Corruption – in the shadows

A few years ago I was asked to be a visiting speaker at a class in the American University of Central Asia, (AUCA). The class was part of a course on Business Studies and was titled Business Ethics.

At first I was reluctant to agree, because I thought they’ll want to hear about bribery and corruption … but talking to the lecturer that had set up the course, it was quite clear that he had a much wider, more inclusive view of what was meant by the phrase “Business Ethics” (… the need to act responsibly, fairly and justly in relation to customers (clients), employees, partners, the community, government, society as a whole – including the contribution that one could make to help the disadvantaged, and the environment … as well as to the investors and shareholders … that, although making a profit is important, the bottom line is not “all important” …) business so, in the end, I agreed.

As a theology student, many years ago, ethics was, in my opinion, perhaps the most important part the course.  The classes on Biblical texts, philosophy, the history of the church, comparative religion and so on, were all valuable in providing a background context … but it was in the classes on Ethics when the academic world intersected with the real world.

It is true that the questions of bribery and corruption did crop up, but the students obviously understood that these were just aspects of a much wider issue of behaving ethically – responsibly – in business.

As it happens, we hear a lot about bribery and corruption here in Kyrgyzstan.

Every year, since 1995, Transparency International publish a Corruption Perceptions Index and Kyrgyzstan and the country often appears near the bottom of the list: currently it is ranked as the 150th place (out of 177 countries and territories).

The President and other leading politicians often makes speeches about the need to combat Corruption and there are frequent reports of officials being arrested by the Anti-Corruption Agency complete with estimates as to how much each case has cost the country.   There are, for example, a number of high profile investigations currently underway against the mayors and former mayors of Bishkek and several other cities – not to mention the ongoing dispute over the Kumtor Gold Mine.

So you can imagine my surprise when I saw a news report on the BBC website about the “breathtaking” levels of corruption – not in Kyrgyzstan, nor in Central Asia; not in the developing world but in, of all places, Europe.

The report by the European Commission examines the level of corruption in all 28 European Union countries and states that corruption is so rife that it is costing Europe about 120 billion Euros a year … and in addition to draining resources is eroding trust in democracy.

According to opinion polls, something like three quarters of Europeans considered corruption as “widespread”, more than half that it was increasing and 40% of the businesses surveyed described corruption as an obstacle to doing business in Europe.  In Sweden, (which is ranked 3rd by Transparency International, and so counts as one of the world’s countries almost free of corruption), 18% of the people surveyed said that they knew someone who received a bribe …

To many people, the word “corruption” is synonymous with “bribery“, but although this is perhaps the most common, obvious and visible form of corruption, in fact it is only one aspect. Corruption can involve doing something, (or not doing something), with a view to private gain – especially using a public office to influence events in favour of one party in return for some advantage – not necessarily financial.  Corruption can take several forms, of which bribery is just one … such as:

• the public official (traffic policeman, tax inspector, etc.) pretending to find an infringement of some rule (which is not necessarily that difficult given the way some laws and regulations are phrased) and then accepting a payment (bribe) to overlook the offence; … or
• the public official expecting, (demanding), and accepting payment (bribe) for signing a particular document (license, permission, etc.), or to decide a question in favour of the person making the payment;
• the official using the power and prestige of their office to obtain favours, property etc. that would not otherwise be given to them - known here as “abuse of power”; … or
• the official who uses information gathered in the course of his employment for other purposes -such as “insider trading”; … or
• a person involved in a procurement decision to a relative, friend or close personal associate, perhaps at an inflated cost; or
• the use of one’s position to allocate a relative, friend or close personal associate to a position of power, authority or influence, regardless of their ability or other personal qualities  - otherwise known as nepotism;
• … and so on.

The article, and the others I have seen on the report, which seem to concentrate on four main points:

