PATRUSHEV: NATIONAL ECONOMIC SECURITY STARTS WITH FIGHTING CORRUPTION

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An interview with FSB Director Nikolai Patrushev

Nikolai Patrushev, head of the FSB, discusses progress on various aspects of national economic security in 2005: state secrets and espionage in the defense industry, bankruptcy laws, anti-corruption efforts, smuggling, and illegal fishing.


This is an exclusive interview with Nikolai Platonovich Patrushev, director of the Federal Security Service (FSB).

Question: What are the FSB’s objectives with regard to ensuring Russia’s economic security, and how are you working to achieve them?

Nikolai Patrushev: As the era of global confrontation between two different socio-economic systems and military-political blocs ended, emphasis shifted to economic competition. It’s no secret that most of the economically developed nations have policies aimed at upholding the interests of their leading national companies and transnational corporations, and this often entails trying to weaken Russia’s influence in global markets. They use their powerful financial resources to do this, frequently accompanied by intelligence agencies and related organizations using specific methods of influencing the socio-economic processes under way in Russia. As President Putin noted in his recent television interview, “all forms of economic, political, and media pressure are used” against Russia in global competition.

Under the circumstances, ensuring economic security, which is a component of the national security system, is one of the most important areas of our activity.

Question: What kind of significance do state secrets have in today’s conditions, and why have the state and society focused attention on reliably protecting state secrets at this particular time?

Nikolai Patrushev: Attitudes to state property and intellectual property alike have changed these days. Loopholes in the law are being eliminated as we watch, along with the extremely simplified regulations for international contacts that flourished in 1990s, encouraging a general opinion that it was acceptable to treat state secrets rather casually.

Companies themselves, particularly defense sector enterprises, have learned to protect their designs and technologies; their executives cooperate closely with FSB bodies.

But we can’t leave it there. We shall strive to create conditions that facilitate the prevention of such “leaks.” After all, the information in question often involves commercial secrets as well as state secrets, comprising the intellectual property of the Russian state, Russian enterprises, Russian companies. And whenever it proves impossible to prevent such unlawful actions, we use our arsenal of forces and resources to put a stop to them. We shall continue to do so.

Around 4,000 investigations have been carried out in 2005 in the area of protecting state secrets. Evidence of secrecy violations uncovered during these investigations has led to over 40 criminal prosecutions and around 300 administrative cases; over 550 licenses for working with state secrets have been suspended or cancelled; the relevant organizations have been issued with over 300 recommendations on how to eliminate the causes and conditions that facilitate posing threats to national security and committing crimes.

Over a thousand information materials have been sent to federal government bodies regarding the problem of ensuring security for secret data.

The FSB frequently prevents attempts by individuals to unlawfully export technology, scientific and technical information, and services that could be used in producing arms and military hardware.

I should like to note that modern science and technology is not the province of isolated geniuses; as a rule, it entails well-managed and painstaking work by a large number of scientists, often working in separate institutions and organizations. This makes the attempts of certain state officials to use the results of this collective scientific research for their own mercenary purposes seem all the more cynical.

Question: Against a backdrop of rapid expansion in our country’s international contacts, are the intelligence agencies of other countries still spying on Russia?

Nikolai Patrushev: In recent years, the FSB has repeatedly prevented attempts by a number of foreign intelligence agencies to take advantage of our openness policy and the expansion of our country’s contacts in politics, science and technology, and foreign trade – for the purpose of obtaining information about Russia’s defense capacities and promising developments in military research or fundamental research. What’s more, some foreign “partners” are trying to obtain samples of Russia’s latest military hardware and the technical documentation necessary for unlicensed production of it. In this context, I should like to note their sustained interest in Russian scientists who are privy to state secrets.

The intelligence agencies of other countries pay particularly close attention to Russia’s military-industrial complex and the field of military technology cooperation.

Given that the Russian defense sector is increasing output volumes, increasing exports, and expanding contacts with foreign partners, the FSB is taking steps to ensure early detection and prevention of such espionage or other activity by intelligence agencies of other countries.

Overall, in terms of counter-intelligence results, this year we have put an end to the activities of 26 foreign intelligence employees and 67 of their agents. Thirteen foreigners involved in their activities have been deported from Russia.

