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Leader of the criminal world
Dmitry Kazmin
Pricewaterhouse Coopers came to the conclusion that either Russia has the highest level of economic crime in the world or the most honest people. Since the crisis began, 71% of surveyed companies said they fell victim to economic crime, and nearly half of the respondents live in fear of their assets being stolen.
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Companies that were faced with fraud
Percentage of respondents whose companies suffered economic crime from August 2008 to August 2009, in brackets the figure of 2007
misappropriation of assets – 64% (42%); bribery and corruption – 48% (34%); financial misstatements: data manipulation on balance sheets – 28% (18%); violation of intellectual property rights, including data theft – 23% (28%); financial misstatements: fraud using borrowed or share capital– 21% (5%); fraudulent market activities, related to price-fixing according to cartel agreements – 3% (16%).
Methods through which economic crimes have been exposed
corporate control: corporate security service – 25% (28%); internal auditing – 16% (20%); fraud risk assessment office, including preventative measures – 15% (1%);
corporate culture: anonymous communication with the management (hot lines) or official communication with the management regarding suspicious activity – 11% (5%); unofficial internal informant regarding suspicious activity – 11% (8%); unofficial external informant regarding suspicious activity – 7% (8%);
beyond corporate influence: investigation by law enforcement and regulating agencies – 3% (7%); casual discovery – 3% (5%); other – 0% (13%).
Measures taken against internal perpetrators
termination of employment – 57%; initiation of a civil or criminal case – 33%; warning – 23%; notice to appropriate regulation agencies – 20%; transfer to another post – 3%; no measures – 3%.
Financial losses due to economic crime in the last year
Percentage of respondents whose companies have suffered economic crime from August 2008 to August 2009
more than $1 million – 47%; less than $100,000 – 18%; from $100,000 to $500,000 – 13%; from $500,000 to $1 million – 11%; unknown – 11%.
Respondents: In Russia, PwC surveyed representatives of 86 companies, of these, 51%f– are private, 34% – are public, and 47% – are of the state sector. 47% percent of respondents work in companies with 1,000 or more employees, 36% of respondents – are top-managers and board members.
The survey conducted in July - September by Pricewaterhouse Coopers (PwC) of more than 3,000 companies from 55 countries showed that, on average, 30% of these companies became victim of at least one economic crime since the beginning of the crisis. Russia holds the first place in this rating at 71% (see graph), followed by Kenya (67%) and South Africa (62%). Meanwhile, Netherlands (15%), Hong Kong (13%) and Japan (9.6%) hold the best positions.
When PwC conducted its 2007 survey, 59% of Russian companies came across economic crime, but even then Russia placed first in the world ranking (Russia also led the way in 2005). However in 2003, when the study was conducted in Russia for the first time, no one admitted to being a victim of fraud, notes the co-author of the survey, Irina Novikova: “Today, we live in different times – companies are no longer afraid of talking about their problems.
As of November 1, there have been 4.2 million corporate entities registered in Russia. Meanwhile, about 400,000 economic crimes are recorded annually, says Pavel Sychev, deputy head of the Criminal Investigation Department of the Ministry of Interior. It is hard to say just how many companies become victims of crime – he continues: many of the corporate entities are not active, meanwhile others may file several cases simultaneously. Moreover, not all companies prefer to air their dirty laundry in public (see graph).
Forty-eight percent of respondents faced bribery and corruption, learned PwC. Misappropriation of assets proved to be the most serious problem (64%). This concept not only includes corporate raiding, but also embezzlement by the staff, explains Novikova. No more than 1% of all criminal cases have been initiated against raiders. According to Sychev, about 100 new cases have been initiated this year, 300 more have been reopened, last year that number was 350.
According to PwC, most of the crimes are not committed by the staff, but rather by “outside parties” (in 62% of all cases), this includes agents and brokers. Fifty-six percent of respondents say that the measures taken by officials and law enforcement agencies are “inadequate”, while 48% say they noticed criminal activity becoming more frequent. Hence the fears of falling victim to these crimes: 45% of companies believe that they will fall victim to theft of assets in the next year.
SMARTS (which was attacked by raiders) Director General, Andrey Girev, says the survey results are not far from the truth: “More than 50 crimes have been committed against us annually”. It is not often that a major economic crime is committed without the help of regulatory, law enforcement or judicial agencies, he notes. According to Novikova, PwC did not ask the respondents in which cases the crimes had been committed with help from officials. The business sector is being pushed into the field of illegal corruption and bureaucracy, believes the Chairman of Business-Solidarity, Yana Yakovleva (a case had been initiated against her, but it fell apart in court). Due to these factors, it is becoming harder and harder to make honest money, meanwhile, it becomes much easier if one decides to share profit with officials, she explains.
Many businessmen do not view breaking the law as something beneath them, says Sychev: they cash out transactions, evade taxes, smuggle, and do not repay debt. Thus, it is not surprising that they expect their partners, competitors, and even staff members to engage in illegal activities, he notes.
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Presidential villa has been described on the state procurement portal
Mikhail Smilyan
The presidential residence on Valdai Lake is equipped with the latest technology, states one of the documents published on the state procurement portal. The most unexpected places in the residence are equipped with stereo-acoustics, and radars with infrared sensors are used for the protection of the residence.
The Presidential Property Management Department announced the opening of a bidding process for the right to a state contract for the maintenance of the leisure residence, located on Lake Valdai. According to the bidding documents that have been published on the state procurement portal, this will be technical maintenance of buildings, including elevators, sewage system, audio-visual equipment, etc.
