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Why Russia Locks Up So Many Entrepreneurs (bbc.co.uk)
173 points by ytNumbers on July 5, 2012 | hide | past | favorite | 128 comments



> Businessmen have complained for years that people have been able to frame commercial rivals

Corruption is like an infectious disease. It infects the body from the head to the toes. Corruption is involved in every stage of a person's life. When a person is born, in the hospital bribes need to be doled out to nurses, doctors and staff if appropriate care is expected. In school starting from kindergaden and all through highschool teachers and principles are bribed to ensure good grades are assigned.

Then bribes are given to government officials. Say, if you take a driver's exam (this happened to me) they will fail you on purpose expecting that you will realize that you need to pay them a bribe in order to pass it. It is not that are you good or not, it doesn't matter, because others pay, pay is expected always and those that don't pay get failed until they pay.

There is a price you can pay to get away with murder. There is a price you pay to the court DNA tester to either fabricate or deny a paternity test. There is a price for every single piece of certificate or license issued for conducting a business( and, not surprisingly the number of said certificates and licenses never decreases ).

It is not just bribes. It is also nepotism. There is so much freakin' incompetence because people who are not qualified are put in position just as a result of being related to some higher-up.

This corruption is also transmitted to offspring. Children observe their parents interact with the corrupt system and they learn to do the same, in the process also become corrupt.

To get back to the article. I think a lot of businessmen get locked up because they did not play by the un-official rules and thought, perhaps some thought, they could function like they would do in the West or in America.


To get back to the article. I think a lot of businessmen get locked up because they did not play by the un-official rules and thought, perhaps some thought, they could function like they would do in the West or in America.

Whilst the situation in Russia is undoubtedly horrific, let's not pretend that corruption isn't endemic in the rest of the world; some counties have just legalized it to some extent.

Crony capitalism is criticised but rarely has action taken against it, and political campaign donations are seen as being perfectly acceptable. It doesn't appear to matter whether it's giving money to US senators, or joining "donor's clubs" that guarantee access to the UK's prime minister, e.g.:

http://www.conservatives.com/donate/donor_clubs.aspx


Whilst the situation in Russia is undoubtedly horrific, let's not pretend that corruption isn't endemic in the rest of the world; some counties have just legalized it to some extent.

Every time there's a discussion of corruption, people make this statement, and it bothers me (I'm originally from India, which has a lot of corruption too). You cannot just equate the two. Corruption as described by the GP is like a cancer which has metastasized all over the body; corruption in the West is like an isolated blotch of melanoma on the skin.

So yes, there is corruption everywhere I guess ( perhaps even in Sweden and Norway and Switzerland); but it's not at the same level as that in Somalia and Russia.

The thing that draws entrepreneurs from all over the world to the US is that it is almost trivial to register and start a business here; and even if you're wildly successful, your "corruption overhead" is minimal (the occasional $35K dinner for $PRESIDENTIAL_CANDIDATE notwithstanding). This may not be the case in ALL industries, but in general it's true.

Consider for example Google. Till a few years ago, despite revenue in the billions, Google didn't even have a lobbying presence in DC.

This is not to say that we should not be alert. The way lobbying (i.e. corruption) is playing out in DC is a troubling trend. If things are left unchecked, there could come a time when, for example, instead of putting a competitor in jail (as in the article), companies would just get laws passed which kneecapped the competitor. We're not there yet (there might be exceptions), but we have to be vigilant.


I think entrepreneurs are drawn to the US simply because it is the biggest economy. The corruption overhead is just a cost of doing business, you don't pay, your customers do, you just have to account for it when you create the pricing structure.

I think Google is an exception, because it is a technology company. I would say the amount of corruption depends on the age of the industry and the vested interests, technology is so new it just isn't there yet. On the other hand, you have the financial industry and the big New York banks. The SEC is bought and paid for, they will never prosecute one of the big banks, and a judge will never rule against them either.

One of the most interesting stories is Martin Armstrong (perhaps the only person in the world who actually understands how the global economy works imo) who was held in contempt of court in jail without trial for like 7 years because the government wanted to silence him.

In the US you won't really see the corruption at the lower levels, but the higher up you go, the more corruption you will find. The corruption is hidden and more sophisticated. The real corruption occurs at the highest levels, behind the curtain. Governments are simply tools used by those who are really in power. It's more profitable to make your competitor (unknowingly) become your economic slave than it is to put them in jail.


As far as I can see, Armstrong was jailed not because government wanted to silence him (which would be futile anyway since there's ample ways to communicate from prison and many people do that) but because he refused to turn over some materials after being indicted (and later convicted) for financial fraud, which looks not entirely unlike what Madoff did. So it does not look like any government conspiracy theory is required. Of course, if you have data proving otherwise, it would be interesting to look at it.

The courts in US regularly rule against big banks in various cases, so it is just plain wrong to claim judge will never rule against the bank. The SEC is more problematic, since high knowledge requirements for regulating banks and security industries leads very quickly to the situation when all SEC experts are industry people, and thus defend the industry interests. This is inevitable problem of state regulation - the only way to know what the industry does is to work there, and finding somebody that is both impartial and competent is next to impossible. Yet even SEC regularly issues rulings against banks.

Of course, there's a lot of corruption is US, including the highest levels of government - so, former House Ways and Means Committee chair Charles Rangel was caught fraudulently evading taxes, getting huge donations from companies directly benefiting from rules he was promoting, taking lavish Caribbean trips paid by lobbyists, etc. He finally had to step down from the position and was censured by the Congress ethics committee, but still was reelected. So I think the problem here is the people that vote for corrupt officials as much as the corrupt officials themselves. If the people would refuse to vote for corruption, people like Rangel would not be able to persists in power for as long as they do now.


