For over three decades, the US Helsinki Commission has promoted the former Soviet states’ compliance with international human rights norms. Now the commission appears to be expanding the scope of its mission to include economic affairs.
The commission recently took steps to address the issue of corruption in Russia and elsewhere. Realizing that corruption will not be eliminated in the former Soviet Union in the foreseeable future, commission representatives appear to be focusing on encouraging greater transparency in regional business practices. Accordingly, the commission recently organized a public briefing in Washington, DC, titled Beyond Corporate Raiding: A Discussion of Advanced Fraud Schemes in the Russian Market.
Leading the discussion was Alexei Navalny, a Russian activist who promotes responsible business practices. He has worked within and outside the Russian legal system to promote transparency and to contain corruption. During his formal presentation, Navalny focused on corrupt practices in Russia’s all-important energy sector. He showed slides purportedly documenting that the construction of pipelines in Russia cost significantly more than in Germany, despite the significantly higher wage costs for German workers. The reason for the cost differential, according to Navalny, was corrupt practices.
Also at the presentation, a US Helsinki Commission representative, Shelly Han, said the agency was reaching out to foreign stock exchanges—especially in London, where Gazprom and other Russian companies are listed—to encourage greater transparency and reporting regarding the amount Russian firms pay for extracting oil and gas. The US Helsinki Commission is an independent US government agency, established in 1976 to track compliance with the Helsinki Accords, signed the previous year. The agency also monitors how former Soviet states fulfill Organization for Security and Cooperation in Europe obligations.
Navalny argued during his November 9 presentation that limited corporate transparency in Russia facilitates corruption. Even state-controlled corporations can award contracts without open bidding, or offering any explanation concerning the decision-making process in tender awards.
According to Navalny, many contract recipients in high-profile awards in Russia – along with middlemen, who can make hefty commissions -- have political contacts in high places. Conversely, many of the Russian journalists who have been killed or injured in recent years, he asserted, were targeted because of their respective investigations of corrupt practices.
Navalny said there was reason for optimism that business practices in the region may start to improve. Many Russian business leaders are now interested in reducing corruption’s grip on the economy, believing it to be bad for corporate profitability. Russia’s reputation appears to hinder the ability of entrepreneurs to attract foreign lenders and investors to the Russian market, he added.
There are powerful tools at the disposal of foreign regulators to support reforms in Russia, Navalny asserted. “I hope Americans will continue to invest in Russia,” he explained, “but we need a little more political leverage to protect those investors.” Large amounts of Russian money passes through US financial and legal institutions and is thus subject to the US Foreign Corrupt Practices Act, he pointed out.
Editor's note:
Richard Weitz is a senior fellow at the Hudson Institute in Washington, DC.
