Putin signs law to seize funds of officials that exceed declared income by $100
then24.com
then24.com
The exact text of the law and numbers does not really matter here, as there is no real independent court/justice or any kind of rule of law.
[sum of family's last 3 years income] + 10,000 rubles > [sum of family's account balances].
> the bank accounts of civil servants, as well as members of their families, including minor children, will be checked by the prosecutor’s office. If it turns out that the proceeds from them exceed the total income of the official and his relatives for three years by more than 10,000 rubles, a lawsuit will be filed with the court for the forced withdrawal of these funds to the budget.
Then, the law states that prosecutor's office should requests the explanations about the source of deposits from an official. Only if the explanations are not provided, the funds could be seized.
http://publication.pravo.gov.ru/Document/View/00012022030600... Article 8.2.1
Wowow that is crazy. Anyone who was disciplined about saving/investing and has been doing so for > 5 years will easily meet that criteria!
Obviously, INAL and definitely not a Russian Lawyer.
As in, if you make X per year; and you have >3X in savings from Y>3 years of spending (a lot) less than you make and stuffing the difference under a mattress, then all your savings in excess of 3X get confiscated.
In other words, similar to people on welfare in America, public servants in Russia are now not allowed to retain assets in excess of a certain limit proportional to their income—even when that income all came directly from their (government) job.
This is analogous to a progressive wealth tax, but not the same; as a wealth tax still allows disproportionate wealth growth for the highest-income earners; while the goal of this measure is to leave you with at most exactly three years of however-much you’re currently making, and nothing more, no matter what your assets looked like before that.
The key “feature” to observe about this approach, IMHO, is that under this system people who are close to the savings cap already, are incentivized to spend every ruble they make, as any extra “left over” come audit time will be taken away. (It’s a bit like the game-theoretic consequences of yearly-limit insurance coverage, actually!)
I've now reread the original article several times, and I can't figure out where your getting that from. The phrasing used in the article is "If it turns out that the proceeds from them exceed the total income of the official and his relatives for three years by more than 10,000 rubles", which I can't parse into that and the source for the article appears to both be down and Russian, so I guess I'll take your word for it.
“total income … for three years” = you and your relatives/dependents income for the last three years.
“X exceeds Y by more than ₽10,000” = X > Y + ₽10,000.
Let’s make up some numbers and see where they lead. Suppose that you are a middle–aged civil servant and your salary has been ₽100,000 for the last three years. Y = ₽300,000, obviously. You’ve been saving for your whole life, so the sum total of all of your accounts, X, is ₽500,000. Most of that is in whatever the Russian equivalent of pensions or 401ks are, so they have been earning money for you. Either collecting interest, or by gaining value on the stock market or whatever. Let’s say that your average growth over the last 3 years was 5%. That means you earned ₽68,000 in interest over those three years. Assuming that this adds into Y, your total income, then Y is ₽368,000. Well, ₽500,000 is certainly larger than ₽378,000, so your name comes to the attention of the prosecutor.
However, I disagree that this means that you automatically lose anything. The article says: “In order not to lose money, the official will have to prove the legality of their appearance on the account.” Presumably then you won’t lose anything if your records show that you obtained it all legally.
On the one hand, you do want to catch corrupt officials who have been taking bribes or kickbacks. On the other hand, choosing this means to do it seems counter–productive, since you have to expect that everyone who is saving up for retirement in some way will qualify for investigation. Since the criteria for investigation are not correlated with the crime that they are trying to detect, they are going to have all the false positives.
That presumes you have perfect record-keeping. Perhaps, if you can't prove 100% of your income and expenses (i.e. if you can't present an immaculately-balanced ledger — and who can?), you'll have your assets confiscated anyway. They can hold you as having violated the letter of the law, even if you kept to the spirit.
One assumption further: the regime perhaps told the people it wanted to keep around, long in advance, to get (or fabricate) such a detailed personal accounting.
Heavily penalizing accumulation of cash like that could be reasonable, but doing it without announcing it at least a year forward makes it hard to argue that it's anything but a cashgrap.
But the idea issue is viable if the explicit goal is to make high cash reserves impossible. People would instead have to invest and various accounts (I.e. pension plans etc) have to be exempt. So it's theoretically reasonable if the economy is suffering because the wealth is never being spen, but that sounds like a very unlikely situation to occur in today's consumption society.
Penalizing accumulation of cash (ie: negative rates) vs. Seizing cash are completely different things.