We are paying just as much attention to ensuring reliable protection for state secrets, and assisting efforts to protect commercial secrets and intellectual property.

The FSB’s responsibilities also include assisting to implement a range of measures being implemented by President Putin and the federal government to continue normalizing the situation in the military-industrial complex. With some satisfaction, I am able to say that these efforts are producing results. Thanks to these measures, the situation in Russia’s military-industrial complex is gradually being normalized, and prospects for improvement are evident.

Question: The defense sector is part of the Russian economy as a whole, with all its realities, including bankruptcies. What are your views on bankruptcy proceedings as an instrument of ensuring national economic security?

Nikolai Patrushev: To be honest, I’m wary about it. We have to take into account that bankruptcy proceedings can be a key tool in reforming strategically important sectors of the economy. But we should also be aware that in real life, if bankruptcy is used in the interests of dishonest clients, it can lead to large-scale destruction of enterprises and organizations, including those in the defense sector – along with a loss of control over strategically important sectors of industry, and a reduction of the economy’s mobilization potential.

According to our information, a number of commercial organizations are currently attempting to establish control over the activities of certain major enterprises and organizations, including some that are strategically significant for ensuring national defense capacities and state security. They are doing this with the aim of making mega-profits by selling off their most valuable assets, unique equipment, and large amounts of property. When applied to a large, highly profitable enterprise, a managed bankruptcy of this kind can bring in billions of rubles.

Moreover, the economic security threat posed by such actions is not confined to direct socio-economic damage. Given the large scale of the activities of entities specializing in “bankruptcy to order,” as well as the special significance of their targets, we have reason to believe that foreign companies are involved in promoting this way of eliminating enterprises and organizations in the leading sectors of the Russian economy.

Unfortunately, these essentially predatory actions often lead to basic and applied research programs being halted, state arms procurement orders going unfilled, and social tension rising.

Under the circumstances, we obviously aren’t standing by and doing nothing. Our priorities include countering attempts by various entities, including organized crime, to apply privatization and bankruptcy procedures to defense sector enterprises for purposes that are contrary to state interests. Within our field of responsibility, we are also developing and implementing a range of measures to provide and enhance anti-sabotage and anti-terrorism security at defense sector enterprises.

Amendments made a few weeks ago to federal bankruptcy legislation specify that anyone appointed as an arbitration manager at an enterprise of this nature must have a permit for working with state secrets. Moreover, the Justice Ministry and the Supreme Arbitration Court have issued the corresponding instructions to specific agencies.

Question: In a speech last year, President Putin listed “fighting organized crime and corruption” among the tasks of the FSB, calling on Russia’s special service to be capable of “providing skilled and capable protection for honest business owners against pressure from criminal organizations, or, if necessary, from the bureaucracy.” What is the FSB’s contribution to anti-corruption efforts in our country, and what kind of problems do you encounter?

Nikolai Patrushev: This is a wide-ranging task, of course, which requires the involvement of non-governmental organizations as well as the special services, the law enforcement agencies, and government bodies.

As a special service, the FSB considers it particularly important to detect unlawful activity by public office holders, as well as preventing them from interfering in the management of enterprises and companies or the economy and finance in general.

Under the circumstances, state security bodies are continually involved in anti-corruption efforts, applying preventive measures as well as taking specific action to put a stop to such unlawful activity.

I should like to note that corrupt behavior by state officials discredits the authorities, while making the apparatus of state itself less reliable and manageable. Corruption also discourages honest people and truly effective managers from entrepreneurial activity, in both the state sector and the private sector. High levels of corruption and underdeveloped anti-corruption legislation are obstacles to Russia’s integration into the international community.

This is precisely why we are currently implementing a range of measures aimed at establishing an anti-corruption system, and these measures are already yielding results. The FSB has detected and put a stop to the criminal activities of a number of senior public servants.

Question: Are FSB operations having a visible economic effect in any particular fields of criminal activity?

Nikolai Patrushev: One such field of activity for us is preventing crimes involving smuggling and fraud. In 2005, FSB investigators have worked on 250 criminal cases related to smuggling, involving 306 people, and 164 criminal cases related to fraud, involving 257 people.

