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By: Gigaom
Are kickbacks just the price of doing business in Russia?
The extent of corruption in Russia's technology industry has been revealed by a survey which says as much as 60 percent of payments made are bribes. Is that a stark warning for startups wanting to tap into a lucrative market -- or simply the cost of operating?

It’s fair to say that Russia has a reputation for not just bending the rules, but breaking them. Campaigning group Transparency International says the country’s levels of corruption are “endemic”. One Russian think tank estimates that bribes account for as much as 20 percent of the nation’s GDP.

Today, that feeling of under the table deals is most visible in politics, as ordinary people gather in the streets to protest against the unbreakable grip that Vladimir Putin seems to hold over the nation’s upper echelons.

But it’s not just politics. This report from the Moscow’s Novaya Gazeta outlines the extent of corruption in the technology sector — and while it’s a couple of weeks old, it makes stunning reading nonetheless.

“Kickbacks in the IT sector this year amounted to about 60 percent of the total,” it says, before pointing out that this is actually an improvement on 2010 — when corruption was estimated at some five to eight percent worse.

Cynics could point out that NG, an opposition weekly that is joint-owned by former president Mikhail Gorbachev and billionaire oligarch Alexander Lebedev, has an axe to grind here. It’s well known for its prickly relationship with the authorities: over the years it has published many allegations of fraud and embezzlement against senior Russian figures — a campaigning stance that has led to four of its journalists being murdered in the last 10 years.

That criticism might hold water if it wasn’t for the source of the numbers: the 60 percent figure actually comes from the head of the trade body that represents Russia’s technology industry.

In conversation with the newspaper, it was Olga Uskova — who heads NAIR-IT, the National Association of Innovation and Development of Information Technology — who said that her organization had come up with numbers after surveying 2,500 industry workers across the country.

And what does that 60 percent represent, exactly? Well, last year alone, Russian government spending on IT was around 300 billion roubles ($9.3 billion). Given that Transparency International’s 2011 study of public-sector corruption put Russia as the 36th worst country on earth, it’s not hard to see that tech industry bribery is a multibillion dollar industry.

Of course, technology is far from being the only area of life or business in which corruption can raise its head — but given that many startups and investors are now starting to eye the fast-growing Russian market, it’s a report that is worth considering carefully. And, so far at least, there has been little push back from the powers that be.

“If those agencies believe that they are above board and do not agree with the assessment, let them publicly prove it,” Uskova told Novaya Gazeta. “Otherwise, let’s start checking.”

Photograph used under Creative Commons license courtesy of World Economic Forum

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