That may be so, but it is difficult to suggest that the legal system is corrupt in the west.

The worst part about the article is the fact that there is no fair trial in Russia.

Imagine a fictitious world where everything is corrupt, but the legal system. It isn't a perfect place to live, but, you know that at the very least your freedom is protected, your contract if breached is remunerated etc.

Imagine a fictitious world where everything is not corrupt, but the legal system is. In such place, one has no freedom, for out of spite perhaps, out of jealousy, out of greed, someone could simply send you to prison.

7 acquittals in 1000 cases, and even then 5 overturned, so practically only 2 people being acquitted in 1000 cases is a practical tyrannical state.

In the west, at least, the legal system protects against corruption by itself not being corrupt. If such bastion of freedom fails, then the land is no longer free.


>That may be so, but it is difficult to suggest that the legal system is corrupt in the west.

Is it? I think it's hard to argue that it ISN'T. How else can you justify poor people getting 20+ year sentences for relatively minor crimes, while white collar criminals can steal MILLIONS, and get a slap on the wrist? When's the last time you saw a major celebrity or pro athlete actually A: Get convicted for something, and B: Serve real time?


Inequalities in sentencing are one matter. It is another thing entirely if trials are not fair. I think for the most part, western nations provide fair trials.

Furthermore, corruption - at least in the US - is taken pretty seriously. Where as a matter of course one might offer a bribe to a policeman in certain countries, it's actually pretty rare here. And in the cases corruption does come to light, it almost always ends public service careers, even (especially?) for high ranking officials.


I'd say they're fair if you can afford a good lawyer. If you can't, and have to take a public defender, you are, in most cases, screwed.


Whether the system is fair or not is orthogonal to the skill of the participants.


I think you're completely missing the point.

This is the system, and it isn't fair.

The outcome of a criminal trial being strongly correlated with your bank balance is pretty much the definition of an unfair legal system.


Is it correlated? At the end of the day 12 randomly selected people from the population decide whether the person is guilty or not guilty.

How that system can be corrupted, even by the skills of persuasion, is beyond me. Some facts are simply facts and no gift of communication can change that.

Lawyers are not magicians. Lawyers can't by simple force of intellect persuade the jury to acquit someone when the fact clearly show to any impartial reasonable observer, as normally is the case with a jury of 12 people, that the person has committed the crime.

You might have a stronger argument in regards to how decisions are made as to which case is prosecuted, how much resources are allocated to gathering the facts to prosecute a case related to drugs as compared to a case related to financial fraud, but in my opinion, once the person charged is in court, I think there is no corruption at all.


The a large percentage, perhaps even a majority, of trials end in the striking of some sort of deal before the case ever goes in front of a jury. You'd better believe that the successful local lawyer who's the DA's golfing buddy gets better deals than some zit-faced public defender who just passed the bar exam. I know that sounds quaint, but it happens all the time in America, especially in small towns where the good ole boys club is still very much a going concern.


The deals are predetermined by law.

In the UK you get 33% off the sentence if you plead guilty at the first opportunity, i.e. at the police station or the first time you appear in court, 20% at the second opportunity, etc.


The UK maybe, not so in the US.


Public defenders usually produce better outcomes than private lawyers, the exception being private lawyers who were once district attorneys or public defenders.

Public defenders get a bad rap because most of their clients are--get this--actually guilty of the crimes they are charged with. The vast majority of defendants accept their guilt and are unwilling to pay thousands for a private lawyer who will not produce a better outcome. For these defendants, the public defenders are merely there to make sure that their rights are protected (at this point, usually procedural rights, i.e., due process).

A lot of the remaining clients go to trial simply because they can without having to pay for it (i.e., go down fighting). These clients have no chance of winning (multiple eyewitnesses, caught on video, caught with the goods/drugs/weapons, DNA/fingerprints, unsolicited confessions, etc.), but the public defender goes to trial anyway because that is what the client has demanded. (Private attorneys would simply inform them that their rates for trial are usually double their standard rates; at this point most clients either switch to public defenders or plead out.)


>Public defenders usually produce better outcomes than private lawyers, the exception being private lawyers who were once district attorneys or public defenders.

Interesting! Do you have a source?


Working for the public defender in California and volunteering with prosecutor's office elsewhere.

Blue states have high-quality public defenders because they receive adequate support from the state. Certain Southern states also have high-quality public defenders, as a result of the civil rights movement (for example, Atlanta, Georgia).

In a lot of smaller counties (including in California), public defenders are private lawyers operating under contract (because there is not sufficient need for a full-time public defender). They're usually selected because they are extremely competent and/or have cozy ties to the D.A., but either way, they also produce good results.

Not all public defenders are good. In some states (specifically Ohio and most Southern states), public defenders are employees of the "county" but are paid minimum wage base salaries and receive the bulk of the compensation as commissions per-case (regardless of outcome). In those states, public defenders generally have little to no budget to hire experts or investigators, but face off against prosecutors who have essentially unlimited resources (and market-rate salaries with pensions). As a result, these public defenders are overworked and simply do not have the time or resources to do a good job on any of their cases.

If you're looking for the actual numbers, I don't know of a freely available source. There are usually a few law journals that publish these stats every year or two, but my current legal database subscription does not include access to these journals.


Why should a celebrity get convicted of something unless they have committed a crime?

I think America may be a bit of an exception actually since you guys elect your judges. That sounds ridiculous to me. It is like electing your doctor or your engineers. Some things simply are best left to technocrats.

That said, in the UK at least, you have the choice of five appeals before a final, conclusive say is given in your case.

