Fishing for minnows in muddy water
We receive many appeals related to the issue of management decision-making in the Ministry of Defense, including on Oboronservis. After Serdyukov’s resignation, major commanders and specialists came to the Public Chamber with a request to bring to the public information that it was the former defense minister who instigated the corruption component, removing the professionals and placing responsible amateurs who made decisions under his pressure to responsible posts.
Probably, it is time to stop catching minnows in this muddy water. It is necessary to see who is at the helm, how professionally trained and controlled these people are by law enforcement agencies, state leaders and public figures. The issue of control is secondary. After the decision has been made and the money has gone, we can only suspend this flywheel, but the matter itself is already twisted and after a year or two we study the materials of the Accounts Chamber, the Prosecutor General’s Office, the Chief Military Prosecutor’s Office and are outraged: billions have been stolen.
The main question is who makes the decisions. How responsible are these people, to what degree can we trust them, do they really approach the work like a state?
The defense industrial complex is our armor, the shield of the country. And the corruption eating away at him strikes a blow not only on the economy, but also on national security.
Chairman of the Commission of the Public Chamber on the problems of national security and socio-economic conditions of life of military personnel, members of their families and veterans
Increasing existing risks
The practice of control and supervisory activities of the Rosoboronzakaz testifies to a sufficiently large number of violations that are permitted by the subjects of the state defense order, as well as to high corruption risks in organizations that participate in this process.
This is due to a number of factors that significantly increase existing risks. These include unreasonable decisions on the one hundred percent advance of the state defense order.
The risk of a corruption component in the field of state defense procurement also increases the lack of clear rules for the use of certain approaches in the pricing of products. For example, the price of work for the manufacture of submarines, ships, for carrying out long-term development work was determined practically by an expert.
Another example is the violation by the subjects of the state defense order of the requirements established by regulatory acts that govern the use of federal property. Identified cases of delivery of products for the state defense order on the documents that were issued in violation of scientific and technical documentation.
In addition, in the performance of government contracts, enterprises used spare parts, components, obtained as a result of the execution of other contracts - on the disposal of weapons and military equipment.
The main, in our opinion, direction of the fight against corruption in the field of the state defense order, as well as creating conditions for reducing corruption risks is the adoption of the necessary legal acts in this area.
Rosoboronzakaz takes part in this work. The Deputy Prime Minister of the Russian Federation, Dmitry Olegovich Rogozin, approved a schedule for the preparation of government regulations required for the implementation of Federal Law 275.
The Ministry of Economic Development has also developed a draft plan of measures for the implementation of the federal law of April 5 2012 No. 44 ФЗ - on the contract system in the field of procurement of goods, works and services for state and municipal needs. We believe that our participation and the implementation of these activities will increase the substantial efficiency of budget spending and reduce corruption risks.
Head of the Federal Service for Defense Order
Subsidies for dependents
During inspections conducted in the fourth quarter of 2012 and in the first quarter of 2013, we focused on the enforcement of the 223 law and special decrees of the government of the Russian Federation by joint-stock companies of the military-industrial complex. Procurement of defense enterprises does not fully meet the objectives of this law in terms of informational openness, transparency, choice of supplier, contractor, expansion of the possibility of participation of legal entities and individuals in procurement, and also contain unclear conditions, managed by the procurement organizers. This creates the likelihood of corruption risks when spending money on the purchase of goods, works and services, which then fall into the price of manufactured products of defense enterprises.
Monitoring of information on procurement carried out by joint-stock companies of the military-industrial complex, located on their own websites, showed that not all customers, building a system of procurement, comply with the principles established by 223 law. Joint stock companies violate the principle of transparency of procurement. Every third joint-stock company OPK does not publish procurement plans in open access. Many have posted on the site procurement plans contain an insufficient amount of information, which, naturally, reduces the competitive environment.
Every second joint-stock company OPK does not post information on entering into direct contracts with sole suppliers and contractors, and does not publish monthly procurement reports.
Procurement of joint-stock companies of the military-industrial complex does not meet the principle of expanding the competitive possibilities of the participation of businesses and individuals in procurement.
A serious problem is the placement of tender documentation. In some cases, it is not available for a potential bidder. Either access to it is complicated, or it is printed in such a way that it is practically impossible to download and submit documents to the competition in a timely manner.
