Confiscating Property: Does It Work?

06.20.2006

Corruption is spiraling out of control in Russia, and even President Putin has been recently calling out corruption as one of the more ‘serious obstacles’ to Russia’s development prospects.  Now, there is a new initiative on the horizon to deal with public office corruption – and that initiative is coming from the “inside.”  Today, Sergei Stepashin, the head of Russia’s Audit Chamber, called for confiscation of property obtained illegally by government officials:

“My colleagues in the Audit Chamber and I believe that it will be necessary to legally formalize such a measure as confiscation of ill-gotten assets and to apply this rule to corrupt civil servants,” Stepashin said.

Property confiscation is a serious debate in Russia – and many problems lurk beyond the surface.  As proponents of the measure mention, property confiscation is not uncommon in many countries around the world, if it is deemed that the property was obtained through criminal or illegal means. Ideally, who will question this?  If one is to violate property rights and obtain property through illegal or semi-legal means, it is natural to assume that the role of government is to enforce the rights of the original owners and prevent criminal activity.  But thats how things work in developed countries.

It is important to note that the Russian measure is reaching out beyond government officials, as it is applied to all instances of illegal capture of property.  So, clearly, it has implications for the whole society.  And, as far as the society goes, in the ideal world of property confiscation there exists a functional, independent judicial system, where decisions are carried out impartially based on the rule of law.  In Russia, however, such judicial system remains a distant dream, not a reality. 

As such, it would be reasonable to assume that if implemented, this property confiscation initiative could achieve the opposite and instead of curbing corruption, increase risk and uncertainty.  Opponents of the measure clearly say that all it can do is establish a process for confiscation of private property through corrupt judicial system by crooks.  In fact, the idea is not new — such a law was already in place before being abolished several years ago.  Now, its being brought back.  As Sergey Malinin notes in his Pravda.ru article, this measure is of extreme importance to companies doing business in Russia:

In other words, in case management of some company employs illegal methods for making money, not only their private property but also company assets may be confiscated. It is not ruled out that this innovation would have made the Yukos intrigues simpler.

And, as far as corrupt government officials go – most of them in Russia do not register property in their name anyway.  Instead, it is registered in the names of their relatives and even friends, which raises a lot of questions as to the effectiveness of this “threat of punishment” in curbing corruption.