Corruption - Protection

Political corruption, although not the most widespread, presents the greatest danger, because it co-opts the power and mechanisms of the state. Political corruption provides cover for all the other forms, distorting government functions to cater to personal interests.

The Moscow city government's direct links to criminality led some to call it "dysfunctional," and to assert that the government operated more as a kleptocracy than a government. Criminal elements enjoy a "krysha" (a term from the criminal/mafia world literally meaning "roof" or protection) that ran through the police, the Federal Security Service (FSB), Ministry of Internal Affairs (MVD), and the prosecutor's office, as well as throughout the Moscow city government bureaucracy. Analysts identified a three-tiered structure in Moscow's criminal world. Moscow Mayor Yuriy Luzhkov was at the top. The FSB, MVD, and militia are at the second level. Finally, ordinary criminals and corrupt inspectors are at the lowest level. This is an inefficient system in which criminal groups fill a void in some areas because the city is not providing some services.

Despite Medvedev's stated anti-corruption campaign, the extent of corruption in Moscow remained pervasive with Mayor Luzhkov at the top of the pyramid. Luzhkov oversaw a system in which it appeared that almost everyone at every level is involved in some form of corruption or criminal behavior. Putin and Medvedev's dilemma is deciding when Luzhkov became a bigger liability than asset. While public sentiment against Luzhkov had grown since the "tainted" elections in October 2009, United Russia's leadership knew that he had been a loyal supporter who can deliver voter support. Ousting Luzhkov before he was ready to go could create major difficulties because he could link others in the government to the corruption.

Luzhkov was fired in 2010 by President Medvedev, who said he had lost confidence in the man who had headed the city for 18 years. Russian President Dmitry Medvedev signed a decree on 08:20 28 September 2010 ordering Moscow's old-time mayor Yury Luzhkov to resign, the Kremlin said. "Yury Luzhkov is being relieved of his duties as Moscow mayor in connection with the Russian president's loss of confidence in him," the decree said. Russian President Dmitry Medvedev fired Yury Luzhkov from his post as Moscow mayor not only due to his inefficient management but also because of the appalling level of corruption in the capital, Sergei Naryshkin, the head of presidential administration, later said. Yelena Baturina, the billionaire wife of Luzhkov, later said she feared not being allowed to leave Russia if she returns from her current home in London. Baturina, Russia's richest woman, was living in a rented home in London. Although her personal wealth took a beating during the global financial crisis and the subsequent sell-off of her businesses, Forbes estimated her fortune in 2011 at $1.2 billion, ahead of Oprah Winfrey on the richest people list.

Luzhkov's project to reconstruct the Christ the Saviour cathedral exemplified his style - grandiose projects, realized with sometimes questionable methods, and often scant regard for Moscow's architectural heritage, or cost. Luzhkov had made many enemies on the national stage and many of those who had got rich in the Yeltsin era feared his populist statements about smashing oligarchs. When Vladimir Putin was appointed Prime Minister and then elected President in 2000, Luzhkov's place in national politics was seemingly buried.

According to many observers, the lawless criminal climate in Russia made it difficult for businesses to survive without being defended by some type of protection. In Moscow, a cafe owner pays the local police chief via cash through a courier. He needs to pay a certain negotiated amount over a certain profit. The high prices of goods in Moscow cover these hidden costs. Sometimes people receive "bad protection" in the sense that the "krysha" extorts an excessive amount of money. As a result, they cannot make enough of a profit to maintain their businesses. If people attempt to forego protection, they will instantly be shut down. For example, officials from the fire or sanitation service will appear at the business and invent a violation. Everyone has bought into the idea of protection in Moscow, so it has become a norm. In general, Muscovites have little freedom to speak out against corrupt activities and are afraid of their leaders.

Moscow business owners understand that it is best to get protection from the MVD and FSB (rather than organized crime groups) since they not only have more guns, resources, and power than criminal groups, but they are also protected by the law. For this reason, protection from criminal gangs is no longer so high in demand. Police and MVD collect money from small businesses while the FSB collects from big businesses. The FSB "krysha" is allegedly the best protection. This system is not an incentive for smaller businesses and nobody is immune; even rich people who think they are protected get arrested.

Corruption remains a major challenge for Russia. Targeted efforts in 2012 to root out corruption by public officials and within business transactions led to widely reported investigations in the Ministry of Defense and the Ministry of Agriculture. In recent years, there appears to be a greater number of prosecutions and convictions of mid-level bureaucrats for corruption, but real numbers are difficult to obtain and high-ranking officials are rarely prosecuted. Russia’s ranking improved 10 spots to 133rd in Transparency International’s 2012 Corruption Perceptions Index (CPI).

Sergei Kolesnikov profited as a Putin crony in 1990s St. Petersburg fled Russia in 2010. Kolesnikov says that the Kremlin inner circle, who have effectively painted themselves into a corner -- albeit a very wealthy, powerful one -- with no easy way out. "Putin's entire chain of command is built on a foundation of corruption," Kolesnikov says. "To see power go to another party or other people would be to put themselves under enormous threat of criminal investigation and inevitable punishment."