Russia to ‘get tough’ on corruption, capital flight

Russian authorities will crack down on corruption and the flight of capital from the country, President Vladimir Putin said yesterday.

In his first state-of-the-nation address since he started a six-year third term in May, Putin drew applause from his high-ranking audience when he said officials should be restricted by law from opening foreign bank accounts and owning securities abroad.

“Don’t applaud too soon – maybe you won’t like it,” he said, adding that the measures would apply to senior Kremlin, Government and parliamentary officials.

Putin also said that businesses should not evade Russia’s laws by operating through offshore tax havens. Capital has been leaving Russia at a rate of $80 billion per year.

Nine out of 10 major deals completed by Russian companies, including those in which the state has a stake, were not subject to Russian regulation, Putin said.

“We need a whole system of measures to ‘de-offshore’ our economy,” Putin said, without announcing specific details. As Putin spoke, state oil major Rosneft announced it had signed a deal to buy a one-half stake in oil firm TNK-BP from a quartet of Soviet-born tycoons for $28 billion in cash.

The transaction would complete a record-breaking $55 billion takeover of TNK-BP, Russia’s third-largest oil firm, which is domiciled in the British Virgin Islands.

Corruption has hobbled Russia’s post-Soviet resurgence and shown few signs of easing since Putin came to power.