#22 - JRL 2009-193 - JRL Home

Moscow Times
October 20, 2009
Corruption Seeps Into Online State Tenders
By Natalya Krainova

When Vologda State Pedagogical University wanted a new car, it did what all state organizations do: published a notice on the federal government’s web site for state purchases.

But the university didn’t want just any car. The notice, posted in late September, said the vehicle should cost 1.3 million rubles ($45,000) and be 4,427 centimeters long and 1,809 centimeters wide. The university did not specify what model it preferred.

Of course, no ordinary car is 44 meters long and 18 meters wide, but the gigantic measurements appear to be no ordinary mistake. Dividing the measurements by 10 provides an exact match for only one car ­ the Volkswagen Tiguan SUV, Gazeta.ru reported.

Since no car dealer browsing the tenders web site would be able to link the measurements to the Tiguan, the university might have had a supplier in mind when it published the notice, said experts in state tenders.

“If the notification about a tender contains many details, this often means that the scheme has been created for a particular supplier,” Sergei Gabestro, board chairman at Fabrikant, an electronic trading system that helps state and private companies make purchases over the Internet.

Vologda State Pedagogical University declined immediate comment on the measurements or the tender. A spokeswoman asked for an e-mailed request and did not reply by late Monday.

The government opened the tenders web site, Zakupki.gov.ru, to encourage transparency and provide a level playing field to suppliers in the purchases of everything from pens to SUVs. But many tenders remain nontransparent, particularly in Moscow and St. Petersburg, opening the door to corruption, according to a recent report by the Institute for Information Freedom Development, a St. Petersburg-based nongovernmental organization.

Moreover, there are no strict limits on what can be purchased, leading to oddities like the Interior Ministry buying a gold-plated bed and St. Petersburg authorities ordering 139 mink coats for patients in a psychiatric hospital.

The federal law regulating state purchases obliges state organizations to announce a tender for a state order and publish all the information related to the tender 30 days before it starts, said Ivan Pavlov, chairman of the Institute for Information Freedom Development.

But, he said, buyers often try to hinder rival companies’ access to information about the tender in order to secure the victory of a company that has paid them kickback money.

“This is profitable for the firm that takes part in the tender and to the customer who gets a kickback,” Pavlov said by telephone from St. Petersburg.

In other cases, authorities try to conceal the purchase of “unreasonably expensive” items from public view, Pavlov said. Although purchases of luxury items are not restricted by law, the Constitution and several other laws indicate that state officials have a duty “to spend the money of taxpayers sparingly,” Pavlov said.

The law does not regulate pricing for state tenders on anything except construction, said Vasily Gorbunov, deputy head of the department for control of state orders at the Federal Anti-Monopoly Service.

But the Finance Ministry monitors expenses, requiring a state organization that requests money from the federal budget to explain what it needs the money for, Gorbunov said. “Each expense item is detailed,” he said by telephone.

Cars are a popular item on the tenders web site.

The presidential administration announced a tender in early September for 90 BMW cars worth 300 million rubles. Viktor Khrekov, spokesman for the presidential affairs office, which wanted the cars, said BMW was chosen to secure the best “efficiency of use and economic advantage.”

“We are not rich enough to buy cheap things,” Khrekov said by telephone, explaining that a cheaper car would break down more often and end up costing more than the BMWs.

State Duma deputies are provided with Audis, BMWs, Volkswagen Passats and Ford Focuses as service vehicles, Alexei Sigutkin, head of the Duma’s apparatus, said in an interview at his Duma office.

Sigutkin said his department based its technical requirements for cars and furniture on how much money was earmarked for deputies’ needs in the federal budget.

The Federal Treasury has to examine and authorize all Duma tenders, Sigutkin said.

“If funds are misapplied, the treasury will not allow them to be spent,” he said.

Last year, the Duma saved 100 million rubles allocated from the federal budget for transportation expenses, Sigutkin added.

The Federal Anti-Monopoly Service, which checks tenders, denied 118 requests, or 14 percent of the total, for permission to sign supply contracts because of violations of anti-monopoly laws in the second quarter of 2009, the agency said on its web site.

In the same period, the agency registered 63 cases of state orders that violated the law regulating the placement of state orders, it said. That figure represents 3 percent of all orders.

The transparency of purchases ordered by authorities in Moscow and St. Petersburg has grown worse over the past year, according to the report by Pavlov’s institute, which was released last month. Moscow fell from 44th place to 51st out of a total of 84, while St. Petersburg fell from eighth place to 14th. The Amur region was ranked as the most transparent, while the Tula region placed last.

A common method to hide information about state purchases is to replace Cyrillic letters with identical-looking English letters in the title of the tender, thereby making it impossible to search for the tender by its title, Pavlov said.

Another method is to require visitors to type in their personal data, including the number of their bank accounts, which is a violation of privacy laws and the law regulating state purchases, Pavlov said. The tactic has been used by Ingush authorities, he said.

Still, some tenders have caught the public’s eye in recent weeks. In September, the Kemerovo governor ordered 30 gold wristwatches decorated with diamonds that his spokesman said were intended to honor regional teachers, agriculture workers and mothers with many children. After a flurry of media reports, the tender was canceled abruptly.

In late August, the Interior Ministry ordered a hand-carved bed made of a rare species of wood and covered with a thin layer of gold. Interior Ministry spokesman Valery Gribakin said the bed was needed for an Interior Ministry guesthouse in Moscow.

Also in August, St. Petersburg authorities ordered 100 hats and 139 jackets made of arctic fox and mink fur and worth 1.7 million rubles for 705 patients of a psychiatric hospital.

Hospital directors said the patients had demanded clothes made of expensive fur.

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