Take for example Assange, the Wikileaks founder. It is difficult to find a more political example. He went up to the highest court. That final hearing was held in public, as all hearings are, it was televised, again as all hearings are, you can read the judicial decision, as with all judicial decision. No one was corrupted. You can't corrupt them, because there is complete transparency.

Now take the hacking scandal. At least 10 people have been imprisoned and are awaiting trial I think. Maddof is another example. We will see what comes out of Libor, etc. We don't live in a perfect world, but we are the closest to it I think.

In regards to your point about 20+ year sentence for a relatively minor crime, I think you will find that the media often sensationalises things to get attention. If you delve into these cases, by for example, reading the judicial decision which are available to everyone, you will most probably find that the decision if not to your agreement, is reasonable and justified.

To conclude with clearly showing that there is no comparison between America or the West and Russia, if you look at 1,000 cases, you are very likely to find way more non guilty verdicts than in 2 cases.


> I think America may be a bit of an exception actually since you guys elect your judges. That sounds ridiculous to me. It is like electing your doctor or your engineers. Some things simply are best left to technocrats.

Except for federal courts. All federal court judges are appointed by the president for life after confirmation from the senate. Only state courts have an election process, in some cases.

> That final hearing was held in public, as all hearings are, it was televised, again as all hearings are, you can read the judicial decision, as with all judicial decision. No one was corrupted. You can't corrupt them, because there is complete transparency.

Not all court hearings are televised, as you stated. The court hearing for repealing the Patient Protection and Affordable Care Act (PPACA) was not televised. Most federal trials aren't televised.

Also, just because you can read the judicial decision, doesn't mean that it wasn't a result of corruption during the trial. And once you get the decision, its not like you can fix it if something wasn't right in the decision. Complete transparency would only occur if all court cases were televised and unedited, giving the people access to all evidence.


All court cases are held in public, so if you are interested in the full evidence, etc, you can attend the hearing in person. Moreover, all cases are recorded, so you can request a transcript of the whole process. Most judicial decisions however begin by a summary of the facts and the laws that were in question.

Once you get a decision, you can fix it. You appeal it. If the court was wrong, then the higher court is likely to overturn it.

The point about being able to read the judicial decision is that if the judge applied the law incorrectly, whether because he was corrupted, because he did not like the defendant or anything, if you are a trained lawyer, you can see that the law was applied incorrectly, so you appeal it. If that appeal is successful, the judge below would loose a huge amount of reputation, especially if it was blatantly obvious that he applied the law incorrectly. So no judge would do it. They are paid very handsomely. They probably practised as lawyers before becoming a judge so made quite a bit and therefore they have nothing to gain and everything to loose if they accept being corrupted.


> All court cases are held in public, so if you are interested in the full evidence, etc, you can attend the hearing in person.

Space is limited in a court room. That's why I was talking more about televised sessions.

> Once you get a decision, you can fix it. You appeal it.

Good luck with that. That's all I can say.

> They probably practised as lawyers before becoming a judge so made quite a bit and therefore they have nothing to gain and everything to loose if they accept being corrupted.

That's the problem. Lawyers aren't very good and the laws aren't very clear in a majority of the cases. I have yet to see a judge lose their reputation from having one of their cases appealed. Also, private deals are made with lawyers all the time that are protected by client confidentiality. Do you honestly believe that they would have nothing to gain by exploiting such deals?


> All court cases are held in public, so if you are interested in the full evidence, etc, you can attend the hearing in person.

Most, but not all. The judge can hold a private session if he chooses.


Nope, not at all. Non-violent drug offenders can and do get 20+ year sentences in the US. Especially heroin and crack cocaine. There are some insane mandatory minimum sentences here.


Sentencing is a result of the legislative branch and not the judiciary. These sentences are often mandated by law. Judges have no legal leeway to reduce them. I believe the argument is whether the trial system is fair, and not the unfortunate reality that we elect morons because they are "tough on crime."


How exactly mandatory minimum sentences prove that legal system is corrupt?


Gross inconsistencies.

Have a little crack on you? 5+ year minimum, quite possibly more, especially if it isn't your first time.

Whereas the rich will pay some high-priced lawyer with connections, and get a plea deal, probably for probation, for just about anything short of murder.


I think at best your argument proves that there is a problem with legislation. I.e. with the laws that treat white collar criminals not as hard as crack users.

I don't know about unknown rich with connections. But a lot of celebrities got pretty harsh treatment. Michael Vick served more time than his co-defendants.


That proves the system is broken (and it is, the whole War on Drugs is America's worst mistake since Prohibition) but not that it is corrupt. To prove corruption, you need to prove that the outcome depends on something else than the (admittedly broken) law. Pointing out that the law gives unjustifiably harsh sentences does not advance this argument.


There's a huge, huge difference between:

a) a system in which paying a third party to spend their life understanding that system aids in better navigation of that system

versus

b) a system in which you must pay representatives of the system in order to engage with the system.

Yes, in both situations, more resources will get you better results, but process matters. System A is a whole lot closer to redemption than System B.


> How else can you justify poor people getting 20+ year sentences for relatively minor crimes, ...

Those laws are effectively a eugenics program to weed out low IQ and impulsivity. If you cannot figure out how to beat a cocaine rap or not knock over a gas station, boom, your peak reproductive years get spent in a single sex environment.


Actually research shows that these people that spend years in jail have more children on average than people without criminal record. In addition the more years you spend in jail, the more reproductive you are. So the "eugenics program" will never work because the human evolution doesn't care about low IQ and impulsiveness .


Interesting. Do you have sources for that research?


Sorry, can't find it now. It's somewhat related to papers about "Dark Triad" traits.


