Politics
Corruption Hiding in Plain Sight
June 5, 2024
David Szakonyi
Assistant Professor of Political Science,
The George Washington University
Political scientist David Szakonyi looks at the ongoing crackdown against corrupt officials and offers an explanation for why the Kremlin is acting now.
Something is afoot over in the Russian Defense Ministry. Over the last three months, several top officials and generals have been arrested, starting with former Deputy Defense Minister Timur Ivanov being hit with bribery charges in March 2024. Ivanov’s arrest was followed by those of Yury Kuznetsov (chief of the Defense Ministry’s main personnel directorate), Major General Ivan Popov, and a host of smaller players both from inside the ministry and suppliers to it. Not unrelatedly, Sergey Shoigu was forced out of his post as Defense Minister, but rather than being arrested was shuttled over to the Security Council.
What is most interesting about these cases is that the evidence of corruption in the Defense Ministry has been apparent to just about anyone paying attention for decades now. For example, back in 2017, the business news outlet RBK dug into income and asset disclosures that showed Ivanov and his wife earning 69.7 million rubles collectively in 2016, over five times what former Minister Shoigu pulled in that same year. Five years later, Alexei Navalny’s Team uncovered the fancy cars, clothing, and apartments enjoyed by the Ivanov family at the expense of the Russian taxpayers.
What is most interesting about these cases is that the evidence of corruption in the Defense Ministry has been apparent to just about anyone paying attention for decades now. For example, back in 2017, the business news outlet RBK dug into income and asset disclosures that showed Ivanov and his wife earning 69.7 million rubles collectively in 2016, over five times what former Minister Shoigu pulled in that same year. Five years later, Alexei Navalny’s Team uncovered the fancy cars, clothing, and apartments enjoyed by the Ivanov family at the expense of the Russian taxpayers.
Figure 1 shows the mean total family income (the blue line) as reported by Russian Deputy Defense Ministers, from 2010-2019, the years for which most income and asset disclosures were reported. The shaded blue area depicts the maximum and minimum of family incomes per year. All ruble amounts have been converted to USD at annual exchange rates. Data comes from Declarator (https://declarator.org/).
What explains the timing the corruption charges against military officials?
Indeed, official income and asset disclosures from Declarator, an independent non-profit project that collects this vital source of public available information, help confirm just how much corruption there has been. The data tell a quite striking story about just how lavishly Defense Ministry officials have lived under Putin. Figure 1 plots the average total income of all deputy defense ministers and their immediate family members from 2010-2019 (when data were available). Over this period, these officials and their families lived earned on average roughly $300,000 per year (using annual exchange rates). The blue shaded area shows the range of incomes (minimum to maximum): in five of the ten years where data is available, ministers and their wives pulled in over $1 million! And this was just their officially declared income, not to mention everything they have tried to hide from authorities.
This blatant (and sloppy) abuse of office begs the question: why is the Russian government only now bringing corruption charges?
From the outset, it should be noted that the Russian government is not wanting for evidence on the corrupt activities of its bureaucrats. Since 2008, nearly all full-time government officials (totaling in the millions) have had to declare their income and assets, providing the government a vast repertoire of compromising information it can use to keep them in line. These disclosures, much of which are kept secret, provided detailed information down to the numbers of bank accounts and addresses of real estates for the government to collect, analyze, and store for a rainy day.
Indeed, official income and asset disclosures from Declarator, an independent non-profit project that collects this vital source of public available information, help confirm just how much corruption there has been. The data tell a quite striking story about just how lavishly Defense Ministry officials have lived under Putin. Figure 1 plots the average total income of all deputy defense ministers and their immediate family members from 2010-2019 (when data were available). Over this period, these officials and their families lived earned on average roughly $300,000 per year (using annual exchange rates). The blue shaded area shows the range of incomes (minimum to maximum): in five of the ten years where data is available, ministers and their wives pulled in over $1 million! And this was just their officially declared income, not to mention everything they have tried to hide from authorities.
