Russian Companies Spend 7 Percent of their Profits on Bribes

Over 39 million corruption deals were struck in Russia in 2005, which means 7 percent of companies’ turnover are corruption profits, according to an anti-corruption report of the INDEM foundation. Chances of a bribe taker to be prosecuted in Russia are 0.0013 percent. Statistics of the report are close to the evaluation of the situation by international organizations.

INDEM’s president Georgy Satarov presented a new report on corruption in Russian on Monday. “Business and Corruption. Problems of Countering 2006” is the second report of the fund on fighting corruption. The research involved interviewing businessmen in Volgograd, Smolensk and Moscow. Businessmen complained that their businesses exist profit margins because expenses on “informal agreements” are rapidly increasing, Georgy Satarov says. 39 million corruption deals are estimated to have been struck last year. A businessman in Russia gives bribes two times a year, on the average. About 7 percent of a company’s turnover becomes a corruption profit of an official, the report by INDEM says.

In its first corruption report INDEM cited statistics showing that corruption in Russia is appalling. INDEM analysts said corruption went up 900 percent between 2002 and 2005. This time, INDEM is closer to the statistics of the World Bank which declared a 50-percent rise in corruption deals in Russian in the same period. INDEM estimates “a corruption tax” in Russia to amount to 1.1 percent of the GDP. “Businesses have to concentrate to short-term strategies due to unstable and unpredictable rules of the game,” the report runs.

The sum of bribes has skyrocketed since the last report. As for prosecution, 3,600 verdicts have been passed on corruption cases and only 507 of them entailed a prison term, INDEM reports. Experts of the foundation therefore concluded that only 1 out of 100,000 corrupt officials go to prison, and chances to fine oneself behind the bards for a bribe taker is 0.0013 percent in Russia.

Those polled list the following administrative barriers which breed corruption: complicated procedure of registering a business, licensing, obtaining permissions of local authorities, audits and others. Relations of businessmen and officials when leasing something INDEM considered the most recurrent instance of bribery.

Experts of the INDEM note that it is not flaws of legislation that cause bribery but poor enforcement of laws, including anti-corruption ones. Georgy Satarov, however, has no illusions about the speed of possible positive changes in law enforcement. Analysts at INDEM predict that Russian needs 40 years of meticulous work to reach the corruption level in Portugal or 100 years to come up with corruption statistics in Sweden.

Details : http://www.indem.ru/en/publicat/2005diag_engV.htm