• the existence of corruption in Europe: this seemed to come as a bit of a surprise … or maybe that was just how it struck me – after all two thirds of those in the survey considered corruption as “widespread”.  I was, however, reminded of:
  • a speaker in a one of the early IBC meetings – the International Business Council which represents the business community here in Kyrgyzstan – who expressed his surprise at the way that foreign businessmen seemed “surprised” when they encountered corruption here … “corruption is all over the world,” he said, “you have it home you just don’t acknowledge it until a particular case hits the headlines”.
  • in a recent presentation organized by the British embassy to explain the recent changes in the legislation enacted by parliament in Westminster and how it could/should/would affect doing business here in Kyrgyzstan, how one of the Kyrgyz speakers launched into a lecture about corruption in the UK – and, in particular, Britain was harbouring the son of the previous President whose name was used in Kyrgyzstan as a synonym for and a  personification of corrupt practices.
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• the scale of the problem: the figures resulting from the survey were indeed a surprise  - 12% of the people interviewed across Europe claiming to know someone who had take a bribe indicates that there is clearly a problem – but the fact that the figure for Sweden was actually 18% which raises a lot more questions … and what about the 40%, more than 50% and 75% that crop up elsewhere in the report.
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  I note that in the UK achieved the best result across the whole of Europe with the fact that only five people out of the 1115 people involved in the survey, (less than 1%),  said that they had been expected to pay a bribe … even so, 64% said that they believed that corruption was widespread in the country.  Personally, I was surprised that even five randomly chosen people could be found … but I have been out of the country fro a long time and … well … I suppose that things could have changed in that time.
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  There is a general impression that corruption is rife in Kyrgyzstan.  An article on the subject in one of the local (government), newspapers, (Slovo Kyrgyzstana - the Word of Kyrgyzstan), ran under the headline “When was the last time you took a bribe?, … or paid one?”  It is often said that court decisions can be bought, that official posts (tax and customs posts, jobs in the traffic police … even the Governors of oblasts or government Ministers) are “sold” by those in authority.  It was allegations such as these, (amongst other things), which helped to bring about the two Revolutions which led to the downfall of the first two Presidents of the new country.
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• the difficulty of detection: because corruption is illegal, it is hidden and conducted in secret – in the shadows … which means that it can be difficult to detect and for us to be certain of the actual overall cost, or damage, that it represents.
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  Even though estimates for such figures exist, they are exactly that – estimates … but unlike statistics it is not possible to calculate “levels of significance” or “confidence limits” that enable us to feel any real conviction in their accuracy.In Europe, it is said there are not enough investigators or auditors employed to monitor and regulate, the situation – especially when it comes to the vast budgets of certain departments and programmes operated by the institutions of the European Commission.
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  At least here in Kyrgyzstan, we don’t seem to suffer from a lack of agencies or manpower in this respect … as there seems to be a wide variety involved in the investigation and monitoring of public bodies and finance … although one might ask questions about their efficiency and effectiveness … indeed, such questions are often raised.
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  To make matters worse, there is a semantic problem … as in, when does a mistake, (a procedural error or an error in judgement), become an example of corruption … where is the demarcation between fraud and corrupt practices … some of the examples quoted in the articles that I read could be classified differently.
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• .what to do about it: the report suggests that better controls codes of conduct and standards of integrity need to be in place – especially in regard to procurement practices and financing of political parties … in particular they recommended better enforcement of rules covering potential “conflicts of interest” and improving the variable quality of investigations and audit dealing with across the community – and a hint that additional resources needed to be allocated to support the work of the institutions that are trying to tackle the problem.
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  Some countries came in for special comment – especially Bulgaria, Italy and Romania – in particular with respect to judicial procedures and measures for dealing with organized crime.
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  One word that crops up several times is transparency – the more open everything is then the more difficult it will be for people to nefarious goings on secret.
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  Perhaps the one “one liner” that jumped off the screen was a quote from Cecilia Malmstroem, the Home Affairs Commissioner for the European Union: “The political commitment to really root out corruption seems to be missing.”
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  If we judge solely by the public statements made by politicians, then that’s not an issue here … every politician, it seems, has taken a public stance against and condemns wholeheartedly all forms of corruption … but I suppose there is a tendency to agree with Mandy Rice Davies and conclude “Well, they would say that wouldn’t they.”
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  There was a bit of a hiccup when a bill was presented to the parliament that would have abolished the statute of limitations for serious crimes – for example treason … but including corruption (although, to be honest, I haven’t seen the wording of the bill so I am not sure how they define corruption in this context).  Much hyped, there was a stunned shocked silence when it was announced that the bill had been voted down … followed by telltale winks and murmured comments like “well, of course … looking after themselves …”.  Fortunately, not everyone was silent and some of the deputies that had not been present during the session had had their vote recorded … against the bill when, they said, they were in favour.  They called for a re-vote which eventually was granted with the result that the bill sailed through with only a single figure of votes cast against it.  The cynic might well think that some people sensed the public outrage expressed in those winks and murmurs … another way of looking at it is to wonder at the scale of shenanigans represented in the original vote … but, the important thing is that the bill was passed.
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  (Incidentally, there is another issue – no that a precedent for a re-vote has been set … has this opened a floodgate for chaos so that we will see further examples in the future … one reason (and perhaps a valid one) a deputy gave for voting against a re-ballot.).
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  There is a saying, however, that “actions speak louder than words” and so, it seems to me, we have to look not at what people say, but what they do.  To be fair, there are a lot more examples of people in positions of authority being brought to book for inappropriate, improper or “corrupt” actions … with some going to court and resulting in serious penalties … so maybe things are improving in that respect.
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  Perhaps, on the other hand, this is missing the point.  The really crucial point is to ask what is perhaps the most powerful question of all: Why?  If there is a general agreement that corruption is both wrong and harmful … the why is it so prevalent?, so “breathtakingly widespread”?.
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  Apart from the most obvious answer: Greed – there is another, more cynical, one which is probably that, simply … it works.  You have, for example, a problem – well, a small “gift” … and it’s solved.
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  It strikes me that what is needed is not just a commitment from “on high” – what could be described as a “Top-Down” approach, but also “from below” – a “Bottom-Up” approach.  We need to convince the population as a whole that corruption is wrong, harmful … and in order to that, we need to demonstrate how, in fact, it does not work.  It may appear to resolve problems in the short term but builds up far greater problems for the future.

Tuesday saw the monthly open meeting of the International Business Council, (IBC).  This onbe was sponsored by the OSCE, (Organization for Security and Cooperation in Europe), office in Bishkek and was entitled “Fighting Corruption: Importance of Preventive Measures”.

As well as opening speeches from the Chairman of IBC, the Ambassador of the OSCE to Kyrgyzstan and the Vice Speaker of the Jogorku Kenesh, (the parliament), there was a short film about how the topic was being tackled in Russia and Georgia, presentations by the General Secretary of the Anticorruption Business Council, one of the deputies from the parliament and the President of the Association of Suppliers of Kyrgyzstan, followed by a general discussion.

It is common here for eyes to turn to the regional superpower, Russia, to see how they tackle questions.  Apart from the years of domination from Moscow under Russian rule as part of the Tsarist Empire and seventy years of the Soviet Union, Moscow exercises a lot of influence over events in the region, both directly and indirectly.  The attention given to Georgia was interesting, however.  Judging from what I see and hear, there is a sense of infatuation with Georgia amongst some of the “free marketers” here in Kyrgyzstan.  Georgia is often quoted as an example when it comes to discussing the visa regime.  In this case, however, there is an interesting comparison in that when the two countries were first featured in the Transparency International Corruption Perception Index, in 2003, they both scored about the same response, but in the latest Index, Georgia had improved its rating by almost 100 place: It holds the 68th place in the rankings, similar to that of Italy, whereas Kyrgyzstan still languishes at 16thh (out of 178).

There has been a lot of attention over the years to the question of corruption in Kyrgyzstan, and the OSCE has hosted a number of initiatives to raise and tackle the issue.  In a way that is not surprising.  The perception is that Corruption is a part of everyday life in Kyrgyzstan, from the “bribes” paid to traffic police to overlook speeding offences to kickbacks when tendering for a contract and payments to officials in order to obtain licenses and other permissions.

Corruption, of course, is about a lot more than just the payment of bribes.  It covers all sorts of abuses of power like nepotism and raising false invoices as well.