This blatant (and sloppy) abuse of office begs the question: why is the Russian government only now bringing corruption charges?
From the outset, it should be noted that the Russian government is not wanting for evidence on the corrupt activities of its bureaucrats. Since 2008, nearly all full-time government officials (totaling in the millions) have had to declare their income and assets, providing the government a vast repertoire of compromising information it can use to keep them in line. These disclosures, much of which are kept secret, provided detailed information down to the numbers of bank accounts and addresses of real estates for the government to collect, analyze, and store for a rainy day.
“But the mere existence of kompromat on all these officials cannot explain the timing of the charges being filed against them.”
Instead, I argue there are three reasons that Russian law enforcement crack down on officials for financial gains reaped from political office.
First, anti-corruption charges are used to punish disloyalty to the regime. This point may seem trite since we have so little evidence of defections, or even dissent, among elites. But in a newly published paper, I show that concerns over loyalty shape politicians’ behavior in one place where they actually can express opposition: the State Duma. Deputies from the opposition that openly flaunt their wealth, much of it unexplained, by driving fancy cars are much more likely to vote with the ruling party. Back in 2013, Gennady Gudkov was expelled from the Duma on accusations of mixing business and politics; coincidentally, these charges didn’t surface until after he started openly criticizing the regime.
Second, the loss of a prominent patron can leave corrupt officials exposed. Even before whispers of Shoigu’s descent bringing down his protégés started to dominate the airwaves, several appointees under former President Dmitry Medvedev had already felt the pain of their patron dropping down a few pegs on the regime totem pole. Former minister Mikhail Abyzov, for example, is currently serving a 12-year prison sentence for embezzling 4 billion rubles from several energy companies, while the Magomedov brothers have lost much of their corporate empire. When prominent, well-entrenched elites lose their influence, their rivals smell blood in the water and pounce, using the justice system and abundance of kompromat to propel their attacks.
Finally, officials who neglect their responsibilities in a way that tarnishes the image of the regime or threatens its very survival face their corrupt pasts being used against them. Horrific instances of officials putting the lives of Russians at risk due to their own corrupt motivations are tragically commonplace in Russia.
First, anti-corruption charges are used to punish disloyalty to the regime. This point may seem trite since we have so little evidence of defections, or even dissent, among elites. But in a newly published paper, I show that concerns over loyalty shape politicians’ behavior in one place where they actually can express opposition: the State Duma. Deputies from the opposition that openly flaunt their wealth, much of it unexplained, by driving fancy cars are much more likely to vote with the ruling party. Back in 2013, Gennady Gudkov was expelled from the Duma on accusations of mixing business and politics; coincidentally, these charges didn’t surface until after he started openly criticizing the regime.
Second, the loss of a prominent patron can leave corrupt officials exposed. Even before whispers of Shoigu’s descent bringing down his protégés started to dominate the airwaves, several appointees under former President Dmitry Medvedev had already felt the pain of their patron dropping down a few pegs on the regime totem pole. Former minister Mikhail Abyzov, for example, is currently serving a 12-year prison sentence for embezzling 4 billion rubles from several energy companies, while the Magomedov brothers have lost much of their corporate empire. When prominent, well-entrenched elites lose their influence, their rivals smell blood in the water and pounce, using the justice system and abundance of kompromat to propel their attacks.
Finally, officials who neglect their responsibilities in a way that tarnishes the image of the regime or threatens its very survival face their corrupt pasts being used against them. Horrific instances of officials putting the lives of Russians at risk due to their own corrupt motivations are tragically commonplace in Russia.
“When the regime is flush with cash, most instances of bad governance are ignored, or lightly reprimanded. Only angry public opinion seems to matter: corruption scandals require action only when they cause widespread outrage.”
Then scapegoats need to be found to reassure the wider population that such negligence will never happen again.
