Publication: Monitor Volume: 7 Issue: 124

This dispute between Deputy Prime Minister Aleksei Kudrin and State Duma Deputy Yegor Ligachev over the size and cost of the state bureaucracy came on the heels of fresh revelations about bureaucratic corruption, this time in the Railways Ministry (MPS). The Audit Chamber, the state agency set up by the parliament to monitor the use of federal funds, has discovered that the MPS last year allocated 778.5 million rubles (some US$27.8 million) to finance its central apparatus. Out of the total spent on the upkeep of the MPS’s central apparatus, 45.9 million rubles (some US$1.63 million) went to refurbish its offices, 58.1 million rubles (US$2.075 million) went toward the salaries of ministry officials, while another 260.8 million rubles (some US$9.31 million) were allocated to meet various needs of top ministry officials, including the purchase of apartments. Three deputy railway ministers–Aleksandr Kasyanov Vladimir Ilin and Sergei Grishin–received apartments costing US$886,700, US$633,300 and US$461,200, respectively, while Pyotr Korotkevich, head of the MPS’s finance department, got an apartment costing US$485,600. The auditors reported that when they queried MPS chief Nikolai Aksenenko about these expenditures, he justified them on the grounds that the ministry had been forced to recruit personnel from the regions and thus had to entice them with “attractive housing provisions.” The Audit Chamber also found that the MPS had spent US$1.11 million to purchase thirteen Audi A8 automobiles (Vedomosti, June 27).

The Audit Chamber’s probe of the MPS would appear to be part of the Kremlin’s drive to reform the country’s “natural monopolies,” including Gazprom, United Energy Systems (UES) and the MPS, all of which in many ways resemble states within the state. The MPS charges two different shipping tariff rates, one for domestic goods, the other for imported goods or those bound for export. It earns 60 percent of its revenues from the latter. Last year, Putin alleged in Aksenenko’s presence that the import-export tariff was being used by “swindlers,” and said that he was in favor of a single tariff rate for all railway freight. That unified rate was scheduled to come into effect on July 1 of this year, but has apparently been postponed due to disagreements between the MPS, the Ministry of Economic Development and Trade and the Antimonopoly Ministry over how the MPS will be compensated for the expected huge losses in its revenues (Vedomosti, June 27;, December 9, 2000).

Meanwhile, the Kremlin may be looking for a pretext either to oust Aksenenko, who was reportedly a key member of former President Boris Yeltsin’s inner circle, or to strip him of his powers. The Stringer website reported last week that the MPS would be restructured in such a way that a private company, Russian Railways, would take over all of the railway system’s infrastructure, leaving the ministry with “purely bureaucratic functions.” It was suggested that while Aksenenko had hoped to become the head of Russian Railways, Aleksandr Voloshin would be transferred from his current job as Kremlin chief of staff to run the new company (, June 23). Whatever the case, the leak of the Audit Chamber’s report on MPS corruption is reminiscent of the leaks detailing corruption by Gazprom’s top management published in the weeks leading up to Rem Vyakhirev’s removal as Gazprom’s CEO (see the Monitor, May 23).