Duma to Vote on Limits for Inspectors

In a move to cut red tape and bring an end to law enforcement practices that President Dmitry Medvedev has described as "causing nightmares" for businesses, the State Duma will begin considering bills Wednesday promising a huge reduction in state inspections.

The bills, which will be considered on first reading, should reduce the myriad inspections business owners are subjected to 40-fold, Duma Speaker Boris Gryzlov told reporters Tuesday.

But experts said that simply reducing the number of inspections would not necessarily make them less obstructive or tackle rampant corruption.

Police, health and fire inspectors are dreaded by businesses because of their propensity to come looking for bribes.

Large companies frequently employ workers whose primary function is to manage the payment of such bribes, but the limited resources available to smaller businesses usually mean that this is not an option for them.

The inspections are usually the prime factor mentioned for the sluggish development of the small and medium-sized business sector in an economy that has otherwise been booming.

Vladimir Golovnyov, deputy chairman of the Duma's Economic Policy and Entrepreneurship Committee and a member of the United Russia party, said the law was targeted at eliminating various government inspections of a "basically corrupt character" and limiting the opportunities for inspectors to conduct "extra-procedural investigations."

"Surveys have shown that the main problems arise as a result of the behavior of law enforcement agencies," Golovnyov said in an e-mailed statement.

Gryzlov said 20 million regulatory inspections were performed last year on small and medium-sized businesses, at a cost to the federal budget of 162 billion rubles ($6.3 billion). If the bill is passed, more than 95 percent of those inspections would be eliminated, Gryzlov said, Interfax reported.

But Vladimir Rimsky, an analyst with Indem, a Moscow-based research center that tracks corruption, said the new bills miss the point, as the problems lie not in the number of inspections, but in the behavior of the inspectors themselves.

"As long as their aim is not to help businesses, but to find breaches of the law, not much will change," he said.

As an example, Rimsky pointed to the ineffectiveness of fire inspections.

"The number of fires has seen a constant rise, not least because inspectors are focused on issuing their documents and collecting bribes rather than eliminating actual fire hazards," he said.

Rimsky said that even if the number of inspections is drastically reduced, regulatory bodies might simply find other ways to extort bribes.

But Vladislav Korochkin, vice president of the business lobbying organization Opora, said the proposed measures were definitely positive.

"[They] contain many positive innovations that offer real hope for a reduction in the number of business inspections," he said.

This in turn, should mean a crackdown on corruption, Korochkin said.

"Fewer inspections mean fewer possibilities to take bribes," he said.

But Ruslan Radzhapov, CEO of the Correa's cafe chain, said he was also skeptical about the chances of success.

The real problem is that regulatory officials are more interested in catching someone breaking a rule and imposing a penalty than in actually preventing infractions.

"It is like with a traffic police officer on the streets: The fines are draconian, but people end up paying only half [of the fine] — to the police officer," he said.

Radzhapov, who said his chain of five cafes in the capital is subject to inspections "pretty much every month," argued that much of the trouble stemmed from the fact that corrupt inspectors are often sent calling by competitors or other hostile businesses. "They are being used as a weapon," he said.

Prime Minister Vladimir Putin called upon the government to fundamentally change its approach toward regulating business when he discussed the package of bills in the Cabinet in July.

Medvedev, who has repeatedly called for an end to what he has labeled "legal nihilism" in the country, last month criticized law enforcement agencies for harassing businesses with inspections and other interference and demanded that the practice be stopped.