Interview with Vladimir Igorevich Kozhin, head of the RF President's Business Administration, conducted by Mariya Tsvetkova: "'We Have a Large Business Element' -- Vladimir Kozhin, Head of the RF President's Business Administration".

 

The budget of the President's Business

 

Administration is growing faster than the federal one. Kozhin links this with the Constitutional Court's move to St. Petersburg and the upgrading of the aircraft fleet for the state's top officials.

 

From the administrative point of view, the coming to power of a new president means at the least that he needs a new residence. Under Dmitriy Medvedev Gorki-9 received the status of the presidential residence, while Novo-Ogarevo, where Vladimir Putin lives, became simply a state dacha. For meetings and negotiations, the new president took a liking to using the Mayyendorf Castle in Barvikha, whose remodeling the President's Business Administration in fact completed. Moreover, by the time that the new head of state took office, the business administration had done an audit of the subordinate enterprises and institutions.

 

Vladimir Kozhin, the president's business manager, told Vedomosti about the results of this work.

 

Biography

 

He was born in 1959 in Troitska (Chelyabinsk Oblast). In 1982 he graduated from the Leningrad Electrical Engineering Institute with the diploma of electrical engineer. He worked in the Petrogradskiy Rayon Committee of the VLKSM (All-Union Leninist Communist Youth League)

 

1986 -- engineer at the NPO (Scientific Production Association) Azimut 1990 -- general director of the joint venture Azimut Interneshnl Ltd.

 

1994 -- chief of the Northwest Center of the Federal Currency and Export Control Administration

 

1999 -- became head of the Federal Currency and Export Control Service 2000 -- president's business manager

 

 

(Tsvetkova) You have been head of the President's Business Administration for over eight years now. Vladimir Putin once worked there too. What does this job resemble more -- state service or business?

 

(Kozhin) Time really flies. It seems that it was just yesterday that we came and here it is already the ninth year. As for what it resembles... Officially it is state service.

 

Undoubtedly that is what it is. The entire business administration complex was created to support the functioning of the top organs of state power. To that end the business administration system is quite extensive, and there is a very large business element. A great many of our enterprises engage in commercial activity within the limits established by law.

 

(Tsvetkova) In September the president signed a new statute on the business administration with a new list of federal state unitary enterprises (FGUPs) and federal state institutions (FGUs) that are under your management. What was the point of these changes?

 

(Kozhin) The task is very simple. After all, life goes on and everything changes. Indeed the need has arisen to correct the statute itself and the list that you are speaking of because a great deal has changed in the Russian Federation. In effect we began to work on creating the contemporary complex of the President's Business Administration in 2000, and this work includes two components. The first is that we simply eliminated a great many things. In previous years they had created quite a few structures that simply were not supposed to exist in the President's Business Administration. These are kinds of "parasites" that, shielded by the signboard of the UDP (President's Business Administration), engaged in absolutely their own affairs and their own business. We liquidated them. This work is already finished to a greater degree now.

 

The second component is the process of reorganization and modernization when the activity of a particular sector shows us the need to make decisions directed, in our opinion, to improvement and development. Then some of the enterprises and institutions are merged or, on the other hand, separated out. If the enterprise is working efficiently, it means that everything is in order. It is a vital process. If it is working inefficiently, we begin to look for the reason. Very often we simply combinee nterprises that have similar functions and consolidate. That in fact served as the basis for the appearance of the new list.

 

(Tsvetkova) What criteria do you use to evaluate the efficiency of enterprises? Among others the FGUP Kreml( Kremlin) was disbanded. Please use that example to explain.

 

(Kozhin) The FGUP Kreml was created for only one purpose. Since we have quite a few venues for creative work, beginning with the State Kremlin Palace, a large number of halls, and quite nice halls, (we) thought that we needed to help our directors use these facilities, bearing in mind that professionals should work on this. The FGUP Kreml was in fact created at one time for this purpose, but it could not handle its job. This FGUP, as is in principle absolutely normal, began to work more on its own business, organizing tours of well-known collectives and major concerts, but independently of our system. So we proposed that it continue to work on its own activities, but no longer within the framework of the President's Business Administration.

 

(Tsvetkova) In the 1990s it was acknowledged that FGUPs in principle should be abandoned, because they are inefficient. But they still exist. Why?

 

(Kozhin) First, there was no such categorical aspect. Yes, the decisions were being made. But the basis was economics. If an enterprise is working efficiently, and we have a great many of those, specifically in the form of federal state unitary enterprises, why change the form and why liquidate it? So we still have them, and I think that we will continue to. It is a different matter that with the changes in legislation that are constantly happening, and that is a normal phenomenon, changes will take place here too. For example, serious amendments were made to legislation, to the Land Code, and to the Tax Code, and today everything that applies to land has changed fundamentally. Land taxes have risen very seriously. Our enterprises own or rather manage very large parcels of land. The situation changed drastically with the introduction of these innovations and the appearance of serious taxes on land parcels. Even major enterprises that are working efficiently will not be able to pay land taxes in the future. Naturally in these conditions we will think about changing their specialization and changing the legal form.

