POLITICS-RUSSIA: Russia Cracks Down on Graft

By IPS Correspondents Reprint | | Print |

Sergei Blagov.

MOSCOW, Jan 18 2002 (IPS) - A crackdown on Russia’s endemic graft was one of President Vladimir Putin key electoral pledges, and the Kremlin seems determined to deliver.

Notably, in early January Putin sacked Railways Minister, Nikolai Aksyonenko, who was accused of embezzling millions of U.S. dollars. The former minister had been linked to Boris Berezovsky, the once- powerful tycoon, who found himself in exile after Putin began distancing the Kremlin from so-called “oligarchs”.

Before Putin’s sudden accession to power in 1999, Aksyonenko – a former Deputy Prime Minister under former President Boris Yeltsin – was viewed as a leading candidate to become Yeltsin’s successor.

Moreover, earlier this month the Russian Prosecutor General’s Office announced that it had launched an inspection into the prior commercial activities of one the country’s most powerful officials, presidential chief of staff Alexander Voloshin.

Russia’s Prosecutor General Vladimir Ustinov said that the initial probe may or may not result in a criminal case. In the early 1990s, Voloshin worked with Berezovsky on the so-called pyramid schemes, Russian media outlets have reported. According to the reports, Voloshin ran several companies, which were accused of embezzling millions of U.S. dollars, but the case never led to criminal charges.

Ustinov eventually backed down and said there was no criminal investigation relative to Voloshin. Yet the probe renewed speculation about Voloshin’s imminent sacking, as well as several high-profile cases against officials associated with Yeltsin’s influential inner circle.

However, it has been argued that high profile probes came just as a reflection of an on-going battle between two powerful clans influencing President Putin, namely between Putin’s old colleagues from the special services and the old Kremlin team joined by some right-wing politicians.

Nonetheless, there have been other signs of an on-going crack- down on graft in Russia. For instance, in 2001 Russian law enforcement agencies investigated a total of 40,000 officials, working at Russia’s various institutions.

However, most investigations involved minor paperwork violations. As in January 2002 the Prosecutor General’s Office marked its 280th anniversary, Putin urged the prosecutors to do more to combat crime, according to the RIA news agency.

It is understood that now Putin is moving towards jettisoning the legacy of the early wild years of Russia’ “bandit capitalism” and taming super-rich “oligarchs”. In 2001, Putin initiated the sacking of the head of natural gas giant and Russia’s largest company Gazprom, Rem Vyakhirev.

Earlier in January, Prosecutor General Vladimir Ustinov indicated that his office intends to interrogate more Gazprom executives, widening an investigation into the sale of the gas monopoly’s assets by the management of rogue subsidiary Sibur. Until recently, Gazprom high-ranking executives were informally considered untouchable in Russia.

However, earlier this month Gazprom first deputy Chief Executive Officer, Vyacheslav Sheremet, who is also Sibur’s board chairperson, Sibur CEO Yakov Goldovsky and vice president Yevgeny Kozhit were detained for questioning. Sheremet was eventually released while two other executives still remain in custody.

Prosecutors opened a criminal case based on incriminating documents sent to them by Gazprom’s security service. However on Thursday Gazprom deputy CEO Alexander Ryazanov dismissed reports that Gazprom was behind the arrests.

When President Putin initiated the appointment of his old St. Petersburg contact Alexei Miller as Gazprom chief last year, the Russian leader made it clear that he wanted to stop the siphoning of valuable assets at the 38-percent state-owned gas monopoly. Sibur has long been seen as the final outpost for the cronies of former CEO Rem Vyakhirev, and analysts regarded the petrochemical giant as a backdoor through which management could embezzle Gazprom’s stakes in valuable enterprises.

While the investigation centers on the sale of Sibur’s assets worth 2.6 billion rubles (86 million U.S. dollars) a bigger story of missing assets could be disclosed. Last year Russian media outlets alleged that close relatives of Gazprom’s top managers acquired stakes in Gazprom’s affiliates, which were worth millions of dollars, for a symbolic sum of 10 rubles