- Dances With Bears - http://johnhelmer.net -

RUSSIAN LAW ON INCOME AND ASSET DISCLOSURE HITS AND RUNS

DwB_1656 [1]

By John Helmer, Moscow

Disclosure by Russian officials of state companies of their annual incomes and property is required by Russian law. There are four exceptions. The first is when the officials required to disclose don’t want to. The second is when the prime ministry is persuaded to let them. The third is when the Kremlin is persuaded not to disagree. The fourth is when President Vladimir Putin says it’s up to Prime Minister Dmitry Medvedev to settle the matter.

During his televised conference [2] with the country this month the president was asked if the exceptions to the disclosure regulations are equitable. Putin replied that if foreigners working for state corporations aren’t obliged to disclose, then it isn’t fair to require Russians to do so. “The decision of the Government [to exempt disclosure is] due to the fact that in the management bodies, the boards of directors of our largest domestic companies there are a lot of foreign experts, foreign nationals…We cannot oblige them, cannot in person get them to publish and publicize their income. And to put our citizens at a disadvantage with foreign nationals [is] also incorrect. But in most Western economies managers of large companies do it voluntarily. Our government has even adopted a code of conduct in business. It is accepted, but it does not really work. If you ask my opinion, I would strongly recommend to the heads of our companies to present their incomes — I don’t see anything wrong.”

PeskovDmitry Peskov, the President’s spokesman (right), has clarified [3] the position by saying that on the issue of the income and asset disclosure, Putin isn’t pressuring Medvedev on what to do. “This is an issue that is entirely in the prerogative of the Cabinet of Ministers”.

It has taken a decade for the Russian government to reach this point. In 2006, the State Duma ratified the UN Convention against Corruption [4]. There was no decision then on whether obligatory disclosure of income and assets on the part of officials, their spouses and children should become the basis for prosecution for their coming by good fortune corruptly.

There continues to be a legal argument in Moscow over whether Article 20 of the Convention was excluded from ratification, or exempted from implementation. Entitled “Illicit enrichment”, this article provides: “Subject to its constitution and the fundamental principles of its legal system, each State Party shall consider adopting such legislative and other measures as may be necessary to establish as a criminal offence, when committed intentionally, illicit enrichment, that is, a significant increase in the assets of a public official that he or she cannot reasonably explain in relation to his or her lawful income.”

IvanovIn the Duma ratification debate of 2006 pro-government deputies argued this violated the presumption of innocence in Article 49 of the Russian Constitution; and created an offence which didn’t exist in the Criminal Code. In 2013 an attempt by the Communist Party to introduce illicit enrichment in Russian law failed to win a first-reading vote. In December 2014, Sergei Ivanov (right), the President’s chief of staff, said [5] that “Russia ratified the Convention in full, without any exceptions or omissions, just as most countries around the world, and our legislation fully agrees with that international convention.”

A report [6] by Denis Primakov and Ksenia Konik of the Russian branch of Transparency International agrees, with qualification. “So far in Russian legislation, Art. 20 of the Convention is not fully reflected, although some steps have already been taken…” Their report recommends that the burden of proof in allegations of illicit enrichment should be shifted by statute from prosecutor to the state official to establish that his enrichment was legally obtained.

To start with the disclosure of income and assets, the two government ministries responsible for drafting and then enforcing the measures are the Ministry of Open Government and the Ministry of Labour and Social Protection. The first is headed by Mikhail Abyzov , a businessman (below, 1st left); the second by Maxim Topilin, a career bureaucrat (2nd left). At the Kremlin the drafters and enforcers of the anti-corruption regulations are the legal directorate, headed by Larisa Brychova (3rd left), the anti-corruption directorate, headed by Oleg Plokhoy (4th left); and the civil service directorate, headed by Sergei Dubik (right).

5p

Among the obvious targets for the disclosure requirements, according to the current regulations, are asset values when “the transaction amount exceeds the total revenue of the employee and his wife (husband) for the last three years preceding the transaction.” This is spelled out at Sect 10(2)(d) of Putin’s anti-corruption decree of July 8, 2013; read it here [7].

Abyzov controls several hundred million dollars’ worth of assets in the US; they don’t appear on his latest disclosure, they can be followed here [8]. He ranks second on the list of the top income earners in the government for last year:

TOP-20 MINISTERS OF GOVERNMENT WITH THE HIGHEST REPORTED INCOME FOR 2014
top-20
Source: http://www.vedomosti.ru [9]

Topilin reports an income of Rb5.1 million, but last year his wife earned more than three times as much – Rb16.5 million. Counting wives’ incomes changes the placings in the Top-20 table; for details read this [10].

Disclosure of income and assets of officials of state companies is hedged with ambiguity in the regulations and in their enforcement. The list of 63 state corporations or enterprises to which the disclosure rules apply was issued on October 7, 2013; Prime Minister Medvedev signed it as an amendment to an earlier government resolution dated July 22. Read the list in full here [11].

There were anomalies and inconsistencies to start with; there are more now. Rosneft (no. 21), Gazprom (14), and Russian Railways (28) were on the original list. But now, according to the spokesman for Medvedev, so long as a state-owned corporation is a commercial, profit-making one, disclosure is not required [12]. This lets Igor Sechin of Rosneft, Alexei Miller of Gazprom, and Vladimir Yakunin of Russian Railways, three of the best paid conscientious objectors, off the hook. Profiting in the air and profiting on the sea should also remove Areroflot (13) and Sovcomflot (32) from the disclosure list.

When Putin said this month that he recommends disclosure in the cases of Sechin, Miller and Yakunin, he didn’t say whether this disclosure should be to the government – and there kept confidential, according to recent court rulings [13] – or made public through the websites of the corporations they run.

Medvedev’s new interpretation still leaves officials at the non-profit companies owned by the state subject to the government decree of December 2014 [14], and without escape. That is, until the government puts into law the Russian trust. So long as illicit enrichment is vested in a trust, it will escape both the disclosure requirement and an Art.20 investigation. For more on trusts, click [15].

1-JSOJs7ZV8NJDqXRFNvAgRwThe charge of proletarian envy has been made to discredit the interest recorded in public opinion surveys in what officials get paid. In December, after Putin had been asked [16] about Sechin’s salary and replied that he didn’t know, Mikhail Leontyev, a reporter turned Rosneft spokesman (right), accused left-wing and anti-Russian propagandists of resentment. “Especially liberal and Western publications which for some reason we are very fond of watching, plus communist propaganda, instigate in the people an unhealthy hatred for high-income earners. To be sure, we journalists are happy to inform everyone what we get paid whenever our competitors in the market reveal what they get.”

There is only one state company employing journalists on the disclosure list. That’s Itar-TASS (55). The much larger Rossiya Segodnya, which was established by presidential decree in December 2013, absorbing the RIA-Novosti news agency and the Voice of Russia radio, and the RT television network are not on the list. For this year Itar-Tass has a budget of Rb2.6 billion ($52 million); Rossiya Segondnya’s budget is Rb6.5 billion ($130 million); RT’s annual budget, according to this month’s Duma vote [17], is Rb21 billion ($420 million).