Procurement: Counterfeits To Die For, Or From

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November 19, 2010: Russian aviation officials were alarmed when, upon inspecting 60,000 aircraft parts, they found that nearly a third of them were counterfeits. While most of the substandard fake parts came from neighboring countries, many were made in Russia. While China wins first place when it comes to stealing technology and producing counterfeit goods, Russia is solidly in second place, turning out about a third as many counterfeit goods as China. Russia's neighbors, many former parts of the Soviet Union, have the same bad habits. But Russia and China together produce about 80 percent of counterfeits. Western nations would like to get both Russia and China to crack down on the counterfeiting. That won't be easy. In both countries, the counterfeiting is a multi-billion dollar a year industry, run by guys who know how to bribe the right politicians. The counterfeiters have another incentive to keep the prosecutors at bay; counterfeiting kills. Phony medicines and aircraft engine parts have both been linked to deaths in Africa and Asia, where the imitation goods are often sold. If brought to justice, Chinese and Russian counterfeiters would likely be executed.

Meanwhile, the Russian government is making some progress eliminating the corruption that enables counterfeiting to flourish. Payoffs to get into college, a hospital, or to stay out of the army, have been staples of Russian life for generations. Even in the time of the czars, a century ago, bribes were a problem. But when the Soviet Union collapsed in 1991, the corruption became more common than at any other time in Russian history. Someone demanding bribes to do their job was no longer an occasional risk, it was now expected. Those demanding bribes were delighted, as they were getting rich. Most Russians were furious, thus the current government campaign to root out the problem is very popular. There are more pragmatic reasons. In the military, for example, officers, NCOs and older troops have long exploited new conscripts. It has gone beyond shakedowns and beatings to cases where the parents of the new troops are told to send lots of cash, or their boy will get hurt real bad. No wonder so many other parents bribe conscription officials to keep their sons out of uniform in the first place. But many Russians still serve for patriotic reasons, and are appalled at the corruption in conscription, and the way the military is run. Military bases are still full of officers and NCOs who will make all sorts of deals, if you are willing to pay enough. That includes buying counterfeit goods. Russia will never have a first class military as long as all this corruption is rampant. The government is rounding up the usual suspects, and trying to scare the majority of corrupt officials straight. This works, to a point. Then you have to come back and root out the hard core crooks. It will take several years to see if the government has the gumption to battle its own officials for that long.

 

 


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