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    Russian Press - Behind the Headlines, June 9

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    Military ordered to hush up corruption / Russia may change insurance contribution rates / Russian cruise victims sue Turkish companies

    Moskovsky Komsomolets
    Military ordered to hush up corruption
    The corruption scandal triggered by the MK story about commanding officers extorting money paid in bonuses to their subordinates at Lipetsk Air Center has prompted an unusual response. The Defense Ministry and its Air Force command were quick to heed the paper’s message. The defense minister ordered all units across the country be investigated to identify any similar cases. But some generals eager to expose corruption interpreted the command in a highly irregular way.

    MK has seen a cable from acting Commander-in-Chief of the Air Force Viktor Bondarev, dated June 3, 2011. It was circulated to the troops and recommended “anti-corruption measures be enforced when officers are paid bonuses in 2011.” Since the document is not classified, MK will quote from it to demonstrate the methods recommended to wipe out graft in the military.

    Point 1 suggests “hotlines be set up in the main units and formations” to “register all verbal complaints.”
    A telephone message when “someone rats on somebody else” cannot be considered legal grounds for an investigation. It would have been understandable if this was a direct hotline to the military prosecutor or the Air Force special department responsible for state secrets. But no. An officer who falls victim to extortion by his superior must report the incident to that very commander, before going on to prove his case.

    If anyone involved doubts the effectiveness of this measure, they can follow the advice in Point 2, which says: “Appeals by service personnel and their family members concerning instances of corruption made to an Air Force commission, bypassing the appropriate authorities, should be viewed as indicating a lack of trust in their immediate superiors, and should result in the appropriate conclusions being drawn and sanctions taken.”
    Therefore, if an officer goes over his superior’s head in filing a complaint, this should be qualified as “lack of trust in the superior’s competence.” Who is responsible for giving some Air Force commission the right to re-categorize a criminal offense as a disciplinary misdeed and decide how the offender should be punished?

    What if the allegations against the commanding officer were sheer slander? Why could the cable not have reminded officers that they have the legitimate right to turn to the prosecutor?

    But the most devastating piece of this official strategy against corruption is contained in Point 3 of the cable. It reads: “Additional bonus payments should be stopped for all officers within main units and formations should reliable information be duly received and corroborated that incidents of corruption are present within the unit or formation in question.”

    In plain language, that means: if anyone files a complaint with the prosecutor that the commander was guilty of extortion and this proves true, then bonuses will be frozen across the entire unit: a sort of mutual guarantee.
    The conclusion is clear: no one in the military wants to fight corruption. On the contrary, officers are told to hush up corruption in the ranks.

    Russia may change insurance contribution rates
    The government is considering changing insurance contribution rates to the Pension Fund, a step that could hurt large- and medium-sized companies.
    Russian President Dmitry Medvedev instructed the cabinet to consider cutting insurance contributions from 34% to about 26% in late March. The issue was discussed again on Wednesday. There are two options to choose from and a deadline of two weeks.
    Insurance contributions can be frozen at 34% for big business, cut to about 26% for medium-sized and small retail concerns and to 16%-20% for small businesses working in the industry and services sector. Or the rate could be cut to 30% for all businesses other than non-retail small businesses, which would pay 16%-20%.

    The first option, although better, will be difficult to implement because of the loose distinction between large- and medium-sized businesses, said presidential aide Arkady Dvorkovich. Putin’s press secretary, Dmitry Peskov, declined to comment.
    Dvorkovich proposed following the distinctions set out in the law on the development of small- and medium-sized businesses, under which companies with revenues from 400 million to 1 billion rubles with a staff of 100-250 are considered mid-sized.

    Igor Yurgens, vice president of the Russian Union of Industrialists and Entrepreneurs, said: “The rate should be lowered, not only for small and midsized companies but also for big business, which has been hit by ruble appreciation.”
    “I don’t see why big business should pay more,” said Sergei Galitsky, head and co-owner of the Magnit retailer. He added that definitions of a large company differ from industry to industry.
    “There is no reason to discriminate against big business, which accounts for the bulk of the country’s economic activity,” said UniCredit Bank chairman Mikhail Alekseyev.

    “These are compromise options,” said Alexander Galushka, president of the Delovaya Rossiya business association for the non-commodity sectors of the economy. He said the rate should depend on company size but warned that this may prompt large companies to split up.
    An official involved in the discussions said cutting insurance contributions by one percentage point will cut potential revenues by 100 billion rubles ($3.6 billion) in 2012. If all companies pay 30%, the shortfall will amount to 400 billion rubles ($14.4 billion).
    Dvorkovich said there are ways of compensating for losses incurred by the Pension Fund as a result. For example, the flat rate (34%) could be changed to a regressive rate, with 30% deductions from an annual wage of 512,000 rubles and 5% from all income over that amount, as the Finance Ministry suggested in April.

    Deputy Finance Minister Sergei Shatalov said the rate could be cut to 26%-28% for annual salaries of 1.5-2 million rubles, with 3% to 5% charged for income above that.

    A regressive rate will affect midsized and large companies, which pay over-the-table salaries, said an official. Yurgens said it could encourage schemes by which companies cut official salaries but pay the rest under the table.

    Moskovsky Komsomolets
    Russian cruise victims sue Turkish companies
    On June 8, Russia’s Public Chamber discussed progress made in the investigation into the spate of alcohol poisoning incidents that took place during a Turkish cruise, even though Turkey failed to submit their official report by the deadline.

    Turkish companies have covered all medical expenses for the Russians who required treatment beyond the terms covered by their insurance, as well as their relatives’ hotel and travel expenses, said Oleg Moseyev, spokesman for Russia’s Tourism Agency.
    The tour operators who organized the fatal cruise from Bodrum, during which 20 Russians were poisoned by bootleg alcohol and four of them died, have also paid compensation to the families of those who died. The family of Aigul Zalyayeva, 20, received $5,000, and Marina Shevelyova’s relatives were given 150,000 rubles (about $5,500). The companies also said they would ensure that all insurance payments are made correctly.
    However, the Turkish police have not yet submitted an official report.

    Investigators have established that the Russians did not bring the alcohol with them, said Alexander Sokolov, a Public Chamber member.
    One victim, Viktoria Nikolayeva, remains hospitalized in a very severe condition. Her Russian travel agent and insurance company are shouldering all medical expenses.

    Lawyers are preparing injury lawsuits demanding compensation for pain and suffering. They will be also asking the Bodrum and Antalya courts to begin criminal proceedings against the guilty parties.
    The Russians were insured for $15,000 to $30,000.
    “Compensation will obviously be paid,” Moseyev said. “But the lawsuits cannot be filed for another month or two. We need to wait for the forensics reports, which will take some time. No lawsuit can be filed until this incident is officially recognized as the cause of death.”

    RIA Novosti is not responsible for the content of outside sources.

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