Right. I did not say it was enough, just that the goal certainly appears to be eugenic.


yay! You just taught me a new term in english: Crony capitalism. It's almost the same in spanish btw: ("capitalismo de amigos", literally: "friend's capitalism"). Thanks for that ;)

And yes, that kind of problem seems to be present all around the world. Probably, it's something related to human nature. And sometimes, it looks like the system is trying to encourage that behavior. We learn of the importance of knowing certain people, pertaining to certain circles, making contacts, grow our social network, and so on.

As a simple example, things like LinkedIn are essentially encouraging the use of our contacts, to get an advantage in our professional careers. Doing that in public service, would be unethical (and most probably, illegal). But doing it in the private sector, seems to be fine. So, that dichotomy blurs as long as it doesn't go too far away. But then, you'll eventually end up in that crony capitalism... unless something or someone stops you. And sadly, the law doesn't seem to be stopping anyone.


There aren't many 'English' words!

wikipedia: The word "crony" first appeared in 18th century London, according to the Oxford English Dictionary to be derived from the Greek word χρόνιος (chronios), meaning "long-term".[2]


It's actually worse. There are no rules that would prevent that from happening. If you have money, you are a target for criminals, and bigger organized crime syndicate is the security services themselves. If you're lucky, you lose some money, if you're less lucky - you can lose everything, including your freedom. Since judicial system and law enforcement as a rule do not protect potential targets from attacks, but rather facilitate and sometimes initiate them - there's nothing to prevent that from happening. You can bribe someone, of course, if you have money - but somebody else can pay more, or threaten, or the bribed official may decide to take the money, but do nothing to help you. What you're gonna do, sue him? Another part of it is that the laws are purposely built in a way to ensure it's impossible to not have some problems with them. This way, of course, the officials can solicit more bribes - but also more people would be imprisoned because there's always something he can be accused of. Or, as famous Russian saying goes, if there's a man, there's always a criminal code article for him.


Thanks, You make me feel better for my country. Even when there is a lot of corruption in Argentina, luckily we are not at that level yet.

I mean, yes... some things are common: police taking money from prostitution and even from drug dealers in some places, Union leaders getting rich and powerful by using union's money as if it was of their own, politicians contracting companies owned by friends or family members while public prosecutors and judges turning a blind eye... and so on...

But taking money to put innocent people in jail? Maybe there's hope yet...

But then, somebody else coming from a different country would read my message and would also say: Wow!

Surely, that's an advantage of having a highly banked system as in some places of Europe and the US. I think that most of this "low level corruption" problems would be solved if people used less cash. I don't know in Russia, but here, most of the transactions are made in cash. Even when buying a house, most people go to make the transaction carrying USD 150,000/250,000 in cash. People do not trust in banks (mainly after the 2001 crisis), and lots of people have safe deposit boxes instead of savings accounts, just to avoid the government from knowing how much money they have (tax evasion). But, if people used less and less cash, it would be harder to have these kind of corruption in lower levels, simply because of money laundry's complexity for most people would be just too much, or too risky.


Incidentally, a new law was just passed here in Italy to reduce the maximum amount a transaction can legally be made in cash. That is mostly to contrast tax evasion, but the same logic applies to corruption, I guess.


This sounds like an awful law and I would strenuously argue against it if it was proposed in my country.

http://www.businessweek.com/magazine/italys-cap-on-cash-paym...

The limits are quite low, too.

I have a somewhat unreasonable hatred of banks, which stems from some unfortunate incidents - they basically lost my meager money back when I was starting out and they literally left me with nothing to eat for a few days; some unreasonable fees, awful hours, anti-customer service, etc.

So so far I've made all my large transactions in cash - I bought my car in cash, for example, U$ 9000. It's actually a tiny pile of money.. I'm pragmatic and I do use all banking services, but I'd love for them to be disrupted (and even had a tiny try at them myself befare I despaired at the humungous amount of red tape)


>But then, somebody else coming from a different country would read my message and would also say: Wow!

I'm not so sure. All of those things you list in your first paragraph happen in the UK all the time and nobody cares, and I imagine it is the same in most other countries.

As usual, there's probably some Scandinavian place where everyone behaves exemplarily.


That's funny, I had a fellow co-worker here who came from Sweden. He said that even when there was practically no corruption at all where he lived, life was incredibly boring.

He seemed to enjoy "having problems" here (yeah, that sounded strange to me too). Maybe those problems add adrenaline and emotion to our lives? Or maybe he was just crazy.


Life is boring in Scandinavia? I don't recognize that at all, I'll even go as far as to say it's the exact opposite.

Maybe he should try living in Copenhagen or Stockholm.


I don't see how needing to pay bribes makes life exciting. If he wants some danger in his life, he could take up an extreme sport...



Corruption is demoralizing. Unless he views it as tabloid gossip, which is... unimpressive.


They happen everywhere. It's a matter of degree. Some people in corrupt places love to use the fact that no place is perfect as an excuse for why things should not change and why people shouldn't get angry.


In Ireland, there isn't so much corruption. I won't say there's never any whatsoever, obviously, but there isn't anywhere near as much as people are describing here. I suppose it puts in perspective how lucky I should feel.



I think you should put things in perspective. Ireland is not the least corrupt country in the world, but definitely on the right end of the list. Only Scandinavia, Germany, Canada, Australia and New Zealand is less corrupt. The rest of western Europe as well as the US, Chile, Uruguay and surprisingly Botswana is at about the same level, while every other country is more corrupt.

No country is totally free of corruption. It would be no problem to find cases in Swedish media as well. That you find corruption cases in the media is a good sign, because it indicates society does not accept it.

Corruption is not in any way crippling Irish economy like it does many other places.

(Source: http://cpi.transparency.org/cpi2011/results/ )


The table of countries makes interesting reading...