However, that doesn't mean the proposed mechanism i.e an explicit wealth limit is actually reasonable.
By the way an economy suffering because the wealth is never spent is the root cause of every single economic depression in history. Bill Gates is rich enough that he could never spend it all.
Today's consumption society is just an unsustainable method of avoiding a depression. All money saved must be invested because nobody tells the wealthy to stop playing the accumulation game. A negative interest rate would get rid of the need to increase debt.
Tough ask in the current climate, in a Russia-related thread.
It seems something relatively easy to check and relatively easy to bypass for those intending to do so.
As a bonus maybe the uninformed Russians will now think Putin is cleaning up government, the corrupt middle layer that's ruining his mission to make Russia great again...
Even before covid, 50-80% of Americans were living paycheck to paycheck.
Median income and median rent don't leave a lot of wiggle room to hit that 20% target. With decently priced health insurance (unlikely), moderately priced beans and rice, and a low TCO used vehicle (since that's usually cheaper than rent close enough to your job and/or public transit) you'll be able to save 25% or so I'll. With any dependents, with average-cost health insurance, or with a host of other common scenarios those savings never actually materialize.
- I haven't found a credible source corroborating the claim made in this article.
- Their FB page has surprisingly little traffic for a news site and their twitter account was suspended recently.
https://www.facebook.com/then24dotcom/ https://twitter.com/then24dotcom
- Their contact email is...not one you would expect for a legitimate news site (celebsbabe @ $major_mail_provider).
Edit: formatting
https://finance.yahoo.com/news/putin-signs-law-seize-illegal...
[A] You may not save more money in your bank account(s) than 3 * current yearly salary+10k rubles. If your bank account balance is higher, the burden of proof is reversed and you need to prove that you earned it properly.
[B] The amount of incoming cash over some unknown period of time, if higher than 3 * salary+10k rubles, means that every cent above that boundary gets confiscated unless you can prove you earned it.
For [B], that unknown period of time is rather incredibly important. If it's 'one year' that means this law effectively says: "If you corrupt and crime your way into more money, allright, but, cap yourself at a 2:1 illegal-legal rate; any more than that and the burden of proof reverses and we'll just take the remainder. If it's 3 years though, then this says: Any money you make outside of your salary is capped at ~€50 a year (not 50 thousand, fifty). Any more and we just take it.
For [A], hoo boy, that seems like a crazy or desperate move: Steal from those who saved. That really creates a YOLO culture where you just spend every cent you earn immediately, never building anything up because it'll just be taken. That, and everybody will be buying a spacious mattress IMMEDIATELY and will continue to use that as their personal bank for a very very long time.
Separately, the 10k rubles rider seems crazy. 10k rubles is, even before the ruble's collapse, something like €/$ 150,-. Even in Russia where yearly salaries are considerably lower than e.g. western europe or the US, €150,- is a rounding error compared to even a low yearly salary, right?
Anyone have more details? It sounds like perhaps it's B, over a year, so this just caps corruption at 2:1. Whilst I'm sure that'll have quite an effect on russian society, it's not going to significantly affect anybody other than apparatchicks.
"Isn't sufficiently loyal" may be more accurate.
Russian officials store huge amount of cash out of banks, so that new law is really just to be used selectively to punish, not to really fight corruption (naturally no surprise here). It is like in USSR - one just couldn't have any large bank account back then, and so all those Party bosses, municipal leaders, police officers, factory directors, etc. had piles of cash and jewelry at homes.
Is there actually such a joke? Seems like there isn't.
So yeah, what seems to be happening rapidly now is Russia abandoning last bits of democracy and going full dictatorship quickly. To block any dissent in its beginning by possibility of state terror. Not sure if it will work in 2022, for sure hoping it won't.
Except this time it doesn't have even the pretense of working for the common good. Putin has funded the worst sort of racists across Europe for decades.
Another back to USSR thing -with Western condom brands pulling out of Russia it is going to be only low quality domestic rubber like back then.
That fraction is double-ish what it was, but it's still merely a chunk or two of an average person's monthly salary (i.e. it's trivially easy for anyone at all to get caught in this net).
Most important assets are. Valuable assets like real estate and sometimes cars is mostly denominated in USD and sometimes EUR, as the Rubble is too weak and volatile for the general population to bother with it for valuable assets. It's the same in Romania, cars and real estate are denominated in EUR despite nearly everyone in the country being paid in the national currency RON, and, before the creation of the EUR, they were denominated in USD or Deutsch Marks as the national currency was fluctuating like BTC.
