Russias Audit Chamber has produced a research paper entitled "An Analysis of State Property Privatizations in Russia in 1993-2003". Its authors looked into the way Russian enterprises were privatized and gave the following diagnosis: "flaws in basic legislation, the embryonic state of privatization institutions and procedures, and the virtual absence of external controls all contributed to numerous irregularities in specific privatization cases."

The Audit Chamber is the financial watchdog both of private business and the public sector and reports only to the Federal Assembly (parliament). Without any punitive clout and empowered only to send its conclusions to parliament, the Audit Chamber is a source of conflict and controversy - and with reason. This is precisely what we are seeing now, since privatization is a source of economic, political and moral conflict for Russia, and has been for almost 15 years.

Privatizations, claims the Chamber, have hurt not only the sta

Ads

te, but also its citizens. In those years, it asserts, all sections of Russian society did not have equal rights and opportunities with regard to privatization. Factory staffs had a privileged position and could buy shares when their enterprises were privatized. But doctors, teachers, academics and other citizens unconnected with production were all but marginalized and deprived of their share of the nations wealth.

Furthermore, the Audit Chamber cites a long list of enterprises that were sold off in breach of legislation. Descriptions vary: the price of property to be privatized would be scaled down through collusion, no privatization receipts were contributed to budgets, strategic facilities were sold off, etc.

Some episodes, especially those linked with Yukos, are well known. But the Chamber hints that this is just the tip of an enormous iceberg. And close scrutiny of privatizations, it says, suggests that crooked businessmen got their hands on half the country this way. An endless list of malpractices that came the Chambers way portrays the global scale of "contractual" privatization in Russia.

The Chamber mentions a multitude of problem units in the most diverse branches, such as the Krasnoyarsk coal company, Rosgosstrakh, Sidanko, the Tyumen oil company, Surgutneftegaz, NTK Soyuz, the Moscow Mil helicopter plant, Moscows Znamya engineering plant, the Tula arms factory, Voronezh Elektropribor plant, Vnukovo Airlines, the Rybinsk motor plant, and the Baltic shipyards.

The report has sent jitters through the Russian business community. As the proverb goes, "theres no smoke without fire." And if a state agency comes out with a statement mentioning legal violations, it means someone must take some measures, especially since the document quotes Russian President Vladimir Putin. Addressing the fifth congress of the European Organization of Supreme Audit Institutions (Eurosai), he made a point of stressing: "One of our priorities is to build up an effective system of state financial control. The most important objective is to make the authorities more effective, including through giving society objective information on the performance of state institutions."

It appears the Audit Chamber understood and decided to act.

However, what comes next? Will the guilty parties be identified? One or two instances could be described as incidental. But here we have a system. And the Audit Chamber, citing international legal norms, summarizes: "responsibility for the negative consequences of privatizations rests completely with public authorities".

But the document does not mention how this "public authority" can be punished for its misdemeanors. Apparently, the auditors, fearing that their bravery had got the better of them, drew back and offered the country a more financially advantageous compromise. They said the blame should rest with moneyed guys. The Chamber suggests, "The courts should act to restore the violated rights of the legitimate owner - the state."

Is what we have got here really an attempt to revise the results of privatization, i.e., a re-division of property in Russia? This is very unlikely. When Russia is poised to join the WTO, and embark with the EU on building a common economic space, it does not need any such outrageous scandals.

There is a specifically Russian piece of black humor now doing rounds: it says that the publication of the document aims to shake up the Russian business establishment. After all, it is not for nothing that its appearance coincided with a discussion in the country about the causes of the economic slowdown in October. Many analysts have said that the problem is reduced economic activity across the country: businessmen, looking at the Yukos saga, have fallen into a state of lethargy.

Now they will have no time for reflection. As soon as they see themselves on the Chambers black list, they will not doubt get to work fast. And who will then dare to de-privatize an enterprise trying to double Russias GDP and contribute to the state treasury by paying taxes?

MOSCOW. (RIA Novosti political commentator Yana Yurova)