The Courts and Corruption

absolut-corruption-2politic.jpgHighlighting the problem of corruption in Russia, Alexander Karpov, the deputy head of the Russian Supreme Court, has resigned days after his son, Vladimir, who he claims not to have seen in five years, was arrested for taking a $28,000 bribe from a suspect about to stand trial. A court spokesman told the BBC that the resignation was a matter of “judicial etiquette.”

Karpov’s resignation comes on the same day President Dmitry Medvedev fired four governors from regions hit especially hard by the financial crisis. Today, The Financial Times speculates that the sackings may have been linked to another corruption investigation.

“Sergei Markov, a member of the Kremlin’s ruling United Russia party, said that the sackings may have also been connected to anti- corruption probes and could usher in further dismissals right up to cabinet level. ‘In this situation we need to make sure that government funds get to the real sector and are not stolen along the way.'”

Perhaps not uncoincidentally, the business magazine Seeking Alphatoday rates government corruption in Russia as the second mostimportant reason–behind falling oil prices–to be circumspect aboutinvesting in Russia. And making matters worse:

Unfortunately, the courts offer little recourse for privateinvestors. The Russian legal system is ineffective and fails to provideadequate protection over property rights, which is a pre-requisite forprivate investment. Judges serve at the mercy of the President and theruling siloviki. Corruption also permeates the judicial system andsociety as a whole.

Of course, there’s always a silver lining. As Bloomberg reported last month, falling oil prices make it harder to pay bribes.

“If money is cheap and easily available, as it is when oilrevenues are flowing in, people don’t mind paying bribes,”said Evgeny Gavrilenkov, chiefeconomist at Troika Dialog in Moscow. “When the cake isgrowing everyone wants a bigger piece, but when it’s shrinking,people concentrate more on survival. If you have nothing to pay youdon’t pay and that’s what we’re seeing in Russia.