Moscow mayor approves bribery

Issue 

By Irina Glushchenko
and Boris Kagarlitsky

MOSCOW — How big a bribe do you have to pay if you want some service performed by an employee of the Moscow mayor's office? Ten per cent of the total value of the business involved.

This figure was specified in a recent interview by Moscow Mayor Gavriil Popov himself. You can't get more official than that.

Speaking to a journalist of the weekly Arguments and Facts,Popov explained that he was opposed to "blackmail", but had nothing against payments to officials for services rendered. The mayor agreed that this could be called bribery, but maintained that it would be more correct to describe it as "commissions".

Popov complained that he never knew how much to give to express his appreciation. In the US, he had discovered, about 15% of the value of a deal was considered appropriate. But in the more straitened conditions of Moscow, he thought 10% was sufficient.

District attorneys in the US would, no doubt, be intrigued to learn who it was of Popov's counterparts who furnished him with this information.

How often Moscow's new business entrepreneurs express their "appreciation" to Popov was not revealed either. But the "democratic" Moscow mayor, who not so long ago was a modest academic, was listed by the magazine Kommersant early this year as one of the five richest people in Russia.

Popov's distinction between a bribe and a "commission" is often lost on foreigners. British MP Ken Livingstone, invited to Moscow by the Party of Labour, observed that under British law Popov would be put on trial for his activities, and that his public statements would be considered evidence of guilt. Popov took offence, and initiated a libel suit against the paper Nezavisimaya Gazeta, which had quoted Livingstone's remarks. Soon afterwards, Popov thought better of it and withdrew his suit.

The official Moscow bribe may now have been pegged well below the US one, but it is still too high for the liking of Russian business people. This is one of the factors behind a scandal which hit the pages of the Russian press during April.

Early this year Konstantin Borovoi, the head of the Russian Commodities and Raw Materials Exchange (RTSB), several times complained publicly that the mayor's office took too much, and that to pay such bribes (sorry, commissions) was beyond the Russian business community.

Borovoi and his associates first threatened to declare Moscow a zone hostile to business. Then, when nothing changed for the better, Borovoi called a press conference at which he accused the city government of a degree of corruption possible "only in feudal states". Borovoi's charges included: "The city's executive power is intimately intertwined with criminal structures, which have created a unique mafia network which controls the city's vital functions". " The city's finest buildings have been sold off to foreign firms or handed over on long-term leases at nominal rents." The Moscow Convention of Business Entrepreneurs called on residents to force the city government out of office through a boycott of its organs.

Popov summoned his own business allies, who duly declared that everything was in order. On April 18 Izvestia published an article defending Popov and describing Borovoi as a "veteran of sharp business". The scandal then died down.

Borovoi had personal grounds for his accusations against Popov and Vice-Mayor Yuri Luzhkov. A good deal earlier, Luzhkov had made a massive gift to Borovoi's RTSB by depositing the monetary assets of the Moscow Social Security Fund, established in the autumn of 1990, not in a state or municipal bank, but in the bank of the RTSB. The sum involved was more than 100 million roubles. The vice-mayor's action raised many eyebrows, since the RTSB was then only just setting up in business.

Later, there was some kind of falling out. The fund was withdrawn from the RTSB and deposited with the Moscow Narodny Bank. Then the RTSB's main competitor, the Moscow Commodities Exchange, began to move its business under the protection of Popov. Borovoi had ample cause to be angry.

Borovoi was always an unlikely anti-corruption fighter, and people familiar with his record were not surprised when his crusade came to a sudden halt. Associates of Popov were said to be drawing the mayor's attention to "the need to examine the business interests of Mr Borovoi".

Both sides understood that they had nothing to gain from allowing the dispute to become too public or too prolonged. If Borovoi did not respond to threats, he could simply be offered a share of the loot. One way or another, the protests from Borovoi came to an end.