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This fact about the rampant corruption of Putin’s Russia is just devastating

In most countries, criminals need to make their dirty money clean in order to make it useful in the legitimate economy. As any Breaking Bad fan knows, that’s what money laundering is: a way to bring the proceeds of crime onto account books and into bank accounts as the proceeds of a legitimate business.

But in Russia, corruption has gotten so bad that the logic of money laundering has turned upside down. There, many companies face the opposite problem: In order to get things done, they need to take clean money and make it dirty.

As Joshua Yaffa reports in an excellent piece in the New Yorker, Russia's answer is a service known as "obnal," or dark money: the process by which legitimate companies take legitimate profits and launder them into off-the-books slush funds to be used for bribes and tax evasion. Though it's not a universal practice, obnal has become a billion-dollar business in Russia. One of the biggest players in the trade was a midsize institution called Master Bank, which reportedly operated at a loss in order to provide cover for its roaring trade in obnal:

It was an open secret that the company issued bank cards with no daily limit and kept a network of A.T.M.s at Moscow’s Domodedevo airport filled with five-hundred-euro notes—convenient for obtaining large amounts of untraceable cash.

But this isn’t just about financial crimes. Master Bank may have been the one stocking those airport ATMs, but the real power in the obnal trade is Russia’s internal security agency, the FSB, which is the successor of the Soviet-era KGB.

Yaffa quotes Boris Grozovsky, a financial journalist, explaining why a government security agency would get involved in a massive illegal money laundering trade: "Not only do they earn money for themselves but they also get to see who is doing what in this business, which, as we say in Russian, allows them to grab anybody by the balls at any time."

The real currency here, in other words, is not money. It’s power and control. Controlling the obnal trade gives the FSB levers of power that they can pull all over the country. If an individual or company is involved in obnal, then the FSB can use that as a threat to hang over their heads: "Nice company you have there. Sure would be a shame if we had to confiscate it and send you to prison."

This speaks to the real Catch-22 of corruption, not just in Russia but in many countries where the problem is systemic. In systems where corruption is widespread, it’s difficult to avoid: It feels as though to get anything done, you have to play by the corrupt rules. To get the contract, you have to pay the bribe; to win the bidding war, you have to arrange for your competitor to fail an inspection; to make a profit, you have to evade taxes.

And yet once you enter such a system, you’re stuck in it. Because corruption is still technically illegal, your corrupt activities make you vulnerable to blackmail. But because your corrupt activities almost certainly implicate others — the official whom you bribed, the institutions that helped you do it, the company that benefited from your crimes — they also make you a threat. Everyone is in danger, and everyone is dangerous. The only way to win is to trump everyone else’s information and control, as the FSB has apparently tried to do via the obnal trade.

That’s a problem for Russia, because it means that its corrupt system is not just harmful, it’s also self-perpetuating. Indeed, as Yaffa notes, when Putin came to power he made a show of rooting out the powerful network of oligarchs who'd taken hold in the 1990s, but that didn’t end corruption. Instead, it only brought it more thoroughly under the control of state officials. Putin’s efforts, Yaffa writes, had "the effect of further embedding the culture of corruption in civic life. The oligarchic class was subsumed by the bureaucratic and political elite, who, in effect, renationalized corruption."

In fact, corruption has been so successfully renationalized that it effectively has an immune system, which attacks law enforcement officials who try to root out corruption. Yaffa’s piece, which I would really urge you to read, focused on one particularly tragic example: a police officer named Boris Kolesnikov who led an aggressive investigation into the obnal trade, only to be arrested, imprisoned, and eventually pressured into suicide, presumably by FSB officials eager to protect their own power.

Sadly, Kolesnikov’s case was unusual mostly because of how successful he'd been in investigating corruption before he came under attack, not because his anti-corruption efforts eventually came to a violent end. Yaffa writes that Kolesnikov and his partner apparently had support from high up in the Kremlin, but even that was not enough to protect them in the end.

We would like to think that corruption is about bad people doing bad things out of greed or malice. But the truth is that once a system is corrupt, playing by the rules becomes a privilege, something that often requires skill and influence that few people possess. The others are left with no choice but to make their clean money and clean intentions dirty.

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