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Several of the speakers pointed out that there are two ways of approaching the problem: Prevention and Punishment.  The stress of the meeting was on prevention rather than punishment.  As the OSCE ambassador put it, “prevention is more effective”.  The deputy commented that “punishment isn’t working, there have been practically no prosecutions for corruption”, and he said that only two cases had been pursued in recent time.  Even a Police Colonel, (I think he said he said he was a colonel), said that no-one believes that there is a fight against corruption in Kyrgyzstan.

It’s a bit like old adage about medical treatment: “Prevention is better than cure”.  It is preferable to avoid the problem than to have to take remedial action once it has occurred.

There were several suggestions of measures that could be implemented in order to deter corrupt practice ranging from setting up an anti corruption council to changing the system of account keeping and utilizing electronic submission of documents for things like customs clearance, (removing the human factor, the “chelovechiskiy factor”, by limiting contact between officials and business), thereby making certain procedures more transparent and automatic.

Having said that, it was also noted that punishment does have a role to play.  Part of the rationale behind any form of punishment is to exact retribution, but there is also an element of deterrence.  The threat of punishment can deter people from doing something.  That, of course relies on the risk of being caught being more than just incidental, and the cost of the punishment outweighing the benefits accrued from the action in the first place.  And there are obviously some benefits … as the Deputy Minister for Economic Regulation pointed out, businessmen go along with corrupt practices because it has some advantages for them.

As was pointed out by some of the speakers, apparently, the chance of discovery is not that great, and it is not clear that the Mikado’s formula of making “the punishment fit the crime” is working, either.

One of the successes of the recently introduced hot line at just two of the customs points, (at Manas Airport and the main border crossing with Kazakhstan), where people can report incidents is that it has led to 5 cases being opened and 4 dismissals of customs officials.

So far, according to the OSCE ambassador, despite all the reports and discussion, there seems to have been little progress made.   He asked how could progress be achieved and suggested two particular influences that needed to be brought to bear: Leadership and Peer Pressure.

Several speakers mentioned the need to instill a sense of ethical responsibility … it needs to be generally accepted amongst the population as a whole that it corruption is unacceptable. This means more than just lip service paid to the general principle, but a sea change in attitudes.   It needs, for example, to be seen as unacceptable to give a bribe as it is to accept one.

Legislation, rules and regulations may well act as a deterrent, but their effectiveness in tackling the problem are reliant upon detection and punishment, and there is always the If, on the other hand, it is generally acknowledged that certain things are “beyond the pale” and this is internalized and becomes a principle of doing business and conducting one’s life, then it is less likely to be breached.  This, however, will take time and relies on upbringing and education.  That’s where leadership, example and peer pressure  come in.

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All through the meeting, however, one thought kept occurring to me … in the meantime the answer may well be to, as in the slogan for the anti-drugs campaign, “Just say No”.

If only it were that simple.

Yesterday, December 9th, was designated by the United Nations as “International Anti-corruption Day”, as long ago as in October, 2003, when it passed the United Nations Convention against Corruption. I don’t think it has been well advertised and, to be honest, I almost missed it this year.  The first I knew was when I saw a post on Twitter from one of the prominent younger Kyrgyz politicians, congratulating his “followers” on the occasion.  I have made sure to write it into next year’s diary already so that this doesn’t happen again. The convention was originally signed by 140 countries, (including Kyrgyzstan), and it has since been ratified by a total of 148 – which means that some others have also adopted it. – especially as some of the original signatories still haven’t, as far as I am aware, done so. It contains chapters with provisions on:

• the prevention of corruption, (with attention to the involvement of public and private sectors, non-government and community based organizations),
• the criminalization of corrupt practices, (requiring states to establish criminal and other offences to cover a wide range of acts of corruption, if these are not already crimes under domestic law, covering not only basic forms of corruption such as bribery and the embezzlement of public funds, but also trading in influence and the concealment and laundering of the proceeds of corruption.);
• International cooperation, (for example in the prevention, investigation, and the prosecution of offenders) and
• the recovery of assets, (which is, as the UN website points out, “a particularly important issue for many developing countries where high-level corruption has plundered the national wealth, and where resources are badly needed for reconstruction and the rehabilitation of societies under new governments”, such as the situation in which Kyrgyzstan finds itself following this year’s April Revolution) .

There are many definitions of the word “corruption”.  To many people, the word is synonymous with “bribery”, but in fact this is only one aspect of corruption.  Corruption can involves doing something, (or not doing something), with a view to private gain – especially using a public office to influence events in favour of one party in return for some advantage – not necessarily financial.

Corruption can take several forms, such as: the public official (traffic policeman, tax inspector, etc.) pretending to find an infringement of some rule (which is not necessarily that difficult given the way some laws and regulations are phrased) and then accepting a payment (bribe) to overlook the offence; or the public official expecting, (demanding), and accepting payment for signing a particular document (license, permission, etc.), or to decide a question in favour of the person making the payment; the official who uses information gathered in the course of his employment for other purposes; the official using the power and prestige of their office to obtain favours, property etc. that would not others be given to them … and so on.

There is a general impression that corruption is rife in Kyrgyzstan.  An article on the subject in one of the local (government), newspapers, (Slovo Kyrgyzstana – the Word of Kyrgyzstan), ran under the headline “When was the last time you took a bribe?, … or paid one?”  It has been said that court decisions can be bought, that official posts (tax and customs posts, even governors of oblasts) are “sold” by those in authority.  It was allegations such as these, amongst other things, which helped to bring the regime of President Akaev into disrepute and led to the Tulip Revolution which overthrew his government.

Every year since 1995, the organization Transparency International has conducted surveys to assess the extent of corruption around the world.  The Corruption Perception Index (CPI) is a benchmark which combines the results from a number of different surveys, (in 2010 there were 13 such components), to obtain a Index of how corrupt a country is perceived as being.  A score of 10 represents a “highly clean” society whereas a score of 0 indicates a highly corrupt one.  In some countries, it not possible to apply all the surveys and so a minimum of three is required for the country to be included in the annual survey’s published results.  For several years the Kyrgyz Republic were omitted from the table of rankings, but in 2005 the country occupied joint 130th place in the CPI with a “score” of 2.3, (on a basis of 5 surveys) along with Burundi, Cambodia, The Republic of Congo, Papua New Guinea and Venezuela.  Although this represented a slight improvement on the score obtained in 2004, (2.2), the country slipped from joint 122nd place in the overall table of rankings.

