Can’t live without kickbacks? Let’s formalize them!

The President officially admits the failure of his initiatives to reduce the spread of corruption in the country. Corporate CEOs avoid commenting on the issue. The public accepts the inevitability of the social pandemic.

Suddenly, there is a PPP scheme on the horizon.

Public-Private Partnership (PPP) is a type of venture, which is funded and operated through a partnership of government and one or more private sector companies. The public sector can be represented at the national, regional or local levels.

The question is whether this form of commercial enterprise, still new and unexplored in Russia, can become instrumental in reducing the level of corruption among public officials who are the main ‘predators’ seeking to appropriate public money.

I do think it is possible. Today, a PPP in Russia is a partnership initiated by a public sector authority lacking the budget to implement a project. At the same time such authority is ready to take on responsibilities and liabilities, including financial investment and risks. Generally, such PPPs are 50/50 partnerships.

On the other hand, if we look at this differently and provided the law containing the appropriate definition of PPP, PPPs can be initiated by the private sector, while the public sector is invited with lesser financial investments or none at all, on the condition that the public sector partner will be responsible for providing full administrative (“red tape”) and legislative (“protection from bribes and kickbacks”) support for the given project. If the project is successful, the public sector partner will be receiving dividends for a pre-agreed period in accordance with the contract.

Such investment scheme could make the necessity of bribes and kickbacks practically extinct. So why don’t we try to modernize and legalise the PPP to ensure it both supports the private sector and reduces the level of public sector corruption in Russia.