They bear the risks of corruption and reduce the efficiency of the military-industrial complex and the following positions. First of all, the lack of project management at many enterprises. Only three percent of enterprises performing the state defense order, carry out their activities in accordance with the project. Our checks show: where there are project management, where the procedure is transparent, there is an effect. Such an enterprise works successfully, product quality and financial situation are good. There is no project management, as a rule, dependent enterprises. And for some reason, most of these enterprises receive funds from the state budget - as subsidies, support, and investments.
Recently it has become a practice in order to optimize production to dispose of allegedly non-core assets. They are sold at fairly low prices. We saw this, in particular, on the example of Oboronservis.
A serious problem is the targeting of subsidies and government support. Now, as a rule, this is done through holding companies. Not all enterprises included in the holding receive this support in accordance with their tasks. Enterprises where production should produce products today, for some reason, do not receive government support. And those whose products will be needed in two or three years, get full.
We also disclose such cases when holdings form their income base by entering into contracts with their member enterprises. Suppose to develop a plan for a conference on quality issues. Price of work - 300 million rubles. The result is 25 printed pages. Is this work worth the money? Does the holding company need to do exactly this work?
These are, in our opinion, today the main pain points in the question that we are discussing today.
Chief of Inspectorate of the Accounts Chamber
Do not create conditions for rollbacks
Speaking about the composition of measures that are focused on the elimination of the prerequisites of corruption of officials, employees of enterprises, the following should be noted. The agency is aggressively pursuing the formation of pricing methodologies for the main products of the rocket and space industry. This applies primarily to the rocket-space, combat missile technology.
In addition, the agency seeks to expand the list of sole performers in order to get away from competitive procedures and not create conditions for kickbacks and other negative aspects related to corruption of officials or persons offering their services for the implementation of the order.
Regardless of the corporatization of enterprises in the industry, the agency seeks to maintain a certain scheme of control measures in these societies, using the office of the board of directors, audit commissions, and other possibilities. We try to ensure that key issues of the economy of enterprises, regardless of their legal form, remain in the control of the agency.
One of the measures contributing to the elimination of the corruption component is to increase the independence of the working competitive commissions. Their number has been reduced, and the specialists included in the commissions are selected according to the principle of minimal dependence on enterprises capable of participating in tenders.
As for corporate governance, measures are primarily aimed at preserving or expanding the participation of federal structures in corporate governance bodies. We are trying to ensure that in every joint-stock company on the board of directors there are representatives of the Federal Space Agency and the Federal Property Management Agency.
Particular attention is paid to the selection of enterprises auditors to assess their financial and economic component. As a rule, these procedures have a competitive basis, but we strive to attract the most conscientious, responsible, prepared and economically independent organizations for the audit.
An important direction is to identify the factors that determine the interest of certain managers in the execution of transactions, and accordingly - careful attention to the approval of transactions proposed by the management of enterprises. Together with the Federal Property Management Agency, we are interested in the transparency of the transaction, the clarity of its ultimate goal and the system of interaction with banks. The main thing is that in this chain there should not be persons who have a certain affiliation or interest in a transaction that is not related to the interests of the enterprise.
The implementation of these measures will significantly limit the possibility of corruption factors, thereby increasing the efficiency of the space industry as an element of the defense industry.
Deputy Head of the Federal Space Agency
Eliminating white spots
Corruption potential in the system of placing the state defense order is significantly lower than in the civilian sector.
Although, of course, the defense industry organization is not completely free from this vice. Our enterprises do not work in a vacuum, there is also a management that is not good at all, which uses white spots in its legal field.
Creating appropriate regulatory, organizational, institutional and financial-economic conditions will allow minimizing corruption factors and risks.
Taking into account the fact that the number of public administration objects has been reduced by more than an order of magnitude, the transition to financing state defense orders and investment projects is now underway through the head organizations of integrated structures. Conditions have been created when we can distribute flows not in bulk to all enterprises existing in the defense industry, but through state corporations and holdings.
The head organizations of the integrated structures become the head performers of the main part of the orders of the Ministry of Defense. By their status, they are state-owned companies, therefore, they are subject to all anti-corruption measures, including those provided for by 223-m federal law. There is work to do.
The most resource-intensive part in the development of the defense industry is implemented through the activities of the Federal Target Program for the Development of the Military-Industrial Complex until 2020, a set of measures for the technical re-equipment of military industries, formed as a strictly targeted document. These activities are planned in the structure of armaments with indication of specific objects of capital investments, the timing of their commissioning, volumes and financing structure, which allows to neutralize the corruption potential existing in the mechanism of placing state orders.
