A Tax Cop Who Dared Tread on Powerful Toes

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Something unheard-of was happening in Saratov: Businessmen were being convicted of tax evasion. One sensational trial after another. Two were taken into custody right there in the courtroom, handcuffed and led off to prison. The rest were given suspended sentences. This spate of convictions began shortly after Colonel (now General) Anatoly Yatskov took over the regional Tax Police office. On a visit to Saratov, I asked him about the trials.

"We were acting entirely within the law," Yatskov said. "Our every move was carefully planned. We even filmed our operations on video."

I asked about Russia's tax laws. Not too long ago, law-abiding Russian businessmen were handing over the lion's share of their profits to the state. Only recently have changes in the laws made them more equitable. Were these tax dodgers victims of the system, I asked? "No way," Yatskov said. "They were all concealing nine-tenths of their profit from the government in any case. A whole class of businessmen never paid taxes in principle. No appeals to conscience could force these people to meet their responsibilities. Only the real prospect of jail time and confiscation of property can induce these underground millionaires to share their wealth with the government."

Yatskov showed me the tape of a raid out in the steppe -- men in camouflage with machine guns, all inching backwards for some reason. A huge man bellied up to them with a savage expression on his face. "Go ahead and shoot," he shouted in a harsh voice. "I did fine without a BMW before, and I can do it again!" A group of people stood behind him, silently supportive. They were clearly pleased with the way former Saratov regional Duma deputy Alexander Akimov was defending his property. Akimov found out that the tax police had arrived from Saratov. He quickly gathered a crowd and called in a detachment of local police, telling them that a band of thugs had pulled into town. When the police discovered who the camouflaged men really were, however, they backed down.

"The thing is, the owner of this company made no payments to the Pension Fund for several years," Yatskov explained. "He owed the government 4.5 million rubles!"

When the tax police realized how Akimov had stirred things up, they decided to confiscate a single car, but one very dear to Akimov's heart. His BMW was taken to Saratov and impounded. The next day, Akimov cleared his debt to the state.

Then there was the case of the Saratov Radio Factory, whose management owed more than six million rubles in back taxes. A criminal investigation was launched, and the police set off with their video camera to record the factory director's statement. They weren't allowed to film in the end because the factory was a top secret installation. Too bad. When the police received a copy of the director's earnings statement from the factory's accounting office, he snatched the document away from them and tore it up.

The director was a little worked up, you see. As it turns out, he was at once the manager and founder of several subsidiaries attached to the factory, where the average wage was no more than 1,000 rubles per month. The director himself, according to the accounting office, took home 100,000 rubles, and he didn't want his employees to find out.

"This isn't an easy job," Yatskov said. I asked if people ever fought back. "They're afraid to fight us openly," he said. "But we definitely encounter resistance." A regional oligarch, for instance, called up one of the deputy governors who had previously been a businessman himself. He found a sympathetic ear. The deputy governor then called Yatskov, but instead of a wink and a handshake, he received a harsh rebuke. Attempts to reach an agreement face-to-face also failed.

What was the "pro-business" deputy governor to do? He couldn't go after Yatskov directly -- the Tax Police being a federal agency.

Then suddenly a letter landed on the governor's desk complaining about "unsanitary conditions" at Tax Police headquarters. An inspection team was dispatched, but its search order was botched and it never got in. Immediately a complaint was sent to the regional prosecutor's office, charging that regional Tax Police officials had broken a federal sanitary law. No one thought that Yatskov would be frightened by all this. The point was to put him on his guard.

It didn't work. Next the deputy governor ordered an audit of the Tax Reform Assistance Foundation, which came under the purview of the Tax Police. The audit was clean. Now what? Were there tax officials with sticky fingers? Of course. The problem was that Yatskov got rid of them as soon as they were discovered. His office contained an internal affairs division that weeded out officers open to bribery. The stubborn deputy governor then took the desperate step of arriving unannounced at Yatskov's office. Yatskov had visitors, as it happened. The second most powerful bureaucrat in the region stewed for 10 long minutes in the waiting room. His meeting with Yatskov lasted less than five. Yatskov refused to deal.

Why would the regional leadership try to "tame" Yatskov, who was serving the regional government's best interests by forcing people to pay their taxes? You'd think they would have thanked Yatskov for helping to fill the region's coffers.

"The term 'conflict of interests' has finally entered our lexicon," Yatskov explained. "For officials who have entered government service from the business world, this conflict can be insurmountable. They're supposed to be working to maximize tax revenues, but they can't break off their old business associations. As a rule, these officials sign their businesses over to relatives, and the businesses thrive precisely because of the contacts and influence now enjoyed by their 'former owner.'"

Is there a way out? When people enter government, they must choose between their private interests and the common good. This should be a condition for appointment to a top post. Our lawmakers should come up with a mechanism for identifying corrupt officials and bringing them to justice.

As a result of his conflict with the Saratov authorities, Yatskov was moved to Yekaterinburg. Until the abolition of the Tax Police announced last week, he was not just the head of the regional Tax Police, but also a deputy director of the federal Tax Police. The main problem he faced was that his officers were working in a danger zone. When they nabbed a big businessman for tax evasion, he usually turned around and tried to buy them off for a sizeable sum. Not everyone can resist this kind of temptation. Yatskov had to fire some of the corrupt officers and turn others over for prosecution, but the problem remains.

This is clearly one of the reasons why President Vladimir Putin has broken up the Tax Police and folded part of it into the Interior Ministry's economic crimes division. But that's not likely to solve the problem. The police are afflicted with the same disease. And given the miserable wages paid to rank-and-file cops, this isn't terribly surprising.

As Yatskov made clear, the first thing the government must do to stamp out corruption is to provide its officers in the line of fire with decent pay and benefits. The officer who refuses a bribe must know that he can provide for his family through honest work and that he will receive a fair pension when he retires, one that will allow him not merely to survive, but to take a vacation now and again. Only then will the policeman and tax inspector be in a position to look out for their own interests while serving the interests of the state and the people.

Igor Gamayunov, a columnist for Literaturnaya Gazeta, contributed this essay to The Moscow Times.