involved. Procuracy challenge acquittals 30X number of convictions. Court officials who assign cases and “rewards” (i.e., bribes) corrupt judges whose salaries varying between 18,000 and 30,000, but may reach 200,000 rubles.”

Pres. Medvedev Chairs the Board of the Institute.

Judges are only okay when they pass the decisions that have little if anything to do with the law or justice but that tally with the interests of the movers and shakers.

Courts are mostly impartial in the cases where interests of state structures or major businesses are not involved.

Procuracy challenge acquittals 30X number of convictions.

Court officials who assign cases and “rewards” (i.e., bribes) corrupt judges whose salaries varying between 18,000 and 30,000, but may reach 200,000 rubles.”

Some Paradigms for Judicial Behavior Judges review case and determine which side should prevail on the merits and then seek bribes to issue appropriate ruling. Judge rules in favor of the highest bidder, except when state officials or members of organized crime groups are involved. Is this a distinction without a difference? In Russian commentator Valery Promyslovsky’s view, “the powers that be thus have even more reason than ever before to maintain political control over the court system rather than allowing the judiciary to develop genuine and not just formal independence” as envisioned by the Russian Constitution.

Judges review case and determine which side should prevail on the merits and then seek bribes to issue appropriate ruling.

Judge rules in favor of the highest bidder, except when state officials or members of organized crime groups are involved. Is this a distinction without a difference?

In Russian commentator Valery Promyslovsky’s view, “the powers that be thus have even more reason than ever before to maintain political control over the court system rather than allowing the judiciary to develop genuine and not just formal independence” as envisioned by the Russian Constitution.

Former MVD Academy Instructor Groshov’s Study 38% said they had used connections or paid bribes to get into the Academy (8.9% were “afraid to answer”); 54% said they had bribed MVD officers; 97% said they had bribed instructors; Attitude towards such bribery: 30% said it was “inevitable,” 25% said it was “necessary,” and 2% “a good thing;” 39% said they were opposed to bribery, even those who partook; 60% said they had seen the misuse of power by officials at the Academy; 69 percent said they had observed the cultivation of people willing to make denunciations; and 42 percent said that all these actions had contributed to an unhealthy atmosphere.

38% said they had used connections or paid bribes to get into the Academy (8.9% were “afraid to answer”);

54% said they had bribed MVD officers;

97% said they had bribed instructors;

Attitude towards such bribery: 30% said it was “inevitable,” 25% said it was “necessary,” and 2% “a good thing;”

39% said they were opposed to bribery, even those who partook;

60% said they had seen the misuse of power by officials at the Academy;

69 percent said they had observed the cultivation of people willing to make denunciations; and

42 percent said that all these actions had contributed to an unhealthy atmosphere.

Fighting Low-Level Corruption Petty corruption represents “only 10-15% of the problem,” according to Kirill Kabanov of the National Anti-Corruption Committee. Fighting low-level corruption impacts the population’s perceptions. Concrete Proposal: require the Militia to wear name tags. Will requiring militiamen to submit net worth and tax returns to supervisors also have a desired effect?

Petty corruption represents “only 10-15% of the problem,” according to Kirill Kabanov of the National Anti-Corruption Committee.

Fighting low-level corruption impacts the population’s perceptions.

Concrete Proposal: require the Militia to wear name tags.

Will requiring militiamen to submit net worth and tax returns to supervisors also have a desired effect?

Programs Not Studies are Required

Institute for Public Projects & and Institute for Comparative Social Research Corruption ‘Price’ List Obtaining a place on State Duma party list $2 million-$5 million.. Getting legislation introduced in the Duma for consideration costs $250,000. “ Winning a ‘goszakaz’ (state purchase order) of 20% amount. Having a line item placed in the federal budget 3% of project’s total value. Getting tax arrears written off costs 30-50% of the amount. To win a case in court costs 10% of the awarded damages. Having a “talking head” criticize an official costs $20,000 a month. http://www.polit.ru/bbs/2008/02/08/corruption.html

Obtaining a place on State Duma party list $2 million-$5 million..

Getting legislation introduced in the Duma for consideration costs $250,000.

“ Winning a ‘goszakaz’ (state purchase order) of 20% amount.

Having a line item placed in the federal budget 3% of project’s total value.

Getting tax arrears written off costs 30-50% of the amount.

To win a case in court costs 10% of the awarded damages.

Having a “talking head” criticize an official costs $20,000 a month.

http://www.polit.ru/bbs/2008/02/08/corruption.html