Institute for War and Peace Reporting | Giving Voice, Driving Change

Kazakstan: Corruption “Boosts Economy”

Survey suggests that many businessmen see bribes as an essential part of their day-to-day activities.
By Andrei Chebotaryov

Corruption now appears to be so rife in Kazakstan that the business community views it as a useful way to boost the economy.


A recent survey by the polling organisation Komkon-2 suggests that two out of three businessmen questioned said that graft was necessary for transitional countries moving from a state-controlled to market economy.


Kazak businessmen - who have never known anything but a bureaucratic system full of never-ending hurdles - now consider corruption as the only way to keep their companies operating.


“If you follow all official rules, you will never be able to get anything done,” said one young Almaty entrepreneur who gave his name as Nikolai Nazarov.


“It took almost five months to open my first shop. When the time came to set up a second, I knew exactly what to do – make a deal with an official to smooth the process over.”


Small businessman Talgat Arynbaev told IWPR that bribes help him and his colleagues to solve problems quickly.


Arynbaev is required to complete as many as ten documents a month, from tax declarations to rent agreements. This can involve standing in line for days on end to get just one of the necessary signatures.


As a result, work can come to a standstill and serious losses are inevitable - which is why many businessmen prefer to grease the palm of the relevant officials to bring the process to an end in a matter of hours.


Viktor Yambaev, president of Almaty’s entrepreneurs association, told IWPR that an army of government bureaucrats are living very comfortably as a result of this.


He also alleged that such officials often bring in new regulations to hamper business development in order to generate more opportunities for corruption.


Consequently, many businessmen are forced to bend or break the law to ensure their own survival.


Sergei Zlotnikov, head of the non-governmental organisation Transparency Kazakstan, told IWPR that an excessively bureaucratic system had forced entrepreneurs to resort to illegal practices.


Aside from government agencies, the Komkon survey suggests that corruption in law enforcement agencies, the judiciary and even universities is widespread.


Almaty undergraduate Maxim Evgrafov told IWPR that many of his fellow students cover up their absence by bribing their teachers. Some do this so often that they do not attend any lectures at all, and only turn up to sit their exams. At this stage, a further bribe is usually enough to secure a pass mark.


Even well known figures such as President Nursultan Nazarbaev’s daughter Dariga Nazarbaeva, who heads the board of the media holding agency Khabar, has gone on record as saying that corruption is inevitable, if undesirable.


In an interview with the Russian magazine Ogonyok in May this year, she is reported to have referred to a Western businessman who said that without graft there would be no progress.


Nazarbaeva acknowledged that bribe-taking was widespread but pointed out it was also evident in developed Western countries in more subtle forms.


In general, the government’s anti-corruption measures have proved unsuccessful, with one important exception.


Last year, there was a temporary halt on tax inspectors and financial police making unauthorised, random visits to companies, during which the former would often pressure the latter into paying bribes. The initiative was so effective that it was reintroduced for much of this year.


“They [the inspectors] can’t just drop by unless they have a warrant or are investigating a complaint to the police, “ said Nazarov.


The prevalence of corruption in the Kazak economy has not stopped western firms investing in the oil industry in the past decade. These are big players who encounter fewer problems with petty officialdom than the local businessmen interviewed by IWPR.


Kazakstan scores high marks with western firms which assess financial risk for potential investors. Moody’s credit rating agency, for example, thinks Kazakstan is a healthier investment prospect than Russia.


It has certainly proved more attractive than the other Central Asian countries, with its relatively sound banking sector, and – thanks to oil – a growing economy and manageable debts. And if it is corrupt, it is probably no worse than its neighbours.


Andrei Chebotaryov is the editor of the magazine K Obshchestvu Bez Korruptsii (Towards a Society Without Corruption).