But this calculus changes when finances worsen. The need to raise more money to finance the military may be tightening the leash around the necks of corrupt officials.
The disarray in Russia’s military through its 2022 all-out invasion of Ukraine requires some heads to roll, some in the form of lost prestige (such as Shoigu) while others being taken down more formally through the use of anti-corruption.
What is the impact of punishment for corruption?
In fact, the Putin government does retrospectively punish corruption when it is accompanied by egregiously bad governance, rather than preemptively encouraging good performance by signaling that any type of corruption is forbidden. This places a floor on how badly officials can defile their duties. Stricter enforcement of anti-corruption laws raises that floor and the expectations that officials must better balance their own private interests with those of the general public.
In Russia, the overall effect of these recent arrests will be to increase uncertainty among incumbent officials about whether their own performance (as well as that of their patrons) are deemed satisfactory in the eyes of Putin and his closest confidantes. In more open political settings, that growing anxiety can often trigger calls for regime change: elites are upset by these disruptions to the previous status quo and want a leader in charge that enforces no such expectations.
But the current political climate in Russia has closed off all such opportunities for collective action or challenges.
But this calculus changes when finances worsen. The need to raise more money to finance the military may be tightening the leash around the necks of corrupt officials.
The disarray in Russia’s military through its 2022 all-out invasion of Ukraine requires some heads to roll, some in the form of lost prestige (such as Shoigu) while others being taken down more formally through the use of anti-corruption.
What is the impact of punishment for corruption?
In fact, the Putin government does retrospectively punish corruption when it is accompanied by egregiously bad governance, rather than preemptively encouraging good performance by signaling that any type of corruption is forbidden. This places a floor on how badly officials can defile their duties. Stricter enforcement of anti-corruption laws raises that floor and the expectations that officials must better balance their own private interests with those of the general public.
In Russia, the overall effect of these recent arrests will be to increase uncertainty among incumbent officials about whether their own performance (as well as that of their patrons) are deemed satisfactory in the eyes of Putin and his closest confidantes. In more open political settings, that growing anxiety can often trigger calls for regime change: elites are upset by these disruptions to the previous status quo and want a leader in charge that enforces no such expectations.
But the current political climate in Russia has closed off all such opportunities for collective action or challenges.
“The regime faces little risk in targeting the most crooked, and may even be able to tap long-standing eagerness among less corrupt officials to settle scores and clean up the government.”
Figure 2 shows the proportion of respondents in the 2004 and 2021 Russian Election Surveys that see corruption as a serious problem in society. To analyze the underlying, please visit: https://socialsciences.cornell.edu/russian-election-study
To quote one former Kremlin official interviewed in the Guardian, “It’s the dream of any investigator to put a real live deputy minister of defence in prison, it’s cool, it’s the dream of a lifetime. You get new epaulettes for that, a promotion, some kind of award. You can earn a reputation for that.”
Therefore, the most likely outcome is that elites interpret these signals from above that the era of excessive greed is over and all must sacrifice some to ensure that the regime does not cave from within. Tatiana Stanovaya highlights similar patterns in Russian elite thinking with regards to the imperative of winning the war in Ukraine.
Anti-corruption campaigns run by authoritarian governments are thus best understood not just as providing handy pretexts to “purge” inexpedient elites, but rather powerful tools to shape future elite behavior. Take the case of China, which since 2012, has orchestrated a wide-ranging but also controversial “Tigers and Flies” campaign to combat corruption in the top ranks of officialdom and the private sector. Skeptics of these reforms are correct when they point to the political motivations driving prosecutions of Chinese elites; there is strong evidence that such drives can be used to settle political scores.
But China’s campaign has sunk its teeth deeper into bureaucratic norms and corporate culture. Better anti-corruption and regulatory enforcement have helped reduce pollution, reduce corporate fraud, improved the quality of judicial decisions, and even improve the health of government bureaucrats (by cutting down their opportunities for alcohol consumption). Anti-corruption campaigns do not have to destabilize authoritarian regimes, in particular, if these governments carefully manage their rollout.