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The address that had been specified in the documents is: Novgorod Oblast, Valdai region, 15 km from the town of Valdai, 0.77 km to the south of the village Roshchino, between Lake Valdai and Uzhin. That is precisely the place where the presidential villa is located. It is often referred to as: “Valdai”, “Uzhin”, or “Dolgiye Borodi” (Long Beards). It is suggested that 77.5 million rubles be spent on the servicing of the facility.
State procurement portal told all about the VIP-villa
The technical documentation for the bidding, which had been announced on November 17, describes the facilities which make up the residence and what it is equipped with. It appears that in addition to being able to take a road to the residence, one could reach it by crossing a floating bridge across the lake in which a swimming pool had been installed. There are two restaurants located on the territory of the vacation retreat, one of which has a cinema hall with a projection screen, DVD-player, and satellite and cable TV. The residence also has a bowling and a billiard room – both of which are equipped with plasma display panels on the walls.
The guests of the residence are no strangers to gambling – a mini casino is located on the premises. According to the documents, one can relax in a guest house that has two living rooms – one plain and one with musical equipment – also, a TV-room, regular and VIP bedrooms, a library and a gazebo, equipped with all-weather acoustics, and includes a barbecue grill.
Security and sound – under a separate line
Sound is given high priority in the presidential house: stereo-acoustic systems have been installed in bathrooms and even in the wine cellar. Buildings that have several living rooms (“white”, “golden”, silver”) and bedrooms ( "pistachio", "turquoise") also have a swimming pool, two showers (“Charcot” and “Vichy”), suntan bed and a spa.
Special attention is given to security for which, besides a number of various locks, a light barrier and radars with infrared sensors that detect the direction of motion are used. Of course, no body fully relies on technology: a kilometer from the presidential residence there is a vacation house called “Sosnovy Bor” (Pine Forest), with no VIP-status. Normally, one could rent a boat or a catamaran and swim in the lake near the presidential villa. But, as the VIPs arrive – boats and catamarans are off-limits.
From the times of Khrushchev to today
During Soviet times the Valdai residence was intended to be a place of leisure for senior government officials. There had been rumors that this was Stalin’s villa, but according to archives, Stalin had never been there. Nikita Khrushchev and Nikolai Ryzhkov enjoyed spending time there. And, in the post-Soviet era, Boris Yeltsin loved to visit the residence.
The neighboring residential village of Dolgiye Borody, got its name during the times of Peter I. According to the legend, when the tsar taxed the peasants, who wore beards, this was the village where the dissatisfied bearded men hid from the tsar’s tax collectors. The residence occupies an area of about 930 hectares. The Valdaisky National Park is in its immediate proximity; lynx, wild boars, wolves, moose, bears, squirrels and raccoons can be found in its forests.
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Cultural value or will of the deceased?
Editorial
Modern technologies remove the centuries-old moral dilemma.
What to do when the last will of the deceased has been to destroy the fruits of his work, which have an undeniable cultural value? This has been the age-old moral dilemma, which resurfaced during last week's publication of Vladimir Nabokov's unfinished novel: “The Original of Laura”. In 1977, eight months before his death, Vladimir Nabokov wrote a will requesting to destroy the unfinished manuscript after his death. His widowed wife did not dare to carry out the wish of the deceased, and before her own death in 1991, wrote this wish in her will to her son. Dmitri Nabokov has no heirs to whom he could relegate the “uneasy” request of his parents, thus he was forced to resolve the puzzling moral dilemma on his own.
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Generally speaking, orders to destroy one’s own literary "child" are as frequent as their violations. For instance, the time when Virgil’s friends not only failed to comply with his order to burn “Aeneid”, but at the last moment prevented him from doing so himself. Another textbook example – Max Brod’s violation of Franz Kafka’s last wishes. Brod defended his decision with two arguments: his conviction in the importance of Kafka’s works for the present and future generations, and if Kafka had been firm and irrevocable about his instructions, he would have found a different executor. Interestingly, Dmitri Nabokov uses about the same arguments as did Brod. In particular, he cites the fact that Vladimir Nabokov mentioned “Laura” as being one of his most important works. And, according to Dmitri Nabokov, one would not refer in such a manner to a book that he wanted to destroy. That assertion is debatable. The dilemma of the future generations about the decision to sell the “Laura” manuscript at Christie’s auction is even more complicated, given the fact that the long history surrounding the publication of the novel looks like a carefully planned PR campaign.
Today, one could argue that the age-old moral dilemma does not have one unique solution. It appears that the problem lies in providing writers a convenient tool that guarantees their last wishes to be carried out; in other words, a tool that does not involve people who will inevitably be faced with any painful decisions. And modern technology makes this possible. Today, the majority of people doing intellectual work create their works without paper being their intermediary, so their heirs will hardly be able to sell anything at an auction. Modern writers are able to store their drafts in the file storage system, access to which is protected by a password. The same is true for e-mail correspondence (usually, an e-mail server provides an opportunity to store files). However, this option is prone to certain conflicts. After a person’s death, his private information remains on the Web. Do heirs have the right to this information? Some companies provision the transfer of passwords to the next of kin of the deceased, others deny heirs the right to access mailboxes and files of the deceased; instead, after some time, these files are automatically removed. Potential conflicts can be avoided by giving users a choice – for example, during registration, asking whether or not the user would like their heirs to have access to the information in case of their death, and asking to specify how long they would like the information to be stored in case of a long period of user inactivity. And finally, there is another way. Services specializing in carrying out the last wishes of the deceased on the Internet already exist; thy delete blogs, correspondence, and other specified information. Perhaps the development of such services, with reliable legal support, will lead to making a writer’s “no” truly mean “no”, rather than whatever their heirs may interpret it to be.
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