In this year’s survey Kyrgyzstan occupied the 164th place, out of 178 countries, (together with the Democratic Republic of Congo, Guinea and Venezuela), with an overall score of 2, (on a scale of 0 to 10).

This is almost the same as in previous years and shows that little seems to have changed over the years.

The report comments that: “With such level and volumes of corruption, Kyrgyzstan cannot progress, can make neither economic, nor scientific, nor technological, nor social breakthrough. Corruption, remaining as it is now, will continue eating up the resources that could be invested in the future of the country.”

There are other surveys and attempts to identify the scale of corruption in the country.  The Investment Round Table and other non-government organizations have organized various activities and surveys within the country.  A World Bank report issued in 2006 found that corruption had increased in the period 2002-2005.  About half the firms surveyed said that bribes were common.

Measures being undertaken to combat corruption – especially in public life.  Public officials – and members of their immediate family – have to report on the level and sources of their income.  Laws are in place under which officials who act inappropriately to their official duties can be prosecuted – and there have been a few high ranking cases such as that of Feliks Kulov, who was convicted and imprisoned for corruption but following the 2005 Tulip revolution, the conviction was quashed.

The general impression is, however, that low level employees are sometimes caught and prosecuted, whilst their high ranking superiors are rarely ever.  The local press does, however, sometimes reports cases being investigated and individuals either resigning or being dismissed.   Despite this, the emphasis seems to have been on establishing a legal framework rather than the implementation of measures to combat corruption.

In 2006 a new “coalition” against corruption was established by the government and a number of Associations have joined with it, committing themselves to providing information, running information and educational campaigns and other measures.

In its Mission Statement, the International Business Council, (IBC), states that it : “supports the ten principles of the UN Global Compact, setting core values in the areas of human rights, labour standards, environment and anti-corruption” and that it encourages members to embrace, support and enact these principles within their sphere of influence.

Yesterday, Roza Otunbaeva reaffirmed the government’s commitment to eliminating corruption in a video address to the participants of a round table discussion on monitoring the hot lines of government agencies.  She pointed out that  ”public supervisory boards” are being piloted in 10 government agencies, which will oversee work of agencies and how public funds are spent; that civil servants are now being hired only on a basis of open competition; that “lie detectors” are used in State Tax and Customs Services; some of the biggest companies – particularly in the energy sector – are being audited “for the first time”.

One morning in October 1987, I woke up at six o'clock as usual, had a bite of breakfast and got into my car to drive to school. As I emerged from the garage, I got a bit of a shock - there was absolute chaos everywhere I looked, high winds, branches of trees all over the place and rubbish blowing everywhere. As I drove to school meandering in and out to avoid the fallen trees lying across the road I wondered what on earth could have led to this mayhem. I turned on the radio in the car and heard for the first time reports about the hurricane force winds that had swept over Southern England and Northern France in what is now referred to as the Great Storm of 1987.

I had slept right through it.  Whilst others had apparently been cowering with fright at the howling winds, I had been safely tucked up in bed, sleeping like a baby.  I had even missed Michael Fish’s famous unfortunate “blunder”:

Earlier on today, apparently, a woman rang the BBC and said she heard there was a hurricane on the way; well, if you’re watching, don’t worry, there isn’t, but having said that, actually, the weather will become very windy, but most of the strong winds, incidentally, will be down over Spain and across into France.

He claims that he was actually referring to the situation in Florida, where a hurricane system had been building up but had yet to make a definitive appearance … which might sound a bit like trying to fudge the issue until you consider his next remarks, which are cut out of the replays and clips on you tube, warning viewers in the UK to “batten down the hatches”, saying it would be “very windy” across the south of England, but predicted that the storm would move further south along the English Channel and the British mainland would escape the worst effects.

This incident came to mind because last weekend the weather forecast for Bishkek had warned that after a few days of fine weather we could expect snow on Thursday.  As it turned out, they were correct.  Wednesday saw rainstorms and a distinct drop in temperature, and although the day started relatively clear on Thursday, by lunchtime we saw flurries of snow, with large flakes floating to the ground.  It didn’t settle, however, although it did turn bitterly cold – so much so, that I even went looking in the chest of drawers for my long johns.

All this made me wonder about how accurate the weather forecasts usually are.  Here, in Bishkek, they do seem to be quite accurate most of the time, but I have seen at least two surveys which seem to indicate that weather forecasts are, generally, not as accurate as you might think.  Forecasts for the next day turn out to be about be between 50 and 60% accurate – i.e. about half the time they got it wrong.  Longer range forecasts are even worse – five day forecasts coming in with an accuracy rate of about 25-35% of the time – i.e. they get it wrong about two days out of three.

Several different forecasting services may vary in their predictions – even thought they are all based on the same basic data.  Although there is one Russian service that seems to me to be quite “accurate”, I tend to look at the weather.com site, whilst others at the BBC or CNN forecasts.

In the case of longer range forecasts, the predictions get frequently updated as more information comes to light.  A seven day forecast may change some 7 or 8 times in the week, as it becomes a six day forecast, five day forecast, and so on.  As one meteorologist has put it: “We have no idea what’s going to happen [in the weather] beyond three days out.”

All this, of course, raises questions about what we mean by “accuracy”, but it helps to create a great admiration for those who managed to predict Thursday’s snow almost a week ahead of time.

Now over the past two weeks we have been facing an ever growing number of predictions, prophecies and forecasts as people watch the unfolding story of the election results.  They were supposed to be published by the beginning of the week but, at the time I am writing this, almost two weeks after the election, we still don’t have a set of definitive results – so we don’t know how many seats each party will have in the new parliament and who will occupy them – yet alone which parties will form a coalition to provide the government and who will become Prime Minister.  There have been calls for the Election Commission to try and speed things up, but they are taking things very seriously and in the light of the problems and furore, (I am tempted to say debacle), over the definition of the five percent threshold, I can’t say that I blame them.

