OPINION: Penitence for show and empty bragging, or Rosatom’s new weapons against corruption

St Petersburg G-8 summit website

Publish date: October 27, 2011

Written by: Vladimir Slivyak

Translated by: Maria Kaminskaya

MOSCOW – On October 19, the Russian State Nuclear Corporation Rosatom served up a salvo of vigorous if utterly unconvincing publicity to put Russians’ minds at ease over rampant corruption in the industry. Rosatom’s self-flagellation, which comes on the heels of several newly revealed graft and embezzlement cases, is fast turning into self-congratulation for anti-corruption achievements. Surely Rosatom could do more than showcase questionable victories to try to earn our trust?

This one, as it happens, was a highly professional campaign. One that involved industry outsiders and other bona fide nonpartisans to lend their anti-corruption expertise. The way it usually works is quite different: A dozen interviews, crafted somewhere deep in the corporation’s bowels, with experts of, shall we say, uncertain provenance, are sent out into the world, with a couple of websites in the Russian section of the Internet then rising to the occasion of reprinting these interviews enthusiastically and with the website’s copyright notice slapped on for good measure. Not this time. The corporation’s serious, for a change.

See for yourselves. The Russian version of Rosatoms website reported on October 19 of a joint meeting between Rosatom’s Public Council – an internal structure formed with the somewhat self-contradictory stated goal of “consider[ing] and form[ing] public opinion when making decisions on the use of atomic energy,” among other objectives – and a separate board that has been created to fight corruption risks within the corporation, called the Council for the Enhancement of Transparency.

The topic of the meeting, according to the report, was “Introduction of the comprehensive system of countering corruption threats at the enterprises of the State Corporation Rosatom.” This multi-level system of anti-corruption measures, the statement goes on,  had been approved by yet another council – Rosatom’s Supervisory Board – on October 4 and provides for the implementation of “internal control and audit, assurance of compliance with the [corporation’s] unified procurement standard and arbitration, as well as measures to prevent and check against economic crimes.”

This comes after scandals such as the arrest, last July, of Rosatom’s former deputy director, Yevgeny Yevstratov, and his group of radiation safety technicians – a bust Rosatom itself hailed as a triumph of justice comparable with that of bringing the former atomic minister Yevgeny Adamov up on US money laundering charges six years ago.

The head of the Supervisory Board, First Deputy Prime Minister Igor Shuvalov, instructed the participants at the October 19 meeting to continue with the anti-corruption programme and the policy of informing the public of the results of this work “despite the reputational risks that arise” – in other words, if they publicly flog themselves and don hair shirts, the Russian public just might be convinced of the corporation’s sincerity in staging this exorcism of grifting demons.

Shuvalov said: “It’s important that it is an iron-clad rule at Rosatom not to cover up or close ranks, but expose violations and make such information available to the public.”

Rosatom’s head Sergei Kiriyenko then followed with even more prostrating remarks by saying: “Rosatom is taking a risk by publicising the transgressions that have been exposed and may have to face the population’s opinion that if there are so many violations then the industry is not doing so well. But we have decided firmly for ourselves that if we aren’t going to air our dirty laundry, we’re not going to achieve anything in our fight against instances of corruption.” 

This makes for a penance of such ambition that it could either be unintentionally naive or intentionally misleading, but we’ll get back to it in a minute.

The new Council for the Enhancement of Transparency seems to be one of the pivots that this publicity campaign hinges on, and Rosatom even signed up the respected Russian branch of Transparency International to lend it the needed credibility.

There is certainly delight in seeing that the nuclear corporation really took to heart the conclusions of a joint report on corruption risks in Rosatom’s procurement activities that Ecodefense! and Transparency International Russia presented last year. That was a monitoring study of some 300 orders placed by Rosatom and posted on the corporations official website, with 200 of these chosen for a detailed analysis, and it revealed numerous violations of the guidelines that Rosatom itself established as its industry purchasing standard. Violations of that standard were found in 83 purchasing contracts – or 27 percent of the total sample and 41 percent of the 200 contracts selected for in-depth analysis. Oh, and in addition – hardly a trace of external control.

