Bribes boost cost of living in Russia

From apples ... to medical care

MOSCOW, April 2, (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 liquor could smooth the way for a visa or official document and fav ors 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.

Kickbacks

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 redhanded. 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 require- ments 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.

Bribes

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 kms (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-km 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.

Cemetery: One Moscow resident paid 90,000 rubles ($1,300) four years ago to obtain a plot at a city cemetery that should have been free of charge. The old cemetery where the person’s relatives were buried was expanding and in order to make sure they had a new plot ready for an elderly relative, the family paid the cemetery’s administration.

Driving test: Driving tests in Russia are a fertile ground for bribery since the complex rules regulating the tests provide countless opportunities to fail anyone. A Moscow resident failed multiple times at the final stage of the three-part driving test before a friend gave him the phone number of a former police officer who had arranged for others taking the test to pass. After the former officer took 15,000 rubles ($220) from the aspiring licensee, the new driver did nothing more than get in the car the next week for the inspector to pass him on the third and final hurdle.

Surgery: Another Moscow resident said his family recently paid 15,000 rubles ($220) for a hernia surgery at a top state-owned hospital. After an intermediary put the family in touch with a doctor there, the family paid him directly upon the patient’s discharge. A smaller sum was also paid to the nurses. The hospital in question provides free surgeries but the waiting list is long, so the bribe was effectively paid to jump the endless queue.

Traffic police: A Moscow motorist last month forked out 5,000 rubles ($74) after a traffic policeman flagged him down late in the evening, entering a highway using the exit ramp. As the policeman started to fill out the ticket on his laptop, the motorist asked if there was any way to “streamline the process.” The policeman said the camera in his car was off so he would be happy to help the driver out. Had he been ticketed, the motorist would have risked paying the same amount in a fine or having his license revoked if the case went to court.