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. Last Updated: 07/27/2016

Inquiry Finds Tax Ministry Broke Law

A new Audit Chamber investigation shows that over the last two years the Tax Ministry overpaid its printing house by millions of dollars and violated the law by not conducting tenders before awarding it contracts.

The chamber is scheduled to examine the report at its board meeting Tuesday and decide whether to request that the Prosecutor General's Office open an official investigation.

In 1999 and 2000, the ministry signed contracts with Moscow-based Transpechat to print millions of tax forms, despite the fact that other qualified companies offered to do the job two to three times cheaper, the report says.

Moreover, the chamber found it impossible to determine by what form of transport the forms were delivered to each of Russia's 89 regions. The parliamentary budget watchdog could only conclude that the distribution was 40 times more expensive than delivery by train, costing the budget 100 million rubles ($3.5 million).

A 1997 presidential decree signed by Boris Yeltsin states that in order to prevent collusion between government officials and producers, tenders have to be held for all government orders. The decree allows for government orders to be filled without a tender only when the government has urgent needs as a result of "extraordinary circumstances," which must be approved by the Economics Ministry (now the Economic Development and Trade Ministry).

From 1999 to 2000, the report states, the Tax Ministry on several occasions doubled its original order to Transpechat without the permission of the Economics Ministry. As a result, Transpechat printed 95 million forms at prices ranging from 1.61 rubles to 2.09 rubles. Audit Chamber officials estimate that the budget consequently lost 76.6 million rubles.

In the fall of 1999, government officials conducted a tender for the printing of several types of forms. Transpechat won the tender, having offered to print two types of forms for 3.50 rubles and 6.50 rubles, respectively. The Belgorod region in southern Russia, which has printed forms for the Finance Ministry and State Tax Service for the past 30 years, offered to print the forms for 2.2 to 2.6 times less.

Apparently, after the tender, Tax Ministry officials decided that they needed twice as many forms because Transpechat actually received twice the amount it bid (46 million rubles instead of 23 million rubles).

"Every region of Russia has a printing house that can print forms for a substantially lower cost than those in Moscow. Why are they printing the forms in Moscow and then spending money on the delivery of the forms to the regions?" said Vera Solodova, deputy director of the Belgorod region's printing and information department.

The chamber also discovered that Transpechat subcontracted the delivery of some of the forms to Ekvilegiya, a limited-liability one-employee company with a network of Sunrise computers listed as its only authorized capital.

Transpechat director Alexei Grishakov said Ekvilegiya won the distribution contract because no one else could deliver tax forms to Chechnya. Neither Transpechat nor the Audit Chamber could say what happened to the forms in the rebellious republic.