What’s more, some parties are still campaigning for recounts – mainly by parties who didn’t make the threshold, or for the election results to be declared null and void – mainly by groups  opposed to the “nationalistic” Ata Jurt party that managed to garner the largest number of votes and contains many people associated with the former regime of President Bakiev, and even for the election to be re-run – which almost everyone else seems to be agree would be a total disaster.

Some of these calls are accompanied by protest meetings and rallies.  Those opposed to Ata Jurt have organized a number of rallies in several places around the country … including here in Bishkek, and supporters of Butun Kyrgyzstan are continuing their protests about the 5% threshold figures being recalculated, including two hunger strikes – although one has been called off.  So far, however, everything remains peaceful.

A more mundane rally was held by minibus drivers to complain over the the arbitrariness of Kazakh customs officials at the border – which can lead to several hours delay as inspections are carried out.

Whenever I asked asked for a prognosis about how the tourist season is going – or what will happen next year – I tend to reply: “Ask me at the end of the season and I will tell you how it was … but don’t ask me to predict something that depends on so many variables which are outside my control and that I cannot predict.”  That’s how I feel at the moment.  I can tell you what has happened – at least as far as I understand the situation, what is happening at the moment – at least as far as I am aware, but I am not going to try and predict what will happen.

After all, many of us were caught unawares by the events in April, May and June; by the successful conduct of a referendum and General election against what seemed to be overwhelming odds for problems disturbing the carefully laid plans; and not to mention by the eventual results of those two plebiscites.

As it happens, as well as trying to prophecy probable, likely, and less likely outcomes about how things will turn out, attention is also turning back to the events of the past.  Enquiries and court cases associated in the disturbances have started – although some of the trials have been put off to a later date, including that of Bakiev’s nephew.  Unfortunately, these are not without some controversy and recriminations being expressed.  Instead of using the retrospection to learn the lessons of history, in order to carve a better future, we we seem to be stuck in the “blame game” and seeking vengeance (in the guise of justice), which tends to lead to vendettas.  This has led to attacks on lawyers representing some of the defendants in various cases which has gained widespread attention in the western media covering the region – and hasn’t gone unnoticed here either.

Bishop: “I’m afraid you’ve got a bad egg, Mr Jones”; Curate: “Oh, no, my Lord, I assure you that parts of it are excellent!”

The cartoon, “True Humility“, by George du Maurier, originally published in the magazine Punch in 1895.

In terms of what is happening now, well … as usual, it’s like the curate’s egg, there are mixed messages – some good some bad.

One of the pieces of “collateral damage” as a result of the events in the South, for example, has been the number of people who have left the region – said to be around 40,000 – and this resulted in a lack of available labour for the gathering of the harvest – especially of cotton.

Then there have a number of announcements made during the week, however, that are not so impressive, not so positive – and indicate that there is still a long way to go – lot of work to be done – before we can say that the situation in the country is really improving.

The Global Competitive Report has identified “corruption” as being the greatest impediment to doing business in Kyrgyzstan, which helped to give the country it’s low ranking – 121st out of 139 countries.  I’m not sure when the survey was carried out, but it would be interesting to know if there has been any change since the introduction of a new government which has tried to implement a more open and transparent regime – or if the issue is still endemic.

(Oddly enough – this week also saw the conclusion of a Bribery case heard in the US – when an executive of what claims to be “the  world’s second-largest independent leaf tobacco merchant” was given three years probation and a $5,000 fine for payments he made to officials during years he spent as a manager in Kyrgyzstan.  It turns out that this was less than he might have expected, because he gave the authorities a lot of assistance in the case and had basically  faced a choice of “either you do this or lose your job”.  I wonder how many people can use that as a defence?)

Kyrgyzstan was ranked 159th amongst the 178 countries included in the “Press Freedom Index 2010″ compiled by  Reporters Sans Frontieres – and it is included in the top three “most dangerous places” in the world to earn your living as a journalist.

Another announcement, this time by the UN, has declared that about a third of the population is still below the “poverty line” in Kyrgyzstan.  I am not sure how they defined “poverty line”, (after all “poor” is a relative term and as Jesus remarks – the poor will always be with us), but it seems to me that the local definition of the “living wage” is extremely low – I am not sure how any family can be sustained on it.

Kyrgyzstan joins Cambodia in the bottom place in the rating of transparency in the national budget which has been published by the International Budget Partnership – whoever they are – in the third of its biennial surveys.  Having said that, there are signs of improvement! In the last survey, back in 2008, Kyrgyzstan also occupied last place, but have almost doubled their score from 8% to 15% – whatever that means!

Life carries on, however.  Roads are still being repaired.  Schools and universities are working and receiving equipment and furniture.  Special events were held to commemorate Breast Cancer Week. A major art exhibition featuring work by a number of young artists from throughout Central Asia has opened in the Historical Museum.  Planes are still operating and flying missions out of Manas Airport – when the airmen aren’t being entertained by visiting performers or participating in local community projects.  The Kyrgyz film “Light Thief” is up for awards in international film festivals.  Doctors are learning new skills to tackle diseases like raging diarrhea. Renovation and reconstruction of properties in the south is continuing – indeed one report refers to Djalal Abad undergoing a “construction boom”.  The water level in the Toktogul reservoir is still rising. A woman saves her daughter from an attack by a wolf.  Bishkek sees Kyrgyzstan’s first sex change operation – apparently a case of genuine hermaphroditism, where the patient had genital organs of both sexes rather than a case of “I was born into a body of the wrong sex” … and that is just a selection of news featured in the press during the week.

During the week I have been involved in a number of meetings to consider the likely prognosis for tourism next year, and what we can do to try and make sure that the industry recovers from the numerous setbacks it has suffered this year.

As I said, I try to avoid making predictions, prophecies or forecasts – but it doesn’t stop me wishing that I had the skill of those meteorologists who so accurately predicted Thursday’s snow.