Anti-corruption campaigns may also play well politically with the Russian public. Over two decades of Putin rule have pushed solidified corruption as consistently one of the top problems that Russian citizens cite in their daily life, in recent surveys rivaled only by the rising cost of living and concerns over the conflict. And as the Figure shows, the Kremlin might be concerned about whether Putin may be held responsible for overseeing his regime’s plunge into rotten bureaucracy. The percentage of Russians that see corruption as a serious problem in the country tripled between 2004 and 2021. These same surveys still suggest a degree of hope among the population that stronger enforcement will help fix the underlying problems.
A larger lesson from all this is that the Russian government still has more levers to pull in its drive to stay in power at all costs. Although the regime under Putin has fallen appallingly short on achieving most of its preferred objectives, past performance is no guarantee of future collapse. Few elites will defect from a regime that knows everything about them and their families for a West that has all but closed its doors. A new progressive income tax can raise trillions of rubles, while still leaving Russia with the lowest tax rates of any BRICS countries. And perhaps an eye towards anti-corruption might help repair the frayed contract with business reeling from a shortage of qualified labor, rising wage bills, and continued threats of nationalization. Indeed, the arrest of multiple, well-connected Defense Ministry officials helps send a message that knives are being sharpened and no one is completely safe.
Therefore, the most likely outcome is that elites interpret these signals from above that the era of excessive greed is over and all must sacrifice some to ensure that the regime does not cave from within. Tatiana Stanovaya highlights similar patterns in Russian elite thinking with regards to the imperative of winning the war in Ukraine.
Anti-corruption campaigns run by authoritarian governments are thus best understood not just as providing handy pretexts to “purge” inexpedient elites, but rather powerful tools to shape future elite behavior. Take the case of China, which since 2012, has orchestrated a wide-ranging but also controversial “Tigers and Flies” campaign to combat corruption in the top ranks of officialdom and the private sector. Skeptics of these reforms are correct when they point to the political motivations driving prosecutions of Chinese elites; there is strong evidence that such drives can be used to settle political scores.
But China’s campaign has sunk its teeth deeper into bureaucratic norms and corporate culture. Better anti-corruption and regulatory enforcement have helped reduce pollution, reduce corporate fraud, improved the quality of judicial decisions, and even improve the health of government bureaucrats (by cutting down their opportunities for alcohol consumption). Anti-corruption campaigns do not have to destabilize authoritarian regimes, in particular, if these governments carefully manage their rollout.
Anti-corruption campaigns may also play well politically with the Russian public. Over two decades of Putin rule have pushed solidified corruption as consistently one of the top problems that Russian citizens cite in their daily life, in recent surveys rivaled only by the rising cost of living and concerns over the conflict. And as the Figure shows, the Kremlin might be concerned about whether Putin may be held responsible for overseeing his regime’s plunge into rotten bureaucracy. The percentage of Russians that see corruption as a serious problem in the country tripled between 2004 and 2021. These same surveys still suggest a degree of hope among the population that stronger enforcement will help fix the underlying problems.
A larger lesson from all this is that the Russian government still has more levers to pull in its drive to stay in power at all costs. Although the regime under Putin has fallen appallingly short on achieving most of its preferred objectives, past performance is no guarantee of future collapse. Few elites will defect from a regime that knows everything about them and their families for a West that has all but closed its doors. A new progressive income tax can raise trillions of rubles, while still leaving Russia with the lowest tax rates of any BRICS countries. And perhaps an eye towards anti-corruption might help repair the frayed contract with business reeling from a shortage of qualified labor, rising wage bills, and continued threats of nationalization. Indeed, the arrest of multiple, well-connected Defense Ministry officials helps send a message that knives are being sharpened and no one is completely safe.
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