An overview of the income and asset declarations of federal ministers

Transport Minister Igor Levitin’s income for 2004 was 80 times greater than that of Prime Minister Mikhail Fradkov. One of the poorest Cabinet members is Finance Minister Alexei Kudrin. Communications Minister Leonid Reiman owns the most apartments, and Emergencies Minister Sergei Shoigu owns the most land.

Transport Minister Igor Levitin’s income for 2004 was 80 times greater than that of Prime Minister Mikhail Fradkov. One of the poorest Cabinet members is Finance Minister Alexei Kudrin. Communications Minister Leonid Reiman owns the most apartments, and Emergencies Minister Sergei Shoigu owns the most land. This information comes from documents provided to us by the Cabinet staff.

The official income and asset declarations of the ministers reveal great inequality within the federal government. The average monthly income of the prime minister, the deputy prime ministers, and the ministers in 2004 came to $51,562. But the 13 (relatively) poorest ministers made an average of $3,675 a month, while the five (relatively) richest made tens or even hundreds of times more. It’s interesting to note that the prime minister is not among the five: Mikhail Fradkov’s official average monthly income was $5,043.

The highest income for 2004 was that of Transport Minister Igor Levitin: $4.85 million, or an average of $404,455 per month. His aide, Svetlana Kryshtanovskaya, told us that this sum was made up of the minister’s salary, investment income, and “the shares Levitin had to sell when taking up his government appointment.” She declined to be more specific about the minister’s income structure. Until March 2004, Levitin was the deputy general director of Severstal-Trans; but an employee of that company told us that Levitin had never owned any shares in it.

The second-highest income was that of Natural Resources Minister Yuri Trutnev: a monthly average of $317,198. Natural Resources Ministry spokesman Rinat Gizatulin told us that the minister is receiving annual payments for shares in the Eks Group, sold when he took up his government appointment. In 2004, received $3.5 million for his Eks shares (92% of his income) The Eks Group’s activities include retail trade (owning the Semya supermarket chain, with annual turnover of $105 million in 2004), transport, and construction.

Third is Healthcare and Social Development Minister Mikhail Zurabov. His income averaged $119,572 per month in 2004. In response to our query about the minister’s income structure, Healthcare and Social Development Ministry spokeswoman Elena Volokhova promised to “provide additional information as required by law”: that is, to send it by mail within a week of receiving the request. We couldn’t wait that long: according to the media law, if we are going to publish the income information received from the government, we have to do so within a week. Zurabov may have received just over half of his income in the form of dividends from his shares in the Ingosstrakh insurance company: sources close to the company and its shareholders say that Zurabov’s companies owned 18% of Ingosstrakh until July 2005. In 2004, Ingosstrakh paid out 125 million rubles in dividends for 2003. Moreover, Zurabov founded the Maks insurance company and headed it until 1998; industry sources still link this company with the minister. Maks paid out 212 million rubles in dividends for 2003.

IT and Communications Minister Leonid Reiman, ranked fourth with an income of $26,925 a month for 2004, didn’t want to tell us the details either. The response from his press service was terse: “As your request indicates, you have received… all the information provided for publication in the media.”

Some of Reiman’s money may have been received in the form of rent for the property he owns: four apartments of 195-284 square meters. A manager at the Miel Property agency says that rental prices for Moscow apartments of that size in 2004 ranged from $1,500 to $15,000 depending on location, number of rooms, condition, and furniture; St. Petersburg apartments cost half to three-quarters as much.

Fifth on the list is Education and Science Minister Andrei Fursenko, with an average of $12,203 per month. That was a one-off occurrence, according to an Education Ministry spokesperson: Fursenko moved from St. Petersburg to Moscow in 2004, selling his St. Petersburg apartment and paying 2.6 million rubles to the Presidential Affairs Directorate for a Moscow apartment with privatization rights.

The lowest income was that of Regional Development Minister Vladimir Yakovlev: $1,689 a month. His aide, Irina Terkina, told us that Yakovlev only became a minister in September 2004, and had no additional income from shares or bank deposits. Slightly richer than Yakovlev were Defense Minister Sergei Ivanov and Emergencies Minister Sergei Shoigu. Their salaries, like that of the foreign minister, are tied to military pay scales, which are significantly lower than civilian equivalents. And the only minister who received most of his income from the state but still made more than Fradkov was Foreign Minister Sergei Lavrov. A former Foreign Ministry employee told us that Lavrov spends about half the year abroad, and travel allowances for trips abroad are about $60 per day even for ordinary officials.

Reiman owns the most apartments: a total of 994.2 square meters. The largest landowner is Sergei Shoigu, with 1.27 hectares; next are Reiman and Zurabov with 0.95 hectares each. Alexei Kudrin, Yuri Chaika, and Vladimir Yakovlev don’t own any land, houses, apartments, or even garages. Noteworthy items of property include Shoigu’s bath-house (banya), measuring 130 square meters, and Reiman’s two garages of 50 square meters.

Pavel Krasheninnikov, a former justice minister, told us there’s nothing unlawful about Cabinet ministers receiving income from bank deposits or securities. State officials must not engage in business, and must place their private company shares in trust: “The point of this ban is to prevent state officials from engaging in business activities, but they are still allowed to receive income from their property.” Krasheninnikov says there are no legal penalties for failure to comply with these standards, but the president or prime minister can apply administrative penalties as punishment.

Experts maintain that the official salaries of Russian minister are neither competitive in the labor market nor adequate for the work they do.

Sergei Vorobiev, general director of the Ward Howell head-hunting agency, says $3,000 to $4,000 per month is equivalent to a middle-management salary in a back office of a large corporation.

FBK economist Igor Nikolayev says: “A minister’s level of responsibility equals that of the chief executive of a large corporation – he makes capital-intensive decisions worth billions of dollars, but a state official’s salary is obviously far less.”

The salaries of senior state officials should be raised substantially, says Yaroslav Kuzminov, rector of the Higher School of Economics: “Otherwise, the state can’t rely on its staff to be absolutely loyal.” Kuzminov adds that by failing to provide its bureaucrats with adequate remuneration, the state prompts them to seek additional income on the side. In his view, federal ministers ought to be paid $15-25,000 per month.