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. Last Updated: 07/27/2016

Pension Fund Owed $5.3Bln, Audit Says

A huge backlog of unpaid fees by employers to the Pension Fund — 145.8 billion rubles ($5.3 billion) as of April 1 — was made public Monday by the press center of the Prosecutor General’s Office.

The office audited the fund’s books in July and has asked the fund to explain what it was doing about the missing money.

"We are expecting an answer from the Pension Fund as to how they are going to collect what they are owed," said Sergei Milokostov, spokesman for the prosecutors’ office, on Monday.

Sergei Dontsov, deputy head of the Pension Fund, which in 2000 is scheduled to collect and distribute 276 billion rubles, said Tuesday in an interview that the backlog is even higher than mentioned by the prosecutor’s office. This is because 300 billion rubles worth of fines go with the debts, making the total debt 445.8 billion rubles, he said.

The backlog has been formed during the last 10 years, he said, naming among the biggest debtors 9,800 organizations with debts to the fund exceeding 2 million rubles.

The biggest are national power grid Unified Energy Systems with 1 billion rubles of debt, the Railways Ministry with about 700 million rubles and natural gas monopoly Gazprom, which has just paid 300 million rubles of its about 700 million ruble debt.

Much of the debt is owed by bankrupt defense enterprises, insolvent farms and budget organizations that have insufficient state or municipal funding.

Dontsov said that some 1,000 defense enterprises owe the fund about 10 billion rubles.

He said that many organizations are slowly paying off their debts depending on their financial state. This year, 15.5 billion rubles worth of debts will be collected.

Some analysts said that it would have been better if the Tax Ministry, which under new tax laws passed this summer will next year take over the collection of payments to the fund, takes over collection of the backlog too.

"I think it is logical to pass over the debts to the Pension Fund to the Tax Ministry because it will be collecting current payments," said Mikhail Delyagin, director of the Institute of Globalization.

However, such a transfer of jurisdiction is legally impossible because the new laws specifically mention leaving debt collection with the Pension Fund.

Dontsov said although debts for insolvent enterprises could be restructured, the fund will take other debtors to court to recover what is owed.

"This year, we started to bring such cases to court, and two people got sentenced for not paying taxes," he said, referring to the case of Rostokino state enterprise, which had bought fruit and vegetables for Moscow. Its general director, Anatoly Gusev, was sentenced to three years in prison and the chief accountant, Vera Bondarenko, to two years.

However, neither was put in jail: Both sentences were suspended.

Dontsov said that he was surprised to see that the Prosecutor General’s Office made a public statement of the Pension Fund’s debts.

Dontsov said that no further response will be given to the prosecutor’s office about collecting debts other than the one made to prosecutors last month after the audit was completed. He refused to speculate if the revelation of the backlog was part of any political campaign.

Analysts were divided on whether there was any political side to the prosecutor’s office disclosures.

"The fact that the Prosecutor General’s Office has made this information public is a syndrome of some political order that is not clear," Delyagin said.

"However … in this case the economic side of it is not made up but is justified. I don’t see any politics in this," said Sergei Prudnik, economic adviser with Troika Dialog. "Enterprises must pay and the Pension Fund must collect, that is it. The prosecutors just want to say that the Pension Fund must work better."