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Difference between revisions of "Otkat (Russia)"
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Finally, in-depth interviews with entrepreneurs may be useful for gaining a better understanding of specific ''otkat'' schemes and their mechanisms. Interviews conducted by the author with small and medium-sized entrepreneurs in Russia revealed two ''otkat'' scenarios: some contractors were paid from lavishly inflated public procurement budgets and thus had no difficulty in completing the work while also meeting the requirements of ''otkat''; others were forced to cope with budget cuts and struggled to stay profitable as a result of paying ''otkat''. In one instance, a company in St Petersburg won a tender for building a road. The successful bid was for 18 million roubles; however, the state officials responsible for the project offered to pay 28 million roubles, with specific instructions to the company that ‘eight [million] you will bring back – in cash. We are not interested in how you are going to do the ''obnalichivanie'', but all the documents need to be waterproof!’ (Author interview 2014). Conversely, a Moscow construction company that had been undertaking works for the upper chamber of the Russian Parliament for years reported difficulties in dealing with budget cuts: ‘A new team arrived, new guys, a hungry lot. They summoned all contractors one by one: 'Roll back 20 per cent'. They said it in plain text. The budgets are being slashed. But we want to have a profit’ (Author interview 2014). Filing a formal complaint was not an option, as it would have resulted in the company being ‘blacklisted’ and being debarred from future bid- making opportunities. | Finally, in-depth interviews with entrepreneurs may be useful for gaining a better understanding of specific ''otkat'' schemes and their mechanisms. Interviews conducted by the author with small and medium-sized entrepreneurs in Russia revealed two ''otkat'' scenarios: some contractors were paid from lavishly inflated public procurement budgets and thus had no difficulty in completing the work while also meeting the requirements of ''otkat''; others were forced to cope with budget cuts and struggled to stay profitable as a result of paying ''otkat''. In one instance, a company in St Petersburg won a tender for building a road. The successful bid was for 18 million roubles; however, the state officials responsible for the project offered to pay 28 million roubles, with specific instructions to the company that ‘eight [million] you will bring back – in cash. We are not interested in how you are going to do the ''obnalichivanie'', but all the documents need to be waterproof!’ (Author interview 2014). Conversely, a Moscow construction company that had been undertaking works for the upper chamber of the Russian Parliament for years reported difficulties in dealing with budget cuts: ‘A new team arrived, new guys, a hungry lot. They summoned all contractors one by one: 'Roll back 20 per cent'. They said it in plain text. The budgets are being slashed. But we want to have a profit’ (Author interview 2014). Filing a formal complaint was not an option, as it would have resulted in the company being ‘blacklisted’ and being debarred from future bid- making opportunities. | ||
Otkat remains an under researched practice both because of its informal character and due to the involvement of state bureaucracy. However, it has implications for the political economy as a whole: by participating in otkat schemes, firms not only need to generate illicit black cash, but they also have to deal with an inevitable mismatch between the actual and ‘on-paper’ transactions, which in turn requires further illicit operations and concealment techniques. Viewed from this perspective, otkat deserves more scholarly attention, as its prevalence may be key to understanding the endurance of the shadow economy in Russia and in other emerging economies. | ''Otkat'' remains an under researched practice both because of its informal character and due to the involvement of state bureaucracy. However, it has implications for the political economy as a whole: by participating in ''otkat'' schemes, firms not only need to generate illicit black cash, but they also have to deal with an inevitable mismatch between the actual and ‘on-paper’ transactions, which in turn requires further illicit operations and concealment techniques. Viewed from this perspective, ''otkat'' deserves more scholarly attention, as its prevalence may be key to understanding the endurance of the shadow economy in Russia and in other emerging economies. | ||
==Notes== | ==Notes== | ||
<references /> | <references /> | ||
[[Category:Russia]] | [[Category:Russia]] | ||