Question

Answer the following questions for the U.S. and Russia:

How corrupt are the local, regional, and national governments?

Answer 1

US:

The US faces a wide range of domestic challenges related to the abuse of entrusted power for private gain, which is Transparency International’s definition of corruption.

Key issues include the influence of wealthy individuals over government; “pay to play” politics and the revolving doors between elected government office, for-profit companies, and professional associations; and the abuse of the US financial system by corrupt foreign kleptocrats and local elites.

The current US president was elected on a promise of cleaning up American politics and making government work better for those who feel their interests have been neglected by political elites.

Yet, rather than feeling better about progress in the fight against corruption over the past year, a clear majority of people in America now say that things have become worse. Nearly six in ten people now say that the level of corruption has risen in the past twelve months, up from around a third who said the same in January 2016.

A new survey by Transparency International, the US Corruption Barometer 2017, was carried out in October and November 2017. It shows that the US government and some key institutions of power still have a long way to go to win back citizens’ trust.

Additionally, many people hold an unfavourable view of big business. Almost a third of people in the United States think that most or all business executives are corrupt.

In comparison, judges are seen to be the cleanest, with just 16 per cent thinking that they are highly corrupt.

A higher proportion of African-Americans surveyed view the police as highly corrupt: 31 per cent, versus an average of 20 per cent across all those surveyed.

Russia:

Corruption significantly impedes businesses operating or planning to invest in Russia. High-level and petty corruption are common, especially in the judicial system and public procurement. The business environment suffers from inconsistent application of laws and a lack of transparency and accountability in the public administration. Russia’s regulatory inefficiency substantially increases the cost of doing business and has a negative effect on market competition. The Russian Federal Anti-Corruption Law (in Russian) requires companies to actively implement anti-corruption compliance programs. However, compliance with these provisions in practice is lagging behind. Russian law criminalizes active and passive bribery, facilitation payments, gifts and other benefits. However, effective enforcement of anti-corruption legislation is hindered by a politicized and corrupt judicial system.

Companies dealing with the Russian judicial system contend with high corruption risks. Corruption in the courts takes many forms, including bribery and the fabrication of evidence (ICS 2016). Bribes and irregular payments are widely exchanged in return for favorable court decisions (GCR 2015-2016). Even though the law provides for an independent judiciary, judges are subject to undue influence from politicians, the executive branch, the military and other security forces (HRR 2016); this is particularly true for the lower-courts (BTI 2016). Corruption is prevalent in high profile or politically sensitive cases, furthermore, local courts often favor local politicians when settling disputes to the disadvantage of civil rights (HRR 2016, BTI 2016). Independent dispute resolutions can be difficult to obtain (ICS 2016). Business executive do not perceive the courts as independent and describe the legal framework as inefficient in settling disputes and challenging government regulations (ICS 2016). Other obstacles to effective dispute settlement are frequently changing laws, decrees and regulations, often leading to an overlap or conflict in practice (ICS 2016). While court rulings in inter-firm cases are perceived as fair, those against state agencies are not (BTI 2016). Thus, companies are advised to include foreign arbitration clauses in their contracts to minimize the role of the Russian legal system

Corruption is endemic in Russia’s law enforcement (OECD 2014). Credible evidence suggests that police officers arbitrarily imposed heavy fines or extorted bribes from unregistered persons (HRR 2016). The Russian police are considered unreliable in protecting companies from crime

Corruption is a high risk in the public services sector. Bureaucracy, corruption and a lack of funds, render the operations of the public administration erratic (BTI 2016). In effect, companies consider corruption as the biggest obstacle to doing business in Russia, and very often encounter irregular payments and bribes when applying for public utilities (GCR 2015-2016). Reportedly, nine out of ten entrepreneurs have encountered bribery at least once, with the average bribe for all purposes reaching USD 9,810 (OECD 2015, HRR 2016). In fact, companies reported that bribery was so widespread in some regions of the country that it was considered as a convenient alternative to administration compliance (OECD 2015). Compliance with regulations can prove to be a daunting task for companies as rules frequently change, are inconsistently interpreted and applied by different officials and jurisdictions, and can contain conflicting provisions (ICS 2016). The decision of one official or jurisdiction may be contested or overruled by another (ICS 2016). Hence, companies are advised to seek local counsel when setting up commercial operations in Russia