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. Last Updated: 07/27/2016

Korruptsia

A bank director is appointed special assistant to the energy minister; a week later his bank announces it is going to invest 60 billion rubles to the oil industry. Another banker tells associates that, as an advisor to the Ministry of Industry, he can get preferential credit terms from the Central Bank. While firms struggle to lease offices in the city center, the business where the vice-mayor's wife works somehow manages to obtain a prime spot in a desirable Moscow neighborhood.


Welcome to the world of 'lobbirovaniye', or as more cynical Muscovites know it, korruptsia. As democratic forms interweave with remnants of the Soviet state, a new brand of politics has been emerging in Russia. Disgraced officials from the old regime have become powers once again, thanks to their contacts and experience. and newly elected officials are finding that the boundary between legitimate forms of democratic pressure and the pursuit of corrupt advantage is porous indeed. "Buying these parliamentarians is very easy", says one Moscow journalist. "Most are from the intelligentsia, professionals used to earning a few hundred rubles a month. All you have to do is include them in a delegation on a trip abroad, or invite them to a banquet".


Under the old Communist order, bribes and connections were essential, providing access to scarce goods. That's still true, but today the stakes are higher, and the rules of play are much more fluid and difficult to divine. Some businessmen speak wistfully of the old days when each official knew his price, commensurate to his level on the administrative scale. Now, with inflation surging and all deals up for renegotiation, prices have gotten out of hand. Registering a business is said to cost 100, 000 rubles. and there is no guarantee the bribed official will not have moved on to another post in a month's time.


As privatization picks up, 92 billion rubles of state property is supposed to be sold off this year. With all this at stake, it is a profitable time to have friends in the government. Take Valentin Pavlov, the former prime minister and August putschist. In most countries, participation in a coup would leave a shadow hanging over an executive's resume. Not so in Russia. Last February Pavlov was offered a job as consultant to the country's largest commodity exchange and its associated empire of private companies. His answer: yes - as soon as certain "legal and physical aspects" of his situation could be resolved. Pavlov is still in Jail.


He isn't the only former Soviet official to have wormed his way into the new order. When the Soviet central ministries were closed down last fall in the aftermath of the failed coup, scores of senior managers, with decades of experience and phone books full of contacts, found themselves on the market. Many in effect took their ministries with them, transforming them into independent "corporations" and holding companies. The old Ministry of Shipbuilding Industry has metamorphosed into four "associations", six "concerns", one "corporation", and one department of the Russian Ministry of Industry. Other former bureaucrats turn up frequently on the boards of privatized companies.


Not surprisingly, the pioneers of private business feel at a disadvantage next to these insiders and they have been organizing their own lobbying groups to help them compete. In the last few years entrepreneurial associations have sprung up almost as fast as companies themselves, as new laws have defined new forms of permissible enterprise. Already there are leagues of cooperatives, joint ventures, leaseholders, joint-stock companies, commercial banks, and commodity exchanges. With a combination of missionary zeal and the edginess of an embattled minority, their leaders use all means at their disposal to push projects past the bureaucracy. Techniques range from the innocent - hiring experts to draft proposed versions of laws and decrees - to the legally dubious. For a fee, many newspapers publish sympathetic interviews with key entrepreneurs or articles pleading their case. Lev Weinberg, president of the Association of Joint Ventures, says: "When I have some sort of weapons, I use them all".


In the new politics of influence, closeness to power can almost be read geographically from a Moscow street map. Lobbying centers on the imperial buildings of Staraya Ploshchad ("Old Square"), which used to be the headquarters of the Communist Party Central Committee. Many of the best-connected associations and businesses have offices in nearby stretches of the old Chinatown section. But Moscow's most formidable lobby is based on the square itself, the Russian League of Industrialists and Entrepreneurs, which says its members produce 65 percent of the output of the former Soviet Union. Its president, Arkady Volsky, is so well connected he hardly had to move his office during the switch from communism to democracy. Just a few years ago, he sat a stone's throw away as head of the Party's industry department, coordinating Soviet production.


Just how does a Moscow lobbyist get his point across? For the uninitiated, here are the basic techniques.


Conventional bribery. For bureaucratic tasks such as registering a business, this remains the quickest method. Igor, a small-business man, says that in order to open a street-side kiosk he has to get approval from five different bodies: "the local prefecture, the city architect, the power utility, the hygiene inspectorate, and the fire brigade - so that if a fire starts they will put it out". Most of these require financial persuasion.


One of the most common forms of baksheesh is a share in the business itself. This gives the arrangement an impersonal appearance, and assures that the bribed official will retain an active interest in the venture. Other ways to disguise bribes are as honoraria for speaking at conferences or as fees for consulting services. Some officials have outraged foreign journalists by demanding hefty hard-currency sums for providing information or interviews.


The old apparatchik connection. Successful companies often have at least one retired Soviet official among their directors. A former finance minister sits on the board of the Russian Exchange Bank, and a former vice-premier heads an international investment fund. Such state-sector professionals act as a conduit of information from sources inside the government. Former apparatchiks can also help a businessman get access. (A crucial first step in most large private projects is a trip to the office of a high government official to get a signed document, indicating general approval. )


The council. Entrepreneurial councils - or soviety - have been sprouting from state organs at all levels. There is one to advise Yeltsin, one under the Russian parliament, one under the Moscow mayoralty, and one under the Ministry of Industry. "RUSSIA BEFORE - LAND OF THE SOVIETS", joked a recent headline in the business weekly Kommersant. In theory, such councils offer a source of expertise for policy-makers, who may not be informed about technicalities of deposit margins or futures trading. In practice, they formalize networks of influence that existed before and provide a legitimate forum for powerful businessmen to meet with top government officials. Membership is itself a result of lobbying, and the same individuals tend to turn up on councils at several different levels.


All of this should not suggest that Russia's nascent democratic institutions are drowning in corruption. In many cases there is genuine confusion about the distinction between fair and unfair influence. The Yeltsin government has tried to draw the line more clearly. One law passed a year ago forbids state officials from personally owning firms of conducting entrepreneurial activities. and just a few weeks ago Yeltsin signed a new anti-corruption decree defining further restrictions for government officials and set up a special "rapid reaction" group, directed by a crusading investigative journalist, to look into charges of corruption.