Corruption in Russia - Research Paper Example

? Corruption in Russia Corruption in Russia Russia’s corruption issue is troubling the government, and is playing a pivotal role in the deterioration of the economy. Medvedev and Putin, former presidents of Russia, have regarded corruption in the country as the foremost challenge. About twenty percent of the country’s military budget is ransacked by corruption, which means that corruption has seeped through the military sphere as well. This seems to be intimidating because corrupt officials, let alone the Russia’s government bureaucracy are exploiting even the military. It has been reported that $35 billion were stolen from government funds in 2010. Corruption in Russia has put a massive burden on the economy and the society and is badly affecting the country as a whole. It has slackened the growth of the economy, and has devalued the government’s efforts to establish a strong infrastructure and a social welfare system. It is mostly fueled by Russia’s weak control over the government sectors and the judiciary system as a whole. Unfortunately, this phenomenon cannot be controlled without threatening the lifestyle and regime of the influential people in the country, who control a large share of the country’s economy. A well-governed lawful state is the only hope to reduce corruption in the country, but it cannot be established without the support of the elite society in the country. The fact that a new system of government has to be formed by breaking the old structure has daunted all past presidents of the country, and has made them even more reluctant to bring changes in the country. (Corruption Grows in Russia) Foreign investors have concluded that Russia is a very risky place to invest their money, which has come as a big blow to the country’s economy. Foreign investors are continuously being cheated and plundered, which has made them ever more reluctant to invest. Hermitage Capital Management, one of the largest investors in the Russian stock market, was occupied in a case that showed the ever-increasing corruption in the Russian justice system, and the level its credibility. Hermitage has accused the Russian judiciary and the police force, to have taken bribes from local gangsters, in order to sell three of Hermitage’s Russian subsidiaries. Furthermore, these subsidiaries were used to steal $230 million from the Russian budget. Hermitage has also informed the Russian State Audit Chamber, of other cases where similar fraud has occured with other companies, which ultimately cost the Russian budget a loss of $240 million. Hermitage has also declared that all these frauds were interlinked, and the police, judges and organized criminal groups, were all involved in the conspiracy. (The Hermitage case and corruption in Russia). There have been numerous other corruption cases regarding the Russian government. In 2010, The U.S. Justice Department revealed documents, which accused the German carmaker Daimler to have paid the Russian government officials, millions of euros in bribe. This was to seal the sales of patrol cars for the police and sedans for the presidential motorcade. For some time, there was no reaction from the Russian government, and things remained quiet. At last, Russian Ministry of Interior, declared an investigation regarding car sales and purchase in the recent year. Although, some government officials, who promised to solve it, met this Daimler case with much vigor the case remains one of the foremost examples of the corruption existing in Russia, and how vulnerable the government officials are to bribes and other forms of corruption. In addition, in 2007, prosecutors in Germany, who were accused of taking bribes from the multi-national company, Siemens, revealed numerous names of Russian government officials. (Russia Slow to Pick Up the Lead in Bribery Cases) Corruption in Russia is not only affecting the economy, but is also slowing down the country’s transition from communism to capitalism. Russia is still recovering from its communism policies, but the widespread corruption is making it ever so hard. While Russia is trying to make the shift to a market economy, it has not been able to execute the reforms properly. Because of constant corruption of business and government officials, the rearrangement of the firms and businesses has been very slow. It has been less efficient and does not look promising. Because of different forms of corruption, it has become a herculean task to enforce rules and laws that will make an efficient market economy. Thus, it has become ever more difficult to establish a capitalist economy in Russia. (20.3. Economies in Transition: China and Russia) As discussed, corruption in Russia has made the foreign investors reluctant to invest in the country. Thus, Russia is having a difficult time in doing business with other countries, as many countries are aware of the increasing cases of corruption in Russia, involving major government officials. Already it is hard for countries to do business with Russia because of unpredictable tax environment and bureaucracy, and widespread corruption makes it more challenging. The reluctance of local competitors to pay taxes and fake products on the market place, are some forms of corruption, which have made it difficult for the government of other countries to do business with Russia. (Challenges to growth in Russia). Corruption in Russia is a serious problem, which has hindered social and economic growth in the country for many years. Russian President Dmitry Medvedev announced some changes in the anti-corruption policies, by introducing an anti-corruption legislation that would oblige the banks to reveal information about the wealth of candidates who are finding public service. He declared that government sectors would not keep secret the information regarding the real estate owned by people applying for government jobs and their family members. The new law also scaled down the officials who previously were reluctant to declare their private businesses in the open and the wealth they owned by other means. In 2009, the president also proclaimed that the top officials would declare their annual incomes. However, this step was scorned, as the annual incomes declared were false, and the real incomes earned by bribery and other forms of corruption were much higher. (Russia to fight corruption with new legislation) Yana Yakovleva, one of the most prominent business activists in Russia, established an organization called Business Solidarity, which supported industrialists and businessmen against illegal actions taken by the government authorities. She was also selected as the chairperson at an anti-corruption Centre, which promised to assist businessmen in fighting back bureaucratic raids. Besides this, the Kremlin has also passed a few reforms to tackle the ongoing corruption. It is called the third phase of criminal legislation liberalization, under which most economic crimes and thefts would be dealt with fines, instead of prison. (Russian entrepreneurs lead fight against corruption). References 20.3. Economies in Transition: China and Russia http://www.web books.com/eLibrary/NC/B0/B63/101MB63.html Challenges to growth in Russia < http://www.ey.com/GL/en/Industries/Consumer Products/Making-it-work-in-Russia---Challenges-to-growth-in-Russia> Corruption Grows in Russia < http://nationalinterest.org/commentary/corruption-grows-russia 5418?page=1> Russia Slow to Pick Up the Lead in Bribery Cases < http://www.nytimes.com/2010/04/30/business/global/30ruble.html?pagewanted=all> Russian entrepreneurs lead fight against corruption < http://www.telegraph.co.uk/sponsored/russianow/politics/8476577/Russian-entrepreneurs-lead-fight-against-corruption.html> Russia to fight corruption with new legislation < http://in.reuters.com/article/2011/04/28/idINIndia-56637020110428> The Hermitage case and corruption in Russia < http://blogs.reuters.com/breakingviews/2009/10/20/the-hermitage-case-and-corruption-in-russia/> Read More