Electronic Corruption: Corruption Scuppers Another Government Project Aimed at Modernizing Russia
To understand why the Kremlin's E-government efforts failed to gain traction, one needs to look no further than the saga of corruption and embezzlement plaguing one of Russia's revered companies. Some 300 million rubles ($10 million) have been misappropriated from a Communications and Press Ministry contract, the Prosecutor General's Office said Tuesday. The money was funneled off via overpriced soft and hardware purchases as part of a contract with the Rostelecom long-distance monopoly, prosecutors said in a statement.
Prosecutors said they first suspected fraud after reviewing a contractual agreement worth over two billion rubles ($64 million) concluded between the Ministry of Communications and state-owned telecoms giant Rostelecom, the main contractor for the Electronic Russia project. The prosecutors want the Interior Ministry to decide whether or not to open a case in what they called "large-scale fraud," Vedomosti reported. The two-billion ruble contract is part of Electronic Russia, a multi-billion ruble federal target program to boost E-government services.
Launched in 2002 under then-President Vladimir Putin, Electronic Russia was touted as a way to move public services online, overcome the digital divide between the regions and improve the computer skills of government officials. Russian President Dmitry Medvedev has since redoubled efforts on the project, promising last year that the Russian government must go digital by 2015. His initiatives have ranged from introducing a new electronic signature and the planned introduction of universal electronic ID cards to issuing guidelines on the conduct of electronic judicial proceedings.
But in what seems like an admission of defeat, president Medvedev told a meeting of regional governors last year that efforts to transition to digitized services in 2010 and 2011 have gotten off to a slow start. "Only three ministries have introduced systems of electronic document exchange: the Ministry of Economic Development, the Ministry of Agriculture and the Ministry of Telecommunications. This is much too slow. We need to move faster on this one," Medvedev said.
The cases now being pushed by prosecutors illustrate the depth of the president's problems.
The Russian government recently allotted two billion rubles ($64 million) to create an infrastructure for the E-government program through the end of 2010. But the cost of hardware and software acquired by the Ministry of Communications through Rostelecom, the lead contractor, was inflated by nearly 270 million rubles ($9 million) through a wide array of middlemen firms, prosecutors alleged. "The Ministry of Communications paid 653 million rubles ($21 million) for equipment that cost no more than 383 million rubles ($12 million)," the Prosecutor General's Office said in a statement.
Prosecutors also found that "one of the main suppliers of equipment" made "questionable transactions" by transferring 150 million rubles ($5.1 million) to offshore accounts of unspecified companies. In addition, prosecutors said they found evidence of a conflict of interest between people working in Rostelecom and an unnamed commercial entity, which procured equipment for the Electronic Russia program, Vedomosti reported. Prosecutors also alleged that the ten million rubles ($345,000), sent by the Ministry of Communications to Rostelecom for the conduct of pilot research into the creation of techno-parks, were stolen. The company concerned did not even pretend to start work on the project, prosecutors said.
A spokesperson for Rostelecom, who claimed anonymity in line with the company's rules, said that the company would clear the air after carefully studying the allegations. He maintained, however, that the Electronic Russia program is on track, and previous checks by Interior Ministry officials have confirmed that the company violated no rules.
In line with a directive signed by Prime Minister Vladimir Putin in August of 2009, the state-controlled telecoms giant Rostelecom was selected as the only telecommunications company permitted to create an infrastructure for the country's electronic government service. In an indication of the importance the government attaches to the program, a special department the Department of Information Technology and Communications was created in the White House, with Konstantin Noskov as its head. State telecoms operator Rostelecom also created the post of director of the Electronic Government project and plucked Valery Zubakha, the former deputy head of information management at City Hall, to head it. Both Noskov and Zubakha were dismissed in March of this year without a plausible explanation, but experts cited by Vedomosti saw a link between their dismissal and the failure of the federal target program.
In February of this year, Russia's Audit Chamber said it analyzed how the unified state policy in the sphere of information technology was being implemented. The auditors said they did not like what they saw. Of the 180 billion rubles ($6.2 billion) allocated for the program between 2005 and 2010, the auditors said 1.4 billion rubles ($48.2 million) "were inefficiently used" a Russian euphemism for misappropriation or embezzlement. A closer inspection of the activities of various organizations involved in the project shows that "development and implementation of software solutions for government agencies within the framework of Electronic Russia are few and far between," the Chamber's Auditor Alexander Piskunov said. The auditors also found that communications protocols and message formats were not standardized in the software procured and implemented for public use under the program. This, the auditors said, has led to incompatibility of software and hardware solutions and made communications between different government systems impossible.
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