Am I wrong to find it fishy that Julian Assange wants to hide in Ecuador (rank #120, score 2.7) rather than face a trial in Sweden (rank #4, score 9.3)


>In Ireland, there isn't so much corruption.

Really? How hard are you looking?


If there was anywhere near as much as is being discussed regarding some other countries, a cursory glance would suffice. Did you miss the bit where I said 'I won't say there's never any whatsoever, obviously'?


I live in Russia and I never gave a single bribe to anyone. My parents did, but I'm 27 and never been in situation when I needed to bribe anyone.


It's a natural progression of corrupt regimes where

1) An entrepreneur pays off someone in the position of power (police, local government, tax collector) to facilitate quick problem resolution.

2) The aforementioned person in the position of power realizes that instead of the paltry fee they could lay claim on a large share of the business or entire 100% stake.


What I love about English-speaking communities is that articles like this one receive real comments from real people. It might sound strange, but try to put this kind of article somewhere in Russian and you're guarantied to receive first 10 comments telling you that it's just America trying to destroy the Mighty Russia with this kind of falsehood. And those comments are rarely from common people, even though Cold War ideas are strong in their heads, mostly they are written by paid pro-Kremlin activists or just simple bots.


Well, these astroturfers are a message in themselves. They do exist in the English web as well, though.


When did you see Youtube comments the last time?

Anyway, you are wrong. Five of that ten comments would be about how their authors hate Russia and are eager to abandon it.

And you are wrong twice because both kinds of comments seem to originate from real people. This is much more sad than any propaganda machine.


Are they really talking about "entrepreneurs"? I have hardly heard that word in Russian media. Now if they talking about the people whom Russians call "businessmen", I can believe it. "Businessmen" has become a generic term for people involved in uncertain economic activity, often shady. It is not uncommon to hear on the evening news of a few "businessmen" resolving their differences with guns. Having so many "businessmen" locked up is not that unusually, especially considering that many criminals simply refer to their activities as business.

I am not making light of corruption in Russia, it is one the top three most serious issues that Russia faces. However, the BBC article seems disingenuous in translating an extremely loaded Russian word "businessman" into entrepreneur and dropping its tremendous criminal baggage.


Russia is so corrupt that running a business without dealing with criminals is not practically possible. Nobody is "clean" and if you are you will not be running a business anymore or even better end up dead or in prison. That is the cost of doing business there. My dad's university friend ran a small company in Moscow, was too honest for his own good, they threw him out of the balcony of his apartment. Competition in in mother russia is a bit more cutthroat then what people NA can imagine.


When I went to visit my then girlfriend's family in Russia a few years ago there was what was known as the $100 rule - basically that nobody ever left the house without $100 US in their pocket, because that amount would be enough to get you out of pretty much any trouble.

Bribery of police is so endemic in Russia that the state's most effective counter to this so far has been to simply bribe the police more and reclaim the losses from the perp - so for a traffic offence, the policeman would get a bonus from the state for not taking the bribe and the offender would have his car sold.

Paying police more in the first place might be a good start.


Russian person here. Why do you think paying the police more would reduce corruption? Highly paid government officials in Russia are just as corrupt.


I agree. Bank tellers are not that highly paid, but the local banks have no problem with massive theft.

Here in the US, police are paid quite well and retire with a nice pension. They also win a free-paid vacation if they kill an unarmed civilian. They call it "suspended with pay".

Despite all that, they also taser the elderly and teens half their size: https://www.google.com/search?q=police+taser+elderly++&o... I read a blog for priv. prop. anarchists and they never run out of stories like those.


You would rather that some one being investigated went back to work and potentially adjusted the evidence that is why when your investigated for a serious offence at work you are suspended.


3 million people? i have a very hard time believing that Russia has locked up 2% of their population the last 10 years - oh, and those were only the enterpreneurs, so the total figure is even higher.


There is no freedom of speech, and a pervading censorship of all media, including more and more of the internet. Speak out, go to jail.

"Just today (june 29) a Court ruled the feminist punk rockers must remain in jail while police slowly investigate them for the crime of allegedly chanting a 'punk prayer' against Putin from a church pulpit." http://news.infoshop.org/article.php?story=20120627165225580


"and a pervading censorship of all media"

http://en.wikipedia.org/wiki/Sin%C3%A9ad_O%27Connor#Saturday...

"NBC did not edit the performance out of the West coast tape-delayed broadcast that night, but reruns of the episode use footage from the dress rehearsal"

Where's the difference? Talking about media.


Well you are talking about NBC censoring, this on the other hand is the goverment putting people in prison. Since the govt controls the TV and papers you wouldn't find much information about the Moscow protests that took place a few months ago. You'd have to look to the internets, which are next in line to be censored. https://en.wikipedia.org/wiki/Freedom_of_the_press_in_the_Ru...


I'm just saying that there are multiple ways of having censored media. Some of which feature govt controlling said medias, some don't, some might be pure commercial, but the end result might look surprisingly the same.


http://www.arik-airline.com/ - Book your flight with Arik Air UK from London Heathrow to Lagos, Abuja, Port Harcourt, Owerri, Calabar, Benin, Akure, Warri, Enugu, Sokoto, Yola, Jos, Kaduna, Kano, Katsina, Maiduguri, Gombe, West Africa: Accra, Cotonou, Freetown, Banjul, Dakar.


during the dress rehearsal she held up a photo of a refugee child.


https://en.wikipedia.org/wiki/List_of_countries_by_incarcera...

This is ~0.5% at a given moment. 2% over 10 years doesn't sound too much.


