Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Study Says Corruption Costs $15Bln Per Year

LONDON -- Corruption is costing Russia's ailing economy about $15 billion a year and was at least partly responsible for its financial crisis this year, a British-based business consulting firm said Wednesday.

Control Risks Group, in a report on how companies should deal with corruption worldwide, said the prospects were poor for a cleanup of corrupt practices in Russia over the next several years.

"Corruption is amorphous and intangible at the best of times, but it's estimated to be costing Russia about $15 billion a year," said Toby Latta, a specialist on the former Soviet Union at Control Risks. "When you compare this with its [Russia's] call for international bailout funds of similar magnitude, you get a picture of the problem."

The report gave no specifics about how the $15 billion figure was reached, but Latta said the economy was badly hurt by tax avoidance, domestic capital flight and the deterrent to investment from corrupt practices.

The report included case studies of a number of other countries, including Ukraine. Its section on Russia said the lack of laws on corruption would hamper any meaningful change in business dealings in Russia in the near future.

"The prospects for change are poor over the next four to five years," the report said. "The existing law focuses on cases of straightforward cash bribery, tending to permit more complex cases of high-level corruption to go unpunished."

Control Risks, which offers advice to companies dealing with political and security risks when investing abroad, said problems dealing with corruption were of growing concern to clients and had become a more high-profile problem in recent years.

John Bray, Control Risks Group's principal research consultant, said that international financial institutions like the International Monetary Fund have paid more attention to corruption in the past several years.

Whereas in the past, fighting corruption was viewed as a political issue outside the IMF's scope, it is now increasingly seen as a factor in economic development.

In addition, the 28 countries of the Organization for Economic Cooperation and Development, along with five other nations, have signed a convention promising to introduce anti-bribery legislation similar to the 1977 U.S. Foreign Corrupt Practices Act, which makes bribing officials overseas a criminal offense in the United States. Russia is not a member of the OECD.

Bray said many of Russia's problems were widespread in other countries as well. The report detailed the sources of corruption in China, Indonesia, Japan, Pakistan and Ukraine.