Incidentally, for the record, it’s been pointed out to me that in last week’s postcard, I said that “the five parties that will be represented in the parliament gathered just over 50% of the overall vote” and this was an error.  Together the five parties actually got 66% of the votes the votes that were actually cast on election day, according to the figures published on the official website: http://cec.shailoo.gov.kg/i-election.asp?ElectionID=137&DistrictID=- and if we add the sixth party, Butun Kyrgyzstan, together they got 77% of the votes cast.

As an aside:Margaret Thatcher became Prime Minister of the UK in 1979 on 43.9% of the popular vote – 35.6 of the electorate – she got over 40% in the other two elections that she won - so Ata Jurt at 16% is less than half of that … however any government involving three parties will have at least 38% of the vote.

As a Brit, I am often asked for my “take” on various stories about the United Kingdom which appear in the news.  Most of the time it is a question about football, (such as: what do I think about Chelsea becoming League Champions), but in recent times the topic has been as varied as the extreme weather conditions, or the results of the general election.

I was surprised, therefore, that the MP’s expenses scandal in the UK actually raised little interest, here … just once twice I had to field wry comments about “politicians on the make” and “there’s corruption everywhere”.  Whenever the topic does come up I have to admit that there is corruption everywhere – even in the UK … although people here seem to think and act as if it is a specifically Kyrgyz phenomenon.

Consider a few names: Ivan Boevsky, John De Lorean, Enron, Nick Leeson, Lehman Brothers, Bernie Madoff, Robert Maxwell, John Poulson, … and that’s just a sample …

To be fair, although the Duchess apparently said that Andrew had told her to ask for 500,000 … she also said that he “never took a penny” and was “whiter than white” … so, it would seem that she knew what she was doing at the time.  Afterwards, she “came clean” straight away – apologized and said how she regretted her “lapse of judgment”.  As soon as the affair became public, that is … when all could see the video of the “transaction” over a bottle of red wine.  What a pity it had come to that.

Once again, I steeled myself and prepared to answer questions and deal with jibes about “perverse Albion”.  Once again, I was spared any embarrassment by the apparent lack of interest in the story.  The people here were too busy considering their own, Kyrgyz, scandals than worry about one woman, who admitted that her finances were in a poor state.

You see, the story broke at about the same time as the Telephonegate scandal here in Kyrgyzstan, with speculation about matters like four hundred thousand dollar bribes; phantom, non-existent, transfers of money into the bank accounts of leaders of the interim government; “appropriation” of a million dollars … and so on.  As a result of these various revelations that seem to come in a constant stream, and as a result there has been s lot of discussion and comment here about the prevalence of “corruption” in the country.

There are many definitions of the word “corruption”.  To many people, the word is synonymous with “bribery”, but in fact this is only one aspect of corruption.  Corruption can involves doing something, (or not doing something), with a view to private gain – especially using a public office to influence events in favour of one party in return for some advantage – not necessarily financial.

Corruption can take several forms, such as: the public official (traffic policeman, tax inspector, etc.) pretending to find an infringement of some rule (which is not necessarily that difficult given the way some laws and regulations are phrased) and then accepting a payment (bribe) to overlook the offence; or the public official expecting, (demanding), and accepting payment for signing a particular document (license, permission, etc.), or to decide a question in favour of the person making the payment; the official who uses information gathered in the course of his employment for other purposes; the official using the power and prestige of their office to obtain favours, property etc. that would not others be given to them … and so on.

There is a general impression that corruption is rife in Kyrgyzstan.  An article on the subject in one of the local (government), newspapers, (Slovo Kyrgyzstana – the Word of Kyrgyzstan), ran under the headline “When was the last time you took a bribe?, … or paid one?”  I found that quite interesting … not just the fact that corruption seems to be an accepted fact of life – but that someone was thinking of it as involving two people – the person who “took the bribe” … and the one who gave it.  Technically, here it is not only against the law to take brides, it’s also illegal to pay one.

It has been said that court decisions can be bought, that official posts (tax and customs posts, even governors of oblasts) are “sold” by those in authority.  It was allegations such as these, amongst other things, which helped to bring the regime of President Akaev into disrepute and led to the Tulip Revolution which overthrew his government and led to the Easter Revolution which overthrew his successor, Kurmanbek Bakiev.

My personal experience in this respect is, fortunately, fairly limited … perhaps because, basically, we don’t pay bribes.  If I am asked, or if it looks as if I am going to be asked about a bribe, I always explain this policy by saying that we don’t have a “Chorniy Kassa” – a “black account”.  We only have one set of accounts – official accounts.  Any payment has to be accounted for properly.  Therefore, I don’t have a “slush fund” that I can use to make such payments.  This is not the whole story, of course, apart from the fact it is  illegal – and basically just “wrong” – it also seems to me to be pretty stupid, because if you pay once, then you end up having to pay over and over again …  However, this “practical” excuse usually serves the desired purpose …

I think that, now, we are known for trying to do things “by the book”, and so people don’t even bother asking about the subject, or even hinting (there’s always a story … a hint … never a direct request or demand) … as they know what the answer will be.  Our staff know my attitude and so, even if they know that something could be “fixed” with an “official payment”, the most they will do is tell me that this is what a local person would do …

A particular problem always arises with the “grey questions” … the “thank you” for doing something quickly … a box of chocolates or bottle of Champagne for the minor official who moves the application from the bottom of a pile, where it will, otherwise, sit forever.  The Americans call these “facilitation payments” … and they are not deemed as serious as a payment to, for example, a senior official.  A local survey has also shown that most people here do not think of these as “corrupt”.

Actually, the problem is not always a question of whether corruption exists … rather there is a much greater psychological one … the fact that there is a perception that it exists, that it’s accepted as a fact of life, which is learned even in the early days of school.   I hear, for example, stories about schoolteachers and university lecturers who will give a good mark whether or not the student was in class … in return for a certain consideration.  Is it any wonder that employers always look twice at any diploma?