>The ruble losing X against USD doesn’t automatically mean that everything becomes higher priced by X immediately (except for imported goods)
It does, since Russia doesn't really manufacture any high value goods that are in demand on the free market, so it has to import nearly everything apart from basic food, fuels and raw materials.
I'm sure Russia can survive just fine without Dutch cheese, US bourbon, Italian designer clothes and French wine imports due to sanctions, but US CPUs, GPUs, iPhones and MacBooks, German car parts and industrial equipment, Swedish trucks, Liechtensteinian dental drills, French Airbuses and Japanese cameras, industrial robots, cutting edge sensors and chips still cost the same amount in USD, EUR and YEN to make but now 2x the price in RUB to import due to the devaluation and Russia needs to import all those things to not go back to the stone age, as they don't manufacture any equivalent domestic alternatives.
More made-up BS. Go to cian.ru, avito.ru or any other real estate or car dealership website, right now, and all you see is rubles. It's been like that for over a decade now. Why would you just make stuff up? Maybe because the last time you were in the country was 00's or never?
Not that most of those matter because they aren't being sold to Russians now anyway.
As another argument, the RUB prices of MacBooks and iPhones shot up +50% the day after the sanctions were implemented. The second hand market and scalping of these goods also exploded in Russia.
And when you run out of dental drill bits, how will that not matter when you visit your dentist? Do you want him to work with a chisel and a hammer?
The average Russian will be hit hard from these sanctions as time goes on.
I think the comment meant that it doesn't matter to domestic inflation because sanctioned goods can't be purchased. The latter part of which is true. The former, not--supply shocks can cause inflation as easily as money printing.
its a gigantic country ya know
This has been true since 2003 [1].
[1] https://en.wikipedia.org/wiki/Mikhail_Khodorkovsky#Criminal_...
> I was trying to figure out why the passed this law now.
> I don't know what use Putin would have of scaring his officials.
That wouldn't be in a bank account, so he's safe. It's only following cash into/out of the banking system
Of course not. Anti-corruption measures in places like that are selectively enforced. Go after the little fish to score anti-corruption points, while the big fish are literally above the law.
Which law?
Those who do not fear the darkness will be consumed by it.
This seems a much stronger signal that the war is going poorly for them than that supposed FSB leak.
But combining the two, he may need to take out some rivals who perceive him as weak and that it's time for them to make their move, and those people seem likely to have big bank accounts.
Early into the Stalinification process, Putin's insiders will not turn on him, even when he starts to purge them. They'll hold out, hopeful that they're not next, scared, afraid to move; they'll tell themselves that they won't be next because they have been loyal, various rationalizations. You can target these insiders, it doesn't matter, they will not turn on him at this stage. A lot of people will have to die before we arrive at that juncture.
Putin's greatest single vulnerability is the FSB, they coup'd the Russian democracy (such that it was, being so embryonic) and installed him, they're among the best positioned to remove him. The question is, why should they. He's one of their own. The oligarchs could perhaps try purchasing his removal in conspiracy with the military or FSB, although it's very unlikely. The military can't be happy with its humiliation in Ukraine and the masses of dead soldiers, which will ultimately be for naught (Putin forced this outcome on them); and I would expect Putin to punish some prominent military leaders for the various failures, which never goes over well with the system broadly.
Of note is the required number of supporters can be quite low when you have a government supported by resource extraction.
[1] https://www.amazon.ca/Dictators-Handbook-Behavior-Almost-Pol...
I have a better idea - 1 billion USD + safe extraction from Russia to any place including closest ones + ie immediate US citizenship. This sum is nothing for the likes of Biden, Johnson (or Musk) and nothing compared to damage this war is doing every day .
There is no way that nobody he meets within next few months wouldn't turn for this, even a group of 10 guys would be OK for rest of their grandchildren's lives. The trick is to do it somehow unofficially, otherwise you are next on FSB hit list, probably with every member of family. It would make him extremely isolated, paranoid, and actually make mistakes and enemies deep inside his pyramid. Play his game by his rules, not this posh western endless talks and diplomacy which he ignores.
Putin has thrown a dice, but he might get to rue the results.
History is full of examples where physical assets are essential. My wife's family had to flee China after their assets were frozen. Ukrainian and Russians today need to flee and have their assets frozen by their respective governments.
1. create a law that would probably be popular with most average people because it is anti-corruption on its face, and
2. allow the government to legally go after virtually any public servant in a selective manner to crack down on dissension