Well, we are 102. And not because of benevolence (even when we have a lot of soft judges lately, that seem to prefer to look after criminals instead of the population), but because our prisons are old and full of people, and there's no political intent to build more. (The government even destroyed some cuz they were too old, but didn't replaced them)

I bet that a lot of poor countries down there share the same reasons (and maybe, some lack the money to build more).


USA Number One! Hoo-ah!


Up there with Georgia and Russia and Rwanda and Iran.


Iran has, like, 2.5x times less.


According to Wikipedia's http://en.wikipedia.org/wiki/United_States_incarceration_rat...:

> The incarceration rate in the United States of America is the highest in the world. As of 2009, the incarceration rate was 743 per 100,000 of national population (0.743%).[2] In comparison, Russia had the second highest, at 577 per 100,000,


You're assuming at one time. Russia's overall incarceration rate is 0.522%.

You're right however, the 3 million figure seems very high.

Russia is a lost cause. Police/government can (and regularly do) take over any business, especially any small business.

Russia is so corrupt, only a full scale revolution will have a chance at fixing the country.


Yeah, absolutely. Revolutions have worked out so well before, especially in Russia. What Russia needs right now is some serious destruction and civil war, followed by a few decades of rule by hard men who know that their Cause comes before anything. Oh yeah.


I think they'd be best off with a "revolution" in thinking by the government and public security services. If they put rule of law as a high priority, and are able to extract enough.

Everyone would be better off with Putin and the FSB crowd having their own licit and overt wealth, power, and perks, but then using their power to enforce fair laws on everyone else in exchange, vs. the system where they officially don't get as much benefit from their jobs, but extract personal benefit through corruption, and where others in society can use the state as a tool against other people.

(which is why it makes sense to pay police, judges, etc. quite well, and to give them high social standing, in exchange for competence, professionalism, and lack of corruption)

You could probably get that from the top echelon (I don't think Putin is at all corrupt, in the sense of taking bribes or anything like that, and would be surprised if his direct reports did), but it's hard to get that down to the lowest level of law enforcement.


Don't know where to start. First, you are seriously naive or uninformed if you think that Putin is not corrupt on a gigantic, unheard-of scale. Take a look at the so-called Putin's palace on the Black Sea, http://www.youtube.com/watch?v=Ac4bzpRhtVQ (there have been really feeble attempts to deny that it was built for Putin, but the funds have been traced to companies owned by his associates - funds that they in turn got from government contracts). This thing cost a billion dollars. There is another one of these in one of the most remote regions of Russia - the Altai mountains - where the road to the place alone cost hundreds of millions of dollars (this time, simply taken from the federal budget), and a whole small town needed to be built to house the construction workers. (The story is hilarious, if you read Russian or if the G-translate can get you close enough: http://chistoprudov.livejournal.com/91316.html). The tiny village which appears in some of the photos is the official excuse for building the gigantic road through some of Russia's most difficult terrain; officially, the road is called a "junction". It cost more than the annual budget of the Altai Republic. Something like a dozen of Putin's classmates and friends have become multi-billionaires, in businesses related to government contracts or state-owned oil companies. In general, Putin's corruption makes the Shah of Iran look modest and tasteful. And that's just the financial corruption; there have also been several brazenly stolen elections, railroading of political enemies in the courts, and God knows what else.

With all that, I still don't think that a "revolution", which is to say a violent seizure of power, followed by the displacement of the current elite, is called for. It would result in years of bloody war. (Do you think the men who own these billion-dollar enterprises built on nothing other than government connections will just settle down and start raising turnips?) And the elite which it brings to the top might be no better. You are unlikely to end up with true rule of law.

The fact is that Russians are not without non-violent means of achieving change. The presidential elections were less corrupt than the preceding parliamentary elections, largely because far more citizens organized and became observers. Putin has had to allow popular elections of governors of Russia's regions, after years of personally appointing them, because of pressure brought about by the outrage over the elections. The idea of destroying everything and building a better version is tempting, but it has produced disaster again and again.


Yeah, you're probably right. I guess I don't consider Putin's direct actions to be corruption so much as bad governance (in some cases; in other cases he's superior to Yeltsin, but maybe that's a really low bar). The US President can spend $5b on a few helicopters to fly himself around without it being "corruption", so I assume the Russian president could build a secure "vacation home" somewhere. None of it is acceptable, but corruption vs. not is just semantics.

The sad thing is Russia has so much hydrocarbon fuel that they can probably go on like this for a long time. US and Europe having open immigration for talented Russians seems like the best we can do.


> I don't think Putin is at all corrupt, in the sense of taking bribes or anything like that, and would be surprised if his direct reports did

Haha. Here's a little about Putin: http://www.telegraph.co.uk/news/worldnews/wikileaks/8175406/... And here a little about his former minister of health: http://en.novayagazeta.ru/society/8682.html There's much more where that came from. You can pretty much pick any high-ranking official in Russia and start digging.


Not only is it not 3 million at one time, there's also no definition provided of what it means for them to have been locked up. It could presumably be a whole load of one week sentences, or maybe even a night or two in jail?


>> Russia is so corrupt, only a full scale revolution will have a chance at fixing the country

Thank communism, because corruption was the only way for business to do any kind of transaction


Communism as we know it? Yes. Communism as Marx envisioned it? No.

It's all just semantics really:

1) In the US, 'socialism' is a dirty word, but don't you dare mess with Social Security or Medicaid.

2) China's 'communist' regime is called the "People's Republic of China."

3) Burma is now called "Republic of the Union of Myanmar" after a military coup.

4) China and the former USSR are both referred to as "Communist," but the governmental structures seem vastly different.

5) The Khmer Rouge were known as the 'Communist Party of Kampuchea,' but referred to their country as 'Democratic Kampuchea' even though they implemented forced relocation and confiscation of private property.


