Page 53 - bne_Magazine_September_2018

bne September 2018 Eastern Europe I 53
Russian Audit Chamber to get stronger anti-corruption mandate
Vadim Dumesh in Paris
Russia's Audit Chamber, which recently got a new boss, heavyweight policy- maker Alexei Kudrin, is demanding a broader mandate to fight corruption, position itself as the know-how centre and the go-to anti-corruption institution, Kudrin said on August 3 as cited by Interfax and Vedomosti daily.
Analysts were disappointed when Kudrin accepted the job as head o of the Audit Chamber, as they were hoping the former finance minister would be giv- en a more obviously powerful role as either special economic advisor to presi- dent Vladimir Putin or a deputy prime minister job in the government. How- ever, it appears now that Putin’s plan is to tighten control over the government and use the Audit Chamber as the leading institution to police the spending of a mooted RUB8 trillion of new spending to “transform” the Russian economy. That means giving the Audit Chamber some real teeth for the first time.
Whatever transpires from the changes the Chamber’s star is clearly rising. Formerly a posh but inconsequential post for former prime ministers like Sergei Stepashin, who also ran the state auditing body before disappearing into obscurity, the previous head of the institution was Tatyana Golikova, who was nominated for the Deputy PM for social policy in the new government – one of the most important posts that will oversee a large part of the new spending under Putin’s May Decrees spending extravaganza. But it's all a work in progress.
Previous reports claimed that the Audit Chamber will be given carte blanche to inspect regional spending and even to scrutinise the Central Bank of Russia, adding to the speculation that the Kremlin sees the institution becoming a key watchdog under Kudrin, clearing the path for efficient spending of Putin's RUB8 trillion development drive.
Kudrin noted that the Chamber's anti-corruption mandate is almost not codi- fied, while he will seek to legally pin the anti-corruption status to the institution that can mobilise its access to state information and accounting systems.
Curbing corruption is the most important of the four goals Kudrin set for his office, along with tying Russia's strategic development goals to the actual budget, enhancing the methods of budgetary control, and informing the public on realisation of national strategic goals.
More recently Kudrin floated the idea that the Russian government could see a third of state officials and bureaucrats sacked by 2024 thanks to digital technology.
ing a record 34% at the start of this year. That has been a boon for the Ministry of Finance, making it easier and cheaper to fund the budget deficit without having to expose itself to international regula- tors with sovereign Eurobond issues on the international markets.
Each round of sanctions have become progressively tougher as relations between the US and Russia go into a death spiral. The original sanctions imposed in 2014 following Russia’s annexation of the Crimea were little more than a symbolic list that named
a few state officials and some gener-
als directly involved in taking over the Crimea, but had little economic conse- quence. The sanctions regime became more serious a year later when investors were barred from lending to blacklisted Russian companies that included some of the biggest names in the country.
Tensions have continued to rise since the 2016 US presidential elections where Washington accused Moscow of meddling in the vote. Things ratcheted up again with the April 6 round of sanctions that for the first time barred US investors (or investors that operated in the US) from dealing with specific existing bonds or shares. Investors were ordered to dump their stocks and bonds in Rusal and other companies belonging to Kremlin insider Oleg Deripaska, among others, causing chaos on the metals market
and significant damage to a number of big western investors that were left hold- ing the now unsellable assets.
These rising tensions have also impact- ed the bond markets. While OFZs were a la mode last year, investors have been selling out this year. First was the Coun- tering America’s Adversaries Through Sanctions Act (CAATSA) sanctions that threatened to target OFZs but didn’t, that came out in February, followed
by the April round. Foreign holding
of OFZs fell to 28% in June and was down to 27% in July. After the latest Defending American Security Against Kremlin Aggression Act (DASKAA) bill and Defending Elections from Threats by Establishing Redlines Act (DETER) sanction proposals introduced in the last two months (neither of which is
www.bne.eu