Amid burgeoning allegations of Russian money-laundering and corruption, Moscow has hosted a conference of the Group of Seven nations plus Russia on fighting transnational crime. According to RFE/RL Moscow correspondent Sophie Lambroschini, participants in the conference apparently focused their efforts on legislative issues and international cooperation in fighting crime. But analysts say they have ignored one element that helps facilitate international crime -- Russian business practices.
Moscow, 21 October 1999 (RFE/RL) -- Russia is trying to convince the West that it is serious in its intention to fight economic crimes such as the alleged money laundering that has received so much international attention. As part of that effort, Moscow is hosting the justice and interior ministers from the Group of Seven countries to discuss cooperation in combating cross-border crime.
The conference participants issued a closing statement yesterday afternoon saying they have agreed on measures to facilitate mutual legal assistance and on recommendations for seizing assets of international criminals. But some analysts say this will be difficult, as dubious transfers of money are an intrinsic part of Russian business. Indeed, as the justice and interior ministers were meeting yesterday, the conference hotel was giving out free copies of a Russian weekly that featured a cover story on five ways to dodge taxes.
Yesterday, Prime Minister Vladimir Putin opened the meeting with a pledge -- in his words -- to "tightly seal all sources of dirty money on [Russian] territory." He added that Russia is "interested in preventing dirty money from Russia from being laundered in foreign banks." And to prove his good intentions, Putin said that government experts are drafting a law on money laundering to replace an earlier bill rejected by President Boris Yeltsin.
Aleksandr Livshitz, Russia's special representative to international financial organizations, also spoke at the conference. He insisted that the new law would open the way to greater Russian acknowledgment of the importance of fighting international crime. But in a television interview last night (Tuesday night), Livshitz also admitted that certain realities were stronger than laws. He said Russian businesses are already paying "taxes" to racketeers, who charge them protection money. Business owners in Russia say they can't afford to pay both the mafia and the state, so they pay only the one that is more powerful -- the mafia.
Viktor Pokhmelkin, a member of the State Duma's (lower house) legislation committee, is one of Russia's leading specialists on corruption and economic crime-fighting legislation. He told RFE/RL today that there is little chance that a law on money laundering will be passed before the Duma elections in December.
Pokhmelkin says that in any case, while such laws are important, they should not be the state's immediate priority. In his words: "The problem in Russia is that there is no legal or business culture. And although we can adopt as many laws as we wish on crime-fighting, they will be to no avail as long as people and businesses here are not convinced of the necessary protective nature of the law for their work. People here still don't see the state and the legislation it goes by as their protector, as their guarantor."
At present, Pokhmelkin says, crime-fighting legislation in Russia is perceived "not as a protection but as a stick that can be used arbitrarily by the state or by competitors." In such circumstances, he says, anti-crime legislation sometimes does more harm then good.
For example, an existing law obliges companies to report any suspicious dealings. But instead of being a way to protect law-abiding businessmen from criminal competition, the rule is used as an instrument for economic warfare. Some companies use the law to denounce their competitors. And the police use it as well to apply pressure on certain companies. "So," Pokhmelkin concludes, "all the law does is to encourage corruption in order to protect oneself from the use of the text against you yourself."
Pokhmelkin says that, before all else, the Duma must adopt laws protecting free business and a real market economy. That, he says, would show that the state is a defender of individual and business rights and not itself a player in the economic struggle.