To tell you the truth, it’s been ages – try never? – snce Ecodefense!’s relationship with Rosatom has seen any touching moments of unity, but it seems that it didn’t take long for Kiriyenko’s people and our colleagues from Transparency International to start singing from the same hymnbook. Well, no wonder there: Of course, we know those corruption demons only dwell in those dark passages where rank and file do their shady deeds – and up there, at the helm, are people of irreproachable rectitude. That is, until some Deep Throat wanders through and spills the beans in a parking garage…

Oh wait, there was one miscreant who insinuated his way into the upper echelons of Rosatom: Yevstratov, a former Kiriyenko deputy… But they caught him and weeded him out and sent him packing, didn’t they? Whoever’s palms he didn’t grease, that’s for the relevant authorities to figure out. Never mind that Russia simply doesn’t know cases where the fall guy destined to be the centrepiece of a widely publicised anti-corruption campaign doesn’t also happen to be a convenient liability of some sort for those who decide to expose him. So, indeed, we would be positively remiss not to applaud such an auspicious turn of events.

If anyone still harboured any doubt as to the remarkable results that this team of in-house and independent exorcists could achieve together, here’s what Transparency International Russia’s head Yelena Panfilova is quoted as saying in a RIA Novosti report (in Russian): .

“When we conducted the first round of our monitoring study in late 2009 and 2010… it was impossible to find [any information], informational transparency was minimal. By end 2010, the situation had started to change, and it’s improved noticeably by now. The [unified industry procurement] standard has fundamentally changed, and its transparency has improved dramatically. Of course, it doesn’t mean that the ideal has been achieved, it’s still far off, but it’s the will for dialogue that matters.”

“Yes, the reputational costs for Rosatom are great, but it’ll be worse if it doesn’t happen, because then the same corruption that everyone is trying to root out will proliferate. Our lawyer’s recommendations concern, in part, [ways] to improve the purchasing standard,” Panfilova added.

Kiriyenko, too, is worried about the colossal damage this could do to Rosatom’s image. But never mind: Best not to get into the “reputational risks” – lest we have to remind ourselves who is responsible for letting these risks fester in the first place.

You have to understand – it’s not that they just came out and said something together – they are working, they’re advancing on corruption as a united front. Modifying legal acts and regulations, introducing an improved “unified industry procurement standard” – it’s all serious, and they’re armed with concrete figures to show it. They already have a report to demonstrate the scope of damage they’ve inflicted on the enemy in just barely over six months. And what damage it was!

At the October 19 meeting, a retired police lieutenant general who now heads Rosatom’s Assets Protection Office, Viktor Bratanov, presented a report that said since the beginning of the year, Rosatom’s own internal supervisory authorities called to account, in one manner or another, 48 heads of Rosatom enterprises. Twelve of those were fired, and twelve dossiers were handed over to the law enforcement in order to initiate criminal investigations, Bratanov said.

Furthermore, Rosatom’s press release said, the number of violations allowed by management at various corporate enterprises and that “indicated possible corrupt conduct” has fallen drastically in the past three years: The number of instances of disposing of property absent of the owner’s consent has reduced by six times; the number of actions undertaken in the interest of third parties has dropped by 8.5 times, and the number of deals concluded for a perceived benefit is down by 4.5 times.

Rosatom, apparently, finds a lot to boast of where the industry’s purchases are concerned – tenders, orders, and contracts the state corporation initiates seeking to buy services, goods, and works from private sector companies to provide for its needs. This is what the October 19 press release says about the corporation’s procurement practices: “By July 2011, the unified industry procurement standard was introduced at 278 industry enterprises (91 percent of the total number of enterprises; by end 2011, the standard is planned to be introduced at 305 enterprises).” An arbitration committee has also been set up to mediate disputes between suppliers and customers. But the key element of Rosatom’s procurement system, according to the press release, is the practice of posting tender documentation for public access on the Internet – as well as publishing the corporation’s yearly procurement programme that the suppliers could benefit from as they plan their activities for the coming year.

And if you were looking for more statistics that would illustrate that particular success, here they are: “The introduction of a transparent procurement system has resulted in RUR 19.7 billion saved to the corporation in 2010 (11 percent of the total volume of open tenders), and RUR 11.6 billion in 2011. The number of open competitive [procurement] procedures has grown from 2,000 in 2009 to […] 34,879 in 2011.”

Did I say this was all very serious and professional? Good news all around, but there are two problems.

