Creative Way to Steal Budget Money in Russia

In his recent blog post Alexei Navalny (a prominent critic of corruption in Russia) described a very creative way in which some Russian officials steal budget money.

In Russia most of the government contracts go through online auctions: governmental bodies submit their orders and different contractors bid for them.

The natural scheme to pocket money from these transactions is to find some supplier and make a secret deal with him. The spender of governmental budget ensures that the specific supplier wins the auction and that supplier will share the revenue.

The problem is that online auctions are transparent and if the bidding is not fair, there will be complaints. However, Russian officials found an interesting way how to cheat the system. Here is how it works…

Below is the screenshot of the real auction, taken from the site GosZakupki (State Purchases).

Snapshot of the online auction

In red font is written the subject of the auction “Поставка обуви” (Supply of shoes). Those who know Russian language will not see anything unusual in these words.

However, they do contain a smart linguistic trick which prevents anyone (except the “favorite” supplier who knows about this trick in advance) to find this auction through the built-in search system of the site!

This trick uses the fact, that some letters of Cyrillic alphabet look exactly the same as the letters of Latin alphabet (like letter “o” in Пoставка oбуви).

While human reader does not distinguish between these letters written in different alphabets, in computer database they are stored in different encoding. Therefore, the bidders who have searched for this auction using Russian letters have never found it!

The specific example above refers to the manager of one orphanage, who successfully used this trick few times in a row, before being caught red-handed. In each of their auctions there was only one (and always the same) bidder and eventual winner.

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This scam is not new. Already in 2009 it was mentioned in the official blog of Dmitry Medvedev, who at that time was the President of Russia.

Here is the translated excerpt of the conversation between Dmitry Medvedev and the Deputy Prime Minister Igor Shuvalov.

Here is the video record of this conversation (for those who understand Russian).

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Last December Alexey Navalny published a number of posts, in which he exposed the fraudsters who used this scheme.

Since then the cheaters stopped using this method… but they haven’t stopped cheating.

Take a look at the snapshot below, taken from another auction. This time the auction’s subject (also in red font) is written with Cyrillic letters only. Yet, it is a blatant attempt to cheat the system – simply a different one.

The trick is simple: in the auction’s subject there are spaces between letters

Comments of Russian netizens

[From http://navalny.livejournal.com/769991.html]

faber_fortunae:  That’s an endless process! next step will be to put two spaces between letters :)Бесконечный процесс! Следующим шагом будет набивать по два пробела между буквами :)

beholder1777:  Soon they will use Morse code.Ну скоро морзянкой будут передавать же.

frau_ly:  If all these efforts could be used for good goals!(Все бы эти усилия, да на благие цели!(

judgev:  W e l l d o n e N a v a l n yн а в а л ь н ы й м о л о д е ц

anti-tsj:  They are so brave, because they don’t risk anything.Они потому так смело себя ведут, что ничем не рискуют.

[Note:  Indeed, in those cases where the cheating was discovered, the auctions were canceled, but nobody was punished]

alykel_hater:  They used these spaces to underline the text, so that the bidders with bad eyesight also could see!они же хотели этими пробелами выделить текст, что бы его могли разглядеть слабовидящее претенденты!

thunderozzz:  When you cut off one head of this hydra, ten new grow instead.Этой гидре одну голову отрубаешь – 10 вырастает.

veron_rus:  It’s obvious that fighting against these methods is useless. Unless they are sent to prisons.Бороться с методиками бесполезно, и это очевидно. Пока сажать не будут.