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Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

No. 46
November 20, 2001
An interview with Auditing Commission head Sergei Stepashin

Author: Oleg Odnokolenko
[from WPS Monitoring Agency, www.wps.ru/e_index.html]


Over 2000 and the first nine months of 2001 the Auditing Commission carried out 613 inspections at almost 2,200 sites in all regions of Russia. According to the materials of the Auditing Commission, 48 criminal cases have been launched. The commission revealed misappropriation of 23.2 billion rubles of state funds in 2000. The president received about 60 "information letters" from the commission....

Question: The influence of your department has considerably grown. What is the reason for this?

Sergei Stepashin: Many materials the prosecutor's office uses today for instituting criminal cases the Auditing Commission presented in late 1990s. But if before all our initiatives were met with statements like "It ain't your business, guys", over the past year and a half I have not received a single formal reply from the General Prosecutor's Office. From my own experience I know that because of various reasons, the investigation of economic, banking, financial, and budgetary crimes is the most difficult for the law-enforcement bodies. It is not enough to be a good investigator here, it is also necessary to be a serious financier and an experienced accountant. We have such experts in the Auditing Commission. We have also united our efforts for investigating the most complicated cases, there is a corresponding agreement with the law enforcement bodies concerning this, and we form joint inspecting groups. This practice turned out to be very useful.

Question: Do you often consult the president concerning the activities of the commission?

Stepashin: We rather often speak on the phone, and regularly meet in his office. As a rule, the decisions on the materials I present to the president are rather harsh. I suppose it is principally important for the head of the state to receive the fullest information from not only subordinated structures, but also from an independent source. In these terms, the Auditing Commission is a unique body, it accounts to the Duma and the Federation Council but it subordinates to no one but the law and the Constitution. It seems to me that at present the Duma is more satisfied with our work than before: we came to an agreement that the Duma will make special resolutions upon the results of our most serious inspections. Our relations with the government have also changed. For instance, almost all recommendations of the Auditing Commission on 2002 budget draft were taken into account. Before nothing of the kind has ever happened.

Question: Does the Auditing Commission plan any new legislative initiatives?

Stepashin: In fact, there are enough laws, but there is not a single perfect law. For instance, at present the Auditing Commission is carrying out a serious expertise of the economic legislation. The matter is that many laws that were prepared in early 1990s not only contradict each other, but also have lots of "holes". And the budget means have gone through these "holes". According to analysts from various departments, over the past decade about $150 billion left the country. In particular, we found huge "holes" in the privatization legislation. But now we have experience and at present we work absolutely differently with the Property Ministry: a pre-privatization inspection of large objects is carried out and their price is determined before tenders. As for the Auditing Commission itself, we also have a number of suggestions here. For instance, we would like to have the same authority as the Finance Ministry control and revision department. I believe it is necessary to render the Auditing Commission the right to appeal to the court for defending the financial interests of the state, as well as for taking administrative measures for ceasing economic and financial crimes. We also intend on establishment of regional structures of our own. Currently, the Auditing Commission has about a 1,000 people, all of them work in Moscow. But this is a meager amount for such a country as Russia. For instance, there are 3,000 revisers in Panama, there the population is only 3 million people.

Question: How do you work out your inspection plan? For example, according to some media, the Auditing Commission got interested in the Transportation Ministry only because you were on rather complicated terms with Nikolai Aksenenko while you were the prime minister....

Stepashin: The situation is absolutely transparent here. I assure you, in this case the revenge is out of the question - the circumstances simply coincided. And this slightly embarrasses me.... That is why I believe it is necessary to stress again: there is not any political engagement in our work, we have never fulfilled anyone's orders, and we never will. Let alone taking revenge. We inspect large ministries and department at least once a year. The collegium of the Auditing Commission determines the order of inspection of large budget-sector structures. We are also in charge of preparation of conclusion on the already implemented budget and the budget draft for the next financial year. At present we are inspecting the presidential affairs administration.

Question: Is it a planned inspection or is it connected to the activities of prior Kremlin economic managers?

Stepashin: There is not sensation here: it is a planned inspection. Moreover, Kozhin, the head of the presidential affairs administration is also interested in his checkout.

Question: What are your next planned inspections?

Stepashin: In the regions: Yakutia, Lensk, Dagestan. We thoroughly examine the situation with funding the St. Petersburg 300 anniversary, and inquire into the foreign debt issue. By the way, our suggestions on establishment of a special structure that would deal with the state foreign debts issue was recently taken into account at a governmental meeting.

Question: By the way, speaking about Lensk, could you comment on the essence of the commission's claims to the Emergency Ministry?

Stepashin: Regardless of all rumors, this year we have not convey any materials on the results of Emergency Ministry inspection to the General Prosecutor's Office. As for reconstruction of Lensk, we have more questions to local authorities than to Sergei Shoigu's department.

Question: Not long ago you inspected the Defense Ministry. What is the situation like there?

Stepashin: The situation is slightly better than it used to be, but it cannot be ideal by definition with such a meager state budget, about $45 billion. Here is one example: lately, the Defense Ministry could afford one tank, one armored infantry carrier, and perhaps, half a ship. We were forced to prepare a special note to the president on the situation in the Armed Forces, I also made a personal report. At present he controls the problem.

Question: Have you changed your viewpoint concerning the Chechen issue?

Stepashin: From the standpoint of our commission there are more than enough problems in the republic. We carried out an inspection and found out that Chechnya received only 40% of the means stipulated by the budget. At the same time, 57 million rubles were misappropriated or stolen. It is very serious, as while the social and economic issues are not resolved, it is senseless to speak about normalization of the situation in Chechnya. Unfortunately, currently too many people there have only two possibilities to earn their living: either with a machine gun, or stealing.

Question: Today departmental special services are in fashion. Does the Auditing Commission have such services?

Stepashin: There is a small special service, if you can cal it so, in the Auditing Commission. It is a special department of fifteen people that is headed by reserved lieutenant general. The employees of the department are present and former workers of the Interior Ministry, the Federal Security Service, and the general Prosecutor's Office. I do not think this structure is redundant, as we always need operative information - this is our work.


In its work, the audit Commission cooperates with the president, the government, and law enforcement bodies - the Federal Security Service, the Federal Tax Police Service, the Interior Ministry, the Tax and Fees Ministry, and the General Prosecutor's Office. By the end of 2001 it is planned to conclude cooperation agreements with all acting controlling and accounting bodies of the Russian Federation subjects.

In 2000 the Auditing Commission inspected the All-Russia State Television and Radio Company, the ORT television network, the Russian Joint Energy Systems, Gazprom, ONAKO, Slavnet companies, Rosvooruzhenie, and the Chechen republic.

In 2001 the Auditing Commission has checked the Transportation Ministry, the Nizhny Novgorod and Kaliningrad regions, and using the means for liquidation of flood consequences in Lensk.

The priority objectives for the near future are: first, the foreign debts issue, from the standpoint of both reliability and fullness of accounting and efficiency of the debt managing. Second, analysis of the financial risks in the sphere of forming and using state financial resources, working out of standards for state auditing and accounts. Third, controlling of using state properties. Forth, increasing control of tax collection, especially from alcoholic beverages.

The major direction of the Auditing Commission work is controlling the implementation of the federal budget.

(Translated by Arina Yevtikhova)

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