A set of measures to improve corporate governance is being implemented. Independent directors are nominated and elected to the boards of directors of state-owned companies, including parent organizations, integrated defense industry structures. When boards of directors are formed committees on strategic planning, personnel, audit, which carry out a detailed study of issues submitted to meetings of boards of directors. These are large transactions, the sale of non-core assets, and so on.
The range of issues considered by boards of directors has been significantly expanded. They approve the development strategy of a corporation or a joint-stock company, medium-term programs of activity, programs of innovative development, restructuring and optimization of assets. Thus, the regulatory role and control of the activities of the executive bodies of state-owned companies are significantly enhanced.
The most important direction in improving the management of defense organizations is the transformation of holdings created with the participation of the state into concerns, that is, effectively managed industrial companies of multi-divisional type.
In order to exclude a conflict of interest in concluding contracts in accordance with the current legislation, an order was given to industry departments of the Ministry of Industry and accordingly translated into industry holdings and subordinate enterprises to ensure that state companies develop and approve internal documents and regulations on keeping a register of persons obliged to provide information on the presence of interest in deals, establishing disciplinary responsibility for failure to provide information about the presence of a conflict of interest, as well as to ensure the placement of these documents on the interdepartmental portal on state property management, in the personal offices of enterprises and joint stock companies and the provision of documents to the Ministry of Industry and Trade.
As part of corporate events with the participation of representatives of the interests of the Russian Federation delegated by the Ministry of Industry and Trade, an order was given to approve in joint-stock companies, where the state has a blocking package, an internal document on keeping the register of persons obliged to provide information on the existence of an interest in making transactions, on establishing disciplinary responsibility for failure to provide such information. Currently, enterprises have approved internal documents, regulations on the maintenance of the register of persons obliged to provide such information.
There are a number of measures that are actively implemented in enterprises and are directly related to the remuneration of enterprise management for the implementation of economic measures.
In accordance with the assignment of the President of the Russian Federation No. PR-113 of January 17 of 2013, the Ministry of Industry and Trade gave instructions for the provision of property information by the heads of state corporations and state-owned companies, as well as joint-stock companies where the state has a blocking package , on income, property and property obligations of their spouses, spouse and minor children. In addition, the ministry is in coordination with the relevant directive of the Federal Property Management Agency.
Features of the defense industry, the ongoing structural reform, improving the quality of corporate governance in the defense industry, as well as implemented system-wide anti-corruption measures generally improve management and control efficiency and, thus, reduce the overall level of corruption.
As for the individual revealed negative facts, they require specific and professional consideration both from the point of view of our supervisory authorities - this is the Accounts Chamber, Rosoboronzakaz, and from the point of view of law enforcement agencies.
Advisor to the Minister of Industry and Trade
The Federal Tariff Service often faces the fact that enterprises (both individual and holding companies) do not have specific, detailed cost reduction programs - with personal responsibility, consolidation by product type. If there are no such documents or they are of a slogan nature, then, as a rule, there is no systemic pricing in the enterprise.
A typical situation - the company can not answer why it costs so much. And government customers are forced into this discussion. And that is the situation that has all the signs of corruption, when they agree on "concepts". This is totally wrong.
Another important circumstance is the price of the product and the price of the contract. In the contract may be one hundred, ten, twenty, thirty products and may be the so-called binding. Here we looked at a number of contracts for the Almaz-Antey air defense concern. The cost of basic products for which we register the price is 10 percent of the amount, everything else - fire extinguishers, ladders, UAZ, and so on. Why it costs so much, no one can answer. And if you take similar products in the previous order, there are other figures. This is a huge field for combating corruption, to which we must pay serious attention.
In my opinion, if Roskomos and Rosatom are well advanced in these matters, as they say, they “graze” their enterprises, then the Ministry of Industry and Trade simply does not physically have such forces. The efficiency enhancement functionality needs to be driven into the functionality of management companies and holdings. And holdings should be held responsible for this - again, not on the basis of certain slogans and beautiful reports, and this should be written down in job descriptions, assigned to specific managers and digitized.
In the fuel and energy sector, this practice works. Managers bear professional responsibility and receive a good salary, high bonuses. For targets, they meet the head and pocket.