I think all these semantic contradictions reveal a much more important truth: what -ism your government operates under or claims to operate under is about 1/1000th as significant as whether it aims to serve the people and respect the law. A corrupt communist state has much more in common with a corrupt capitalist state than with a respectable and well-run communist system, and vice versa. We should really focus a lot less on ideology in our politics and a lot more on basic ethics and accountability. Once we start getting those figured out, we can worry about the -isms.


Agreed, execution matters.

But it's hard to miss the pattern - we have yet to see well run communist (not socialist) state. Every country that tried communism failed, and either are poor backwater countries (Kuba, North Korea), reverted to capitalism (Central and Eastern Europe), or kept communism on banners only, changing most of economy to capitalism under the hood (China).

We even have a few case studies, where one country is divided into 2 parts, and one half is made communist. Both in East/West Germany, and North/South Korea the differences are quite obvious.

Maybe it has sth to do with the system itself, after all?


The most well run communist state was probably Yugoslavia. I can see a few things which made it more successful than other communist states: it did not cut itself off from the world as a whole or associate itself with a much bigger and more powerful communist state and it allowed its citizens more personal freedoms than any other communist state. Of course it eventually collapsed due to internal and external pressure, but communism was not ousted due to a mass civil uprising (the wars were largely due to the policy of forcing a pan-Yugoslavian identity independent of pre-existing ethnic differences). In Slovenia, which only participated in the wars for a few days, the transition between communism and capitalism happened gradually and to my knowledge non-violently over 10 or so years.


This is anecdotal, but even within the same village, switching to capitalism has been known to radically increase production.

I'd recommend this fascinating story from NPR's Planet Money: http://www.npr.org/blogs/money/2012/01/20/145360447/the-secr...

Background: a group of farmers in a small Chinese village secretly agreed to start keeping their surplus crops for themselves.

=============

Before the contract, the farmers would drag themselves out into the field only when the village whistle blew, marking the start of the work day. After the contract, the families went out before dawn.

"We all secretly competed," says Yen Jingchang. "Everyone wanted to produce more than the next person."

It was the same land, the same tools and the same people. Yet just by changing the economic rules — by saying, you get to keep some of what you grow — everything changed.

At the end of the season, they had an enormous harvest: more, Yen Hongchang says, than in the previous five years combined.


It could, but the correlation doesn't automatically imply causation. Perhaps the pattern arises because societies with pre-existing tendencies to authoritarianism and corruption are more likely to give rise to communist regimes. If a society with stronger civil traditions or more capital attempted to implement a communist system, the result might be radically different than what we've seen so far.

I also think that in modern-day practice, the lines between what we term communist, capitalist, socialist, etc. are much blurrier than we tend to admit. The gp post demonstrates how so-called capitalist countries can enact strongly "socialist" or "communist" behaviors and polices, and vice versa--they just do so with different rationalizations and rhetoric. If you could somehow find an absolute measure for the success level of each country in the world and plot it according to the political system they supposedly espouse, I don't think you'd find nearly as much cohesion compared to if you plotted them according to measures like the strength of judicial and education traditions, beneficial geography, balanced ethnic makeup, and so on. These labels get applied after the fact, they aren't the structural drivers that make various governments and societies function the way they do.


> It could, but the correlation doesn't automatically imply causation. Perhaps the pattern arises because societies with pre-existing tendencies to authoritarianism and corruption are more likely to give rise to communist regimes.

Communism was introduced by force in many countries, in few cases it was introduced to half a country, and the half that stayed capitalist, benefited. You'd need to assume countries with high probability of dictatorship and corruption are more probable to be forced to become communist states by others, and that the difference between West and East Germany, North and South Korea regarding authoritarianism and corruption tendencies are bigger, than the same differences between for example East Germany and Russia, or West Germany and Spain.

I think from the data we have it's more probable, that communism just don't work.

> The gp post demonstrates how so-called capitalist countries can enact strongly "socialist" or "communist" behaviors and polices, and vice versa--they just do so with different rationalizations and rhetoric.

Communism is "from everybody according to their needs, to everybody according to their needs". So salary and employement doesn't depend on productivity, free market doesn't dictate prices and volumes of produced goods and services.

Public road system, army, health care system and free education are implementation details, compared to centrally planned economy.


  > Perhaps the pattern arises because societies with pre-
  > existing tendencies to authoritarianism and corruption
  > are more likely to give rise to communist regimes
Seems more likely that whenever someone wants to rise to power as a despot, it's a lot easier when you are claiming to be communist/a workers' paradise/a government for the people, even if that description is in name only. E.g.:

    Why do you want to over-throw $despot? You must be
    an enemy of 'the people.'


> Communism as Marx envisioned it? No.

Marx explicitly advocated a dictatorship. Dictatorship is what they got in the real world, too.


While I agree that it probably did not help, you don't need communism to have such large scale problems, all you need is just a badly run country.


You can find corruption all around the world, in places that were never under a communist regime. Corruption is a consequence of our human condition, not our economic system.


Or maybe low level stats are falsified in each prison/police station to show better "effectiveness" of cops. Only when it's aggregated it's stuppidly big number.

The same happened with recent elections to Duma (over 100% people voted in many regions of Russia).


>Russia is so corrupt, only a full scale revolution will have a chance at fixing the country.

So you're saying there's a violent class struggle between the populist system and the oppressed business class - and that the only way the downtrodden business owners can rise up and free themselves from their chains is through full scale revolution?

This sounds like it's straight out of Monty Python - but hey, good luck with that.


The corruption, like corruption in other countries (including the US), hurts the poor and wage-earning directly and indirectly as well. It's not like it's the populace vs. business owners, it's the powerful and capricious vs. everyone (including other powerful people), using the state and security apparatus as a tool.