First, as the 2010 study on corruption risks showed, because of the special status the corporation continues to enjoy in Russia, its purchases are not subject to the jurisdiction of a federal law that governs the procedure for the supply of goods, implementation of works, and provision of services for state and municipal needs. Even though there are guidelines Rosatom put in place for its purchases in that same unified industry procurement standard, the restrictions they impose on the activities of the purchaser or ordering party are less clearly defined than in the federal law. But surely, recommendations on how to improve that standard coming from an external organisation’s lawyers will do a world of good – given, especially, Rosatom’s long-established privileged position as a state within a state.

Secondly, I am rather inopportunely reminded of a remarkable tender that Rosatom recently conducted after these grand improvements to the purchasing guidelines were made and the nuclear empire’s transparency levels soared to unimaginable heights. In fact, this wasn’t one but eleven tenders undertaken in several Russian regions at once: Rosatom was buying services aimed to improve the image of the nuclear industry as represented by its ten nuclear power plants (NPPs) in operation and one under construction. In other words, sought after was a message that every self-respecting corporation that knows its PR would want sent out into the world – so that the Russian public would see on TV and in newspapers that Rosatom is an impeccable company and beyond any comparison with those poor schmucks in Japan who had allowed that disgrace at Fukushima to happen. So that the residents of those regions where Rosatom has nuclear power plants would enjoy all those festivals, community-building events, and special educational programmes at schools showing the country’s young that Rosatom is a dream company to work for. At the Russian public’s expense, that is – but what is RUR 240 million ($7.8 million) in taxpayer money?

The curious fact about these eleven tenders is that all of the contracts in them were awarded to three obscure contenders whose core business is… wholesale trade in consumer products. That’s right – the same three companies in all of the regions where this massive PR campaign is about to be deployed. Two of these three companies were registered only a year ago and nothing is known about them in the open sources. And these three were the only bidders.

There must be a reason why the entire PR industry of our vast country was unable to produce a single competitor capable of offering professional services in pro-nuclear propaganda, but I can’t think of one. Or could it be that Rosatom’s outside transparency experts introduced a new provision into the purchasing standard that specifies no PR services can be bought from firms that have no experience in selling consumer products wholesale? Of course, we have no choice but to leave it to the experts – they obviously know better.

And here’s another piece of the puzzle – a story that made headlines last July 17. On that day, a steel carcass that was to become the outer containment of a new reactor for the second line of Leningrad Nuclear Power Plant, near St. Petersburg, suddenly collapsed. The concrete had already been poured for the lower part of the wall, and the steel support structure was protruding out of it some 17 metres up, about to be filled with concrete. Worse, a similar incident is reported (in Russian) to have happened last January, when a fourteen-metre-high steel-and-concrete wall crumbled at the same site. The likeliest cause of both incidents is the substitution of construction materials of inferior quality for approved ones and violations of construction regulations, possibly compounded by using incompetent personnel. In other words – corruption. No wonder these and similar stories – such as largescale theft (in Russian) alleged at the construction site of Novovoronezh Nuclear Power Plant, in Central Russia, in late 2009 – draw the attention of both independent observers and the federal authority for industrial and ecological safety oversight, Rostekhnadzor.

Don’t get me wrong – I am all for the State Nuclear Corporation Rosatom’s transparency… but as of yet, it’s not quite clear what it consists of apart from theoretical announcements and figures that stop making sense as soon as they’re put into practical perspective. Could I ask, grateful as I am for the straight and narrow road Rosatom is finally taking, that somebody explain just what exactly caused those steel carcasses to collapse at the site of Leningrad NPP-2? At least, to understand, in principle, if it was the same corruption at play – or, say, bad weather? Because many people still say it was corruption.

There is, of course, much to say for modesty – a competent PR campaign would refrain from overselling – but since we’re on the subject of expelling corruption demons, I have another question: How many embezzlers have been exposed and punished after the revelations at Leningrad and Novovoronezh NPP? If Rosatom is so eager to root out corruption and admits it exists, where else should it look but construction sites, where, as every Russian child knows, billions in budget funding are routinely pilfered?

Now that we find ourselves in this new, corruption-almost-gone reality, where Rosatom’s transgressions are all but behind it, I’d like to nurture a humble hope that one day Kiriyenko will simply come out and say it like it is. Come clean about how it all happened – and better yet, with specific documents in hand.

And I’d also like to hope that someday, this fight against corruption will descend from the lofty illusory reality where it’s making such spectacular advances on our sinful earth, where we could observe its true, unimagined victories without the help of crafty but, alas, too-good-to-be-true publicity stints.

Vladimir Slivyak, a regular contributor to Bellona, is co-chair of Russia’s Ecodefence.