Anyway, each year since 1995, the organization Transparency International has conducted surveys to asses the extent of corruption around the world.  The Corruption Perception Index (CPI) is a benchmark which combines the results from 16 different surveys to obtain a Index of how corrupt a country is perceived as being.  A score of 10 represents a “highly clean” society whereas a score of 0 indicates a highly corrupt one.  In some countries, it not possible to apply all the surveys and so a minimum of three is required for the country to be included in the annual survey’s published results.  For several years the Kyrgyz Republic were omitted from the table of rankings, but in 2005 the country occupied joint 130th place in the CPI with a “score” of 2.3, (on a basis of 5 surveys) along with Burundi, Cambodia, The Republic of Congo, Papua New Guinea and Venezuela.  Although this represented a slight improvement on the score obtained in 2004, (2.2), the country slipped from joint 122nd place in the overall table of rankings.

There are other surveys and attempts to identify the scale of corruption in the country.  The Investment Round Table and other non-government organizations have organized various activities and surveys within the country.  A World Bank report issued in 2006 found that corruption had increased in the period 2002-2005.  About half the firms surveyed said that bribes were common.

Measures being undertaken to combat corruption – especially in public life.  Public officials – and members of their immediate family – have to report on the level and sources of their income.  Laws are in place under which officials who act inappropriately to their official duties can be prosecuted – but the World Bank survey reported that there had been no such prosecutions – although there have been some very high ranking cases and Feliks Kulov was convicted and imprisoned for corruption but when he became the Prime Minister, the conviction was quashed.  The local press sometimes reports cases being investigated and individuals either resigning or being dismissed.

The emphasis, however, seems to have been on establishing a legal framework rather than the implementation of measures to combat corruption.  However, in 2006 a new “coalition” against corruption was established by the government and a number of Associations have joined with it, committing themselves to providing information, running information and educational campaigns and other measures.

Its not clear how effective such measures are … but, judging by the general impression that people have here, and abroad, (as measured, for example, by the TI survey) … not much.

Then again, we have a new government – albeit a temporary, provisional, interim government.  If they can get their act together, then, who knows, it could be the start of something new … Kyrgyzstan has the chance to make a new start, a new beginning … but that will require more than a few training sessions, educational campaigns, and so on.  It needs a change in psychology, a change in society that makes any form of corrupt practice unacceptable … and that in turn relies on a general improvement in living standards.

Perhaps, because everyone’s attention has been concentrated elsewhere and there has been so little comment of discussion of the Duchess’ antics here in Kyrgyzstan, I haven’t had the chance to discover what the general opinion is about the deal that she was trying to broker.  I suspect, however, that people wouldn’t be that surprised … as I said, this sort of thing is taken for granted here.

The play “An Inspector Calls” was written by J. B. Priestly in 1954.  The story is set in Brumly, (a fictitious, industrial, town set in the North Midlands of England), in 1912 – just before the First World War.  The Birling family have gathered to celebrate an engagement.  The head of the household, Arthur Birling, is a prosperous businessman and factory owner – who is driven by the motivation to make money and acquire power.  His motto seems to be: “a man has to make his own way in life”.  In many ways he is a typical caricature of a “capitalist”.

Their celebrations are interrupted by the arrival of Inspector Goole – The inspector of the title.  He informs them about the death of a girl (Eva Smith) who apparently committed suicide – swallowing disinfectant and dying on the way to the infirmary.  After lots of questions, it appears that each of the characters, in their own way, was – more or less – responsible for the girl’s tragic death.

After the inspector leaves, however, they discover that he wasn’t a real inspector at all – and no-one has died.  The family are relieved … but then the phone rings: it is the police … a girl has committed suicide and an inspector is on the way to ask some questions.

Here in Kyrgyzstan, the word “inspector” usually summons up images of the Tax Inspector.

Benjamin Franklin is supposed to have said that “there are only two things certain in life: “death and taxes.”  Taxes are certainly important here in the Kyrgyz Republic – inescapable, really, although most people try to avoid paying them if they possibly can, legally, or otherwise.  It is said that a large number of businesses in the country operate in the “Shadow Economy”.

There is nothing wrong in trying to avoid tax – to minimize the amount paid.  The businessman is involved in making a profit and there are major ways of doing that … one is to increase income, and the other is to decrease expenses.  Tax is an expense – and it is legitimate to try and reduce the amount of tax paid … so long as the method employed is legal.  Tax avoidance is not a crime – Tax evasion is.

The difference is sometimes a “moot point” … a fine distinction.  Running two sets of accounts – one which you show to the taxman which doesn’t contain all your sales – is tax evasion, and illegal.  So is declaring that you pay your employees 1000 som, when in fact they receive 2000 – saving income tax and social fund payments.  On the other hand, acting as an agent – selling goods for someone else, and accepting payment on their behalf, so it is not your income … so that only the commission you receive is your income and so declared, even though it is a lot less than the cash which actually passes through your hands … is not.  Nor is employing someone, wherever possible, on a “patent”, (a document which involves a “one off” payment to the tax authorities, which a amounts to a lot less than if they were an employee and had to pay the full amount of income tax and social fund contributions).

Of course, to the government, (local or national), the tax revenues it receives are vital – and enable the authorities to fulfill their obligations as set out in their annual spending plans.  If we want the roads to be in good order; the hospitals, schools and police be available and responsive the borders to be guarded; the fire brigade and sanitary services to operate well and protect lives … and so on, then they have to be paid for.  As far as the authorities are concerned, they need to maximize their tax revenue – their income – in just the same way as the businessman tries to increase his income.

One powerful instrument available to the authorities to enable them to do this is the tax inspection.  In Kyrgyzstan, most businesses are inspected annually.  In fact, it is enshrined in law that the authorities can only conduct a full inspection once a year – unless one specially requested.  Why would one request an inspection?  Perhaps, for example, if a business was going to close, or was being sold, or reorganized in some way.  There are other inspections which take place during the course of the year – but these should be limited to specific issues.  For example: during the inspection of another company, a question has arisen and the inspector wants to verify the details on an invoice, or receipt.

Nobody likes an inspection … Your work is under the spotlight and you have to justify yourself and your actions.  In the case of a tax inspection in Kyrgyzstan, the spotlight can focus on microscopic details … and you never know where the inspector will chose to point it.  There is another factor: here the inspection can lead to the imposition of fines and penalties.   Although the inspector’s role is supposed to be to verify that everything is OK – that the taxpayer has made the correct declarations and paid all the tax which is due, there is another facet in that they all have a plan to “fulfill” – they have to find irregularities and then recover unpaid tax and impose the appropriate penalties.  The result is that the emphasis of their work is not on verifying that everything is in order – but to be to find additional funds for the budget.