Aside from a few people who made a lot of money a couple decades ago from rapid deregulation, I don't think business owners in Russia are worried about taxes, reasonable regulation, etc. hurting their businesses -- they're worried about totally random extortion.

Very few businesses would rather operate in Equatorial Guinea or Somalia instead of (heavily regulated country of choice: depending on context, could be Germany, the US, Denmark, ...).


> This sounds like it's straight out of Monty Python - but hey, good luck with that.

While I'm not supporting his assertion that this is the case, if such a thing were to happen anywhere, well...http://en.wikipedia.org/wiki/Soviet_russia


He didn't say there is a class struggle. He said a full scale revolution may be the only way the country can be fixed.

Conditions will deteriorate until the point where there will be a class struggle though.


Stealing businesses is a much smarter idea than stealing money. Russian government thugs have figured it out.

I do see why it may seem funny and Monty-Python-like, but it's extremely sad. It's a huge country ruled by thugs and talking heads, and they want more and more for themselves, while talking about helping the population.


I'm curious how "free" the news organizations are in Russia.

I recently was accused of something here in USA along with a ton of other people (copyright troll... I share my internet connection w/ my tenets).

The local news found out about it rather quickly and wanted to do an investigative report. I have to say I have never really liked local news but I'm glad things like this attract their attention.

Is whistle blowing a cultural thing?

In other words can Whistle Blowing be a counter virus to the Corruption virus?


You have in one article two kinds of businessmen mixed up:

First are the owners of small- (and medium-) scale businesses which they built by themselves.

Second are the owners of companies which were previously state-owned during USSR and then they were suddently privatized and "somehow" landed into a hands of very select few.

I don't think it's correct to call the latter group "enterpreneurs". I think it's bad for the former group to have both groups mixed together in one article. What you really have is using some real and ugly problems of the first group to pitch some ongoing cases featuring persons from the second group.

Those cases being ugly too not makes this spin a good thing. My mother owns a small cloth shop, she has quite a few problems as a small business owner, but I doubt she wants to be used as a lever in the favour of Hodorkovsky or Kozlov. She might sympathise them, she might not. She's NOT on the same field anyway.


Makes me appreciate living in Scandinavia (Denmark). Corruption here is barely measurable.

Found this: http://blog.transparency.org/2011/12/07/what-makes-new-zeala...


Depends on how you count it. All those government IT contracts which goes over budget because they keep getting awarded to the same incompetents can't be pure stupidity.

The most important thing though is that people think bribery is wrong which means they won't hesitate to report and prosecute you.


> "You don't know him, you'll never see him again, and you get a financial reward - so why do you care?"

That sums up the ethical viewpoint of most of the Russians I know.


You hang around with wrong Russians.


My wife tells me that all the time.


3 million per in 10 years is 300,000 per year, or 820(!) per day. I doubt they lock up 820 entrepreneurs per day.


Can someone from Russian, please confirm the 3million number? It seems so unbelievable.


In other sources Titov mentions 13,000 entrepreneurs who are currently in jail. A quick search in Russian for "Titov entrepreneurs three million" doesn't give any other results but the BBC article.


I am no Russian or friend with their current government , but this perpetual flow of dubious information on ft, ftd or bbc is remarkable; I would really like to profile, such dubious information based on author etc.. but have no time..


Titov talked about 13000 entrepreneurs.


> At the root of the problem is the criminal justice system itself. Statistically, once officially accused of a crime in Russia, there is little chance of proving your innocence.

Not to mention that it should be the other way around. People are innocent by default, so it should be innocent until proven guilty.


Whoa, that is some statistic! Eventually the best entrepreneurs are going to vote with their feet and that cannot be good for Russia. High time for Putin to fix the broken legal/police system.


Indeed. According to the UN report on inclusive wealth ( http://www.ihdp.unu.edu/article/iwr via http://www.economist.com/node/21557732/ and https://news.ycombinator.com/item?id=4196895 ) Russia's wealth is all natural resources, and decreasing mostly due to a fast drop in human capital.


agitprop


Now, compare that to Putin's pipe dreams of creating his own version of Silicon Valley in Russia. Obviously, even he can't be that stupid. So it's all PR, Putin doesn't want Russia to go anywhere, he just loves presiding over the vast criminal empire of intelligence services, organized crime and oligarchs.


What ever happened to that, by the way? So far the only big companies to come out of Russia were basically local language counterparts of Yahoo, Facebook and Norton.


There are nice exceptions, nginx is the most prominent one in the open source space. Nonetheless, the SV dream is just a PR.


Kaspersky would be another one. There's also Paragraph (creators of Newton's handrwriting recognition module), but they are from the earlier times.


Please, define "big"?

What's about Parascript (acquired for $50M in 2008)? http://www.crunchbase.com/company/parascript

Abbyy? http://www.crunchbase.com/company/abbyy

Evernote? Badoo? Parallels?


Evernote/Badoo were not founded / grown in Russia as far as I can tell. It would be like saying that Google is a Russian company because Sergey was born there.

Also, the fact that a 50m company even needs to be mentioned among the "top" should be sufficient proof of the country's impact on the rest of the world (again, I'm not counting Russia-specific Yandex/Rambler/Odnoklassniki/[...] here)


With the number of amazing engineers from Russia and the rest of fUSSR, they'd basically need to have 20-30% of all successful technology companies to be keeping up. That's clearly not the case, so somehow the Russian business environment is underperforming for tech companies and startups.


Your own link says that Parascript is now headquartered in Boulder, Colorado, USA.


Parascript was a Russian company, but they moved en masse to Boulder in 1994 (IIRC). They are (were?) a group of very smart engineers, very strong in DSP.




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