Medvedev Seeks Bribe Fines 100 Times Payments to Fight Graft

Hands Holding Paper Currency Near Purse HandlesNov. 30 (Bloomberg) -- Russian President Dmitry Medvedev proposed increasing fines for bribery to 100 times any illegal payment and introducing criminal penalties for the mediators of corrupt transactions as he seeks to attract foreign investors.

Theft, kickbacks and misspent funds in Russia equal 1 trillion rubles ($32 billion) a year, Medvedev said today in his annual state-of-the-nation address from the Kremlin.

"Our principal goal is to fight corruption," Medvedev said. "The experience shows that even the threat of 12 years in prison doesn't stop some bribe takers. It seems that economical measures such as fines sometimes can be more effective."

Medvedev is seeking to curb corruption as Russia courts international investors including Apple Inc. and Siemens AG to help reduce the Russian economy's reliance on oil, natural gas and other raw materials. Russia is the world's most corrupt major economy, ranking 154th of among 178 countries, according to Berlin-based Transparency International's 2010 Corruption Perceptions Index released Oct. 26.

A group of senior government officials was arrested last week on suspicion of extorting bribes from companies seeking state contracts. Members of the group, which targeted Toshiba Corp. and other makers of medical equipment, include a senior official in the Kremlin's control directorate and a former deputy health minister, a spokeswoman for the Moscow City Court, said yesterday.

Officials contacted medical equipment makers and threatened to put them on a government "black list" if they didn't pay $1 million, the Interior Ministry said in a statement.

'No. 1 Issue'

Investors may be avoiding Russian assets because of concerns about corruption, Sergey Belyakov, head of investment policy at the Economy Ministry, told reporters Nov. 11.

Many investors say corruption is the "No. 1 issue" they face and no serious progress has been made to combat graft in the past two to three years, Belyakov said.

Russian police uncovered 35,000 cases of corruption in the first nine months of this year, including alleged crimes by four deputy governors and five regional ministers, according to the latest data from Interior Ministry. Major bribe-taking increased 17.5 percent from a year earlier in the period, the ministry said in October.

The government has met six of the 26 anti-corruption targets recommended in a 2008 agreement with the Council of Europe, the Moscow-based Vedomosti reported today, citing an unidentified Russian official in Strasbourg, France. The 20 initiatives Russia has yet to fulfill include establishing administrative courts where the public can file complaints against officials, the newspaper said.

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