I am told that, as in Roman times, many of them have “bought” their position … so there is also a need to recoup the money paid out.  If this is true, it results in a brand of corruption whereby inspectors “find” a technical, or real, infringement of the legislation and then offer to “forget it” or “overlook it” in return for an ex-gratia payment – a bribe (vzyatka in Russian – also known as “blat”).

Why do I keep saying things like “or so I am told”? – because my experience is fairly limited.  As a foreigner, people are reluctant to approach me directly … and so I cannot say for certain, from personal experience, that this is the case.  What I can say is that this is the general impression.

In another play – “The Government Inspector”, by Nikolai Gogol, one of the characters accuses another of “taking more than your due”.  He doesn’t accuse him outright of bribes – simply of demanding too much. Bribery was, apparently, so built into the system that the play is able to exploit the theme, exposing all to ridicule.  In fact, Gogol used the play to ridicule the extensive bureaucracy of the Russian government – with its inherent corruption, with the message: “If your face looks crooked – don’t blame the mirror!”, and, by all accounts, Tsar Nicholas I enjoyed the play immensely, despite the fact that, as he himself is said to have commented, the play ridiculed everyone, most of all, the Tsar himself.

To be fair – I suppose we have ask the question “when is a bribe not a bribe?” – that may sound like sophistry … but put it this way: “when is gift a bribe?”, and it makes a bit more sense.

The Americans have an anti-corruption law which prohibits American companies from paying bribed … but it allows the payment of “facilitatory payments”.  Basically, if a low level bureaucrat can old up some procedure but by giving them a small gift as expression of gratitude for speeding up the process … then this is permitted – whereas paying a high ranking official for granting certain privileges … which may, (or may not), be granted without the “gift” is not.

Clearly, paying someone to “overlook” an infringement of the legislation would not be countenanced – nor should it.

We have been fairly lucky in our dealings with the tax authorities.  I put that down to my accountant being scrupulous in all matters concerning our tax affairs.  She is VERY meticulous in this respect – no easy task given the labyrinthine system of taxes and tax legislation here.  For several years, this resulted in our being awarded “spravkas” – certifying that there had been no infringements at all.

One year, however, the inspector thought she had identified an infringement.  No amount of argument could convince her otherwise.  We said that if she insisted on stating that we had made a mistake in her report then we would appeal.  She “stuck to her guns” and so we appealed.  We won the appeal – from the judgment it appears that there was a specific instruction that upheld our argument … but to this day we have not been able to find a copy.

Then, we received an inspector that seemed determined to find fault – even if there was none.  He made me feel like Arthur Birling in Priestly’s  play.  I was the nasty capitalist – intent only on making money and willing to stop at nothing in the course of doing so.  He was the equivalent of Inspector Goole – here to expose my guilt.

His case was technical and rested on one phrase in the Tax code.  Like the previous inspector – we could present no argument which could persuade him otherwise.  Not the fact that the Tax Code includes procedures which we have meticulously followed …  nor that it limited his remit to just the period since the last inspection.  To be fair to him … IF we considered only the one phrase on which case rested, then he had an argument – but if we considered the Tax Code as a whole, then he didn’t.

He, too, “stuck to his guns” and wrote in his report that we owed nearly two million soms in taxes, (about USD40000).  We appealed and lost the first stage of the process – where the tax authority, itself, considers the appeal.  So, we went to court.

The court decided in our favour.  The tax authority appealed, and once again, we won the argument in court.

To make matters worse, however, we argued that the inspector had infringed the proscribed procedures in several respects:  He should only have considered one year – since the last inspection – but decided to go back, instead, to the beginning of the company’s operation – beyond the six years of tax liability;  He appeared to have “invented” a new procedure which was not proscribed in the legislation; Documents were not properly formulated – the necessary stamp certifying an official signature was missing; The correct procedures were not followed – documents were issued without consultation; Papers presented to the court, which should also have been sent to us – were different to the ones which we actually received by registered post – even though they bore the same reference number, date and signature; There was an attempt to order a re-inspection of the previous year’s tax reports – including the inspector re-inspecting his own work.  And there was more …

I am not sure why this happened … Was the inspector looking for a “gift” in exchange for overlooking the alleged “infringement”?  (If so, he never asked – and we never offered.)  Was he simply trying to fulfill “the plan” – to find infringements and so elicit supplementary payments to the budget?, (and failing to find one, he simply became over zealous and fixated on one phrase of the Tax Code).  Had he really found an inconsistency in the tax legislation which needs to be addressed – and was sticking to a point of principle?  (In which case let the legislators address the issue – but in the meantime, we have fulfilled our obligations under the law as it stands at present.)

Even if I am tempted to think otherwise … let me be generous and assume, for the moment, that it was the latter.

I wish I could say that it was now all over – and could relax once more.  Although we won the court case and have a judgment in our favour, I have to note that, technically, the authorities have three years to consider an appeal to the Supreme Court.  Also, just as in both plays the final curtain down with the expectation of an impending visit by yet another inspector … after nine months of dispute, we are now anticipating our next “annual inspection” which falls due in a very short time.

What will that bring … ?

In fact we had more problems … but worse still, this case wasn’t over yet.  The authorities decided to appeal once more to the Supreme Court, who declined to reach a decision and, instead, they sent the case back to the lower courts.  So we had to go through the whole system once again.  We won the case again in both of the lower courts and finally ended up back in the Supreme Court, but this time before a different set of judges, who grasped the nettle and eventually decided in our favour.

Although I could have done without the protracted stress and worry that the whole process entailed, I did get one positive feeling out of the experience … the legal system did work.  I know that it is easy for me to say that because we eventually the case, and I wonder if I would have felt so positive if we had lost it.  To be fair, however, it seemed to me that the judges were meticulously fair and reasonable and they were very thorough in considering the details of the case.

So, I suppose we have to agree with Shakespeare that: “All’s well that ends well” …  mind you, I could have done the two years of stress and uncertainty!