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RFE/RL
January 31, 2005
Analysis: Strange Days For Russia's Audit Chamber
By Robert Coalson
Copyright (c) 2004. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036. www.rferl.org

Although President Vladimir Putin re-nominated Sergei Stepashin to his post as Audit Chamber chairman on 27 January, the political elites in Russia were caught off-guard when Stepashin told a meeting of the Duma's Motherland faction on 18 January that he had submitted his resignation.

Stepashin, whose term was scheduled to end in April 2006, said that he considered it his duty to tender his resignation in keeping with the spirit of a new law on the formation of the Audit Chamber, which stipulates that the president nominates that body's chairman and that the Duma confirm the nomination.

Until Putin reaffirmed his support for Stepashin, there was a frenzy of discussion about what Stepashin's move might mean. Most analysts saw it as a clear appeal for a vote of confidence from Putin, although some doubted whether that nod would come. Dmitrii Oreshkin of the Merkator analytical group told "Novye izvestiya" on 19 January that some within the administration might try to take advantage of Stepashin's move because the chief auditor "is a man with unsatisfied political ambitions who is not caught up in any compromising games."

The announcement of Stepashin's resignation was given additional political gravitas by the fact that the Duma has now three times postponed hearing his potentially scandalous report on his chamber's review of 1990s-era privatizations. On 12 January, Duma Speaker Boris Gryzlov announced that the report would not be put on the Duma's agenda because changes in the legislature's rules had made it unclear what "format" was appropriate for Stepashin's appearance. "Tribuna" noted on 12 January that Stepashin had already appeared in the Duma chamber on 8 December 2004 to present the report but deputies refused to give him the floor. A few analysts, including Lydia Andrusenko, writing in "Politicheskii zhurnal," No. 2, speculated that Stepashin's resignation was a protest to the Kremlin against possible moves to quash the report.

Examining Privatization

However, at the 18 January Motherland faction meeting, Stepashin told deputies that the Duma's leadership had scheduled his report for sometime "in March or April in the context of a report on the work of the Audit Chamber." He added that he has already submitted the report to both legislative chambers, Putin, and the Prosecutor-General's Office.

"Kommersant-Daily" on 17 January reported that it had obtained a copy of Stepashin's report and that it was characterized mostly by ambiguous conclusions and statements that could be variously interpreted. However, the daily, which is owned by avowed Kremlin foe and former oligarch Boris Berezovskii, wrote that the document could serve "as the basis for the mass reexamination of privatization results" and that "the authorities don't seem to be in any hurry to play this card." Some analysts have raised the concern that the report could signal a qualitative change in the state's assault of private enterprise, inasmuch as the Yukos affair and other high-profile cases to date have centered on the issue of minimizing tax obligations rather than on the core issue of property ownership.

The daily reported that the report repeats longstanding general criticisms of privatization, including that it was conducted without a complete legal foundation; that the State Property Committee frequently failed to register its instructions with the Justice Ministry, making them technically void; and that most tenders were insufficiently competitive and transparent. The report also reportedly includes general conclusions such as that privatization failed to achieve such stated goals as boosting industrial production and economic growth. The report concludes vaguely but menacingly that "it is essential to establish through the courts the violated rights of the legal property owner, that is, the state," the daily reported.

The "Kommersant-Daily" article reports that the main ambiguity in the possible repercussions of the report lies in the fact that it does not really examine specific privatization cases in detail. It surveys the oil and energy sectors, according to the daily, and lingers on Chukotka Autonomous Okrug Governor Roman Abramovich's Sibneft. It also covers the tobacco industry and other sectors, but mostly in order to demonstrate various privatization-related schemes that allegedly harmed the state's interests rather than to point fingers at particular companies or individuals.

KM.ru speculated on 21 January that the Kremlin is benefiting from the uncertainty over Stepashin's report, which the news agency described as "a bomb hanging over" the oligarchs. On the other hand, National Strategy Council General Director Valerii Khomyakov told "Nezavisimaya gazeta" on 20 January that "clearly, some points in the report may not have pleased the Kremlin-linked oligarchs very much." Despite Stepashin's renomination, the fate of the privatization report remains unclear.

Putin met with Stepashin on 24 January and listened to his report on the Audit Chamber's plans for 2005. At that meeting, Stepashin announced that the chamber would "move away from petty topics" and instead study larger matters such as the overall effectiveness of government spending. On 21 January, Federation Council Chairman Sergei Mironov told ABN that Stepashin deserves to keep his post, noting that Stepashin is a "gosudarstvennik," or a person who believes in a strong state, and "that is very important." Stepashin told reporters on 27 January, the day of his renomination, that the government would not pursue a policy of "deprivatization" and shifted the focus of his criticisms from privatization issues to concerns about the management of state property.

Former Duma Deputy Yurii Boldyrev, who helped write the original law on the Audit Chamber, told derrick.ru, the official website of the Union of Oil and Gas Equipment Producers, on 25 January that the most important thing is neither Stepashin nor even the privatization report, but the fate of the Audit Chamber itself, which has gone largely unremarked. He said that the new law that allows the president to nominate the Audit Chamber's chairman spells the end of its independence and turns it into "a fifth wheel" in the structure of the government. "The Audit Chamber made sense when it operated independently of the president and made public things he wanted to cover up," Boldyrev said.