The courts have considered 46 smuggling cases and 17 fraud cases in 2005, convicting 109 people.

In cooperation with customs agencies, we have prevented attempts to smuggle some large consignments of jewelery into Russia, weighing around 200 kilograms. Preliminary estimates put the value of the smuggled goods at over $5 million.

In spring 2005, in cooperation with customs agencies and the Interior Ministry, we closed off a major railway smuggling channel for industrial goods. Products worth over $1 million were confiscated. As a result of taking measures to detect, prevent, and stop smuggling, state security agencies have confiscated goods worth a total of 2.8 billion rubles in 2005.

Question: Russia’s federal budget finance channels are also a tempting target for criminals. Is the FSB involved in preventing crimes of this nature?

Nikolai Patrushev: If budget resources are considered as part of the state property which we have a duty to guard and protect, then the FSB regards efforts to monitor the proper use of financial and material resources as one of its most important areas of activity. In my view, our activities in this area should be focused on preventive rather than punitive measures.

These efforts are organized and carried out on a regular basis, in cooperation with the Auditing Chamber and the Finance Ministry’s Federal Finance and Budget Oversight Service.

Acting on the prime minister’s instructions, in the course of 2005 the FSB has managed to eliminate a number of fraudulent health insurance organizations from the process of servicing benefit recipients, and to prevent the misspending of 3 billion rubles in budget funding. Moreover, our support efforts for the federal targeted program aimed at rebuilding the economy and social sphere in Chechnya have prevented the federal budget from losing over 4 billion rubles. Evidence of misappropriation to the sum of over 800 million rubles was uncovered.

Question: The Border Guard Service had been protecting Russia’s marine bio-resources for five years when it was reincorporated into the FSB in 2003. What kind of problems do the Border Guards encounter in performing these functions? What is your assessment of the situation in this sector, and what should be done to ensure national economic security in this area?

Nikolai Patrushev: Along with re-equipping and modernizing border security infrastructure, one of our priorities since 2003 has been to improve living conditions for Border Guard personnel and their families. Unfortunately, insufficient attention was paid to these key issues earlier.

There is a great deal of media discussion about problems encountered constantly by the Border Guards in the process of protecting marine bio-resources. The most important problem is widespread overfishing of valuable fish varieties, crabs, and other bio-resources in Russia’s territorial waters and exclusive economic zone; the catches are then illegally exported, and foreign currency revenues are hidden in bank accounts abroad. Experts estimate that illegal fishing and exports from Russia could be worth up to $1 billion a year.

My impression is that this is an inter-agency problem, to be addressed in an integrated manner by practically all government bodies.

Meanwhile, the Border Guard Service is already taking a number of additional measures aimed at countering unlawful exports of marine bio-resources and other fishing violations.

Our coastguard units are emphasizing increased use of aircraft and satellites for closer monitoring of fishing in Russia’s territorial waters and exclusive economic zone. We are taking account of the most advanced experience in other countries in the process of developing the marine component of the Border Guards. We are equipping coastguard units with modern vessels and effective monitoring technology. In 2005, these measures have enabled us to confiscate over 1,500 tons of illegally caught fish.

Question: How would you sum up the FSB’s performance in ensuring national economic security over the past year?

Nikolai Patrushev: The FSB continues to work on detecting external and internal threats to national security, including the economic aspects of this activity, as globalization processes accelerate in the international economy.

Our efforts over the past year have prevented the state from losing 41.5 billion rubles, and produced an additional 2.9 billion rubles in revenue for the federal budget and regional budgets. We have detected and stopped unlawful activities by a substantial number of corrupt public servants in government bodies at all levels.

As you see, we are getting results. I’d like to note that none of this would be possible without assistance from the public; the FSB is relying on this assistance to an increasing extent in its efforts to counter various forms of crime and terrorism. The FSB’s confidential hotline has taken 3,200 calls this year alone. I can assure you that this information has been useful – not only to us, but to other law enforcement agencies.

I’d like to emphasize once again that the FSB’s activities in this area are subordinated to pursuing the common goal of all state agencies: facilitating Russia’s optimal socio-economic development within the framework of priorities determined by the federal leadership.

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