 

(Tsvetkova) But what specific lands and legal form are you talking about?

 

(Kozhin) They are those enterprises that in our country manage dacha and housing complexes in the far and near Moscow Region. They are facilities on the Black Sea Coast and in Mineralnyye Vody -- with the specialization of sanatorium-resorts.

 

(Tsvetkova) In the Moscow Region, for example, the Rublevo-Uspenskiy Complex and the Voskresenskoye Rest Home?

 

(Kozhin) Yes. And the Rus Sanatorium and the Dagomys Complex on the Black Sea; it applies to them. Here we will analyze. Those that we need and that work efficiently we will evidently convert into federal state institutions. That changes their commercial component and restricts business. If an enterprise is not able to pay the land taxes, which will rise tens of times, it means that they will be converted into FGUs, and there is an altogether different system of taxation there. Everything that they earn they will use for their own upkeep and among other things receive budget money.

 

(Tsvetkova) Do the enterprises pay deductions from profit into the budget?

 

(Kozhin) Today all of our enterprises pay all taxes and send deductions from profit to the federal budget. We have the very large Predpriyatiye po Postavkam Produktsii (Enterprise for Output Deliveries), which works on material-technical support and deliveries of major goods, motor vehicles, and other things to federal organs of power. This enterprise's earnings last year came to roughly 3 billion rubles. Accordingly, the net profit was about 200 million rubles, and roughly 30 million rubles were transferred to the federal budget.

 

(Tsvetkova) Such a profitable business as hotels belongs to the administration. Please use the example of the Prezident Hotel to tell us how much it obtains from providing lodging to delegations and officials, and how much from outside clients?

 

(Kozhin) The Prezident Hotel is a very efficient hotel that does a good job. If we are speaking of financial results, the proportion of capital received from the state is roughly 3% of the capital that they earn. Last year their turnover came to 1,251,000,000 rubles. The proportion of state money in this amount came to roughly 2.2%, that is, around 27.5 million rubles. The enterprise is busy just like any other Moscow hotel and operates successfully in this very complicated, very dynamic market.

 

(Tsvetkova) The budget of the business administration for this year is almost 40 billion rubles. At what point in the preparation of the budget do you learn this figure and how can you influence it?

 

(Kozhin) Naturally we learn of it just like everybody else, when the State Duma approves the budget and it becomes law. Naturally we work in advance with everybody necessary: with the specialized ministries, with the Ministry of Finance and the Ministry of Economic Development.

 

It is a fairly complicated and lengthy process -- the formation of the business administration's budget petition. Defense of this petition occurs at various levels in the above-mentioned ministries, where a detailed discussion and analysis of the petition that we are forming goes on:what we intend to spend the money for, what amount, and when. And this occurs at various levels: from specialists who assemble the materials to managers, ministers, and special commissions where the priorities are determined.

 

We try to show our priorities, and they are accepted or not accepted. When necessary certain questions are submitted to the level of the government's leadership and even the president.

 

And only later, when this petition has been approved at all levels, that is to say, it is believed that those figures that we are announcing are really necessary, is it sent to the State Duma. There this work continues, and then when the approval of the budget occurs, we learn the final figure. As a rule the figure that we announce and that ends up in the State Duma, with the rare exception and perhaps with small corrections, is in fact approved.

 

(Tsvetkova) So then 40 billion rubles -- is that in fact your petition?

 

(Kozhin) Yes, of course.

 

(Tsvetkova) We compared the business administration's budget for this year with the budget from five years ago. It turned out that the proportion of the administration's expenditures in the total expenditures of the federal budget rose by a quarter. In 2008 it was 39.5 billion rubles (0.56% of the total expenditures), and in 2003 -- 10.76 billion rubles (0.45% of the total expenditures). Does that mean that the standard of living of government officials is rising faster than that of ordinary citizens, or are new challenges being set for you?

 

(Kozhin) The second, of course. Undoubtedly, the standard of living has risen, but just as it has in all other spheres of activity. That does not mean that all this capital isused only to improve officials' lives. Certainly not. I would say that 90% of the capital that was added during that time to improving life has nothing to do with wages. The bulk of the capital is used for investment and development. What does that mean?

 

To illustrate, let us say that we began to order a large number of planes. In effect we are changing our entire aircraft fleet. Because many planes have become outdated, everybody knows that. They were built back in the Soviet Union. At one time the airliners were good, reliable, and efficient, but now they do not meet contemporary requirements, and many have already outlived their service life. This job has not been done for many years. The time has come when we simply must do this. And here practically every year we build several new planes and helicopters and put them into service. The motor vehicle fleet is being upgraded.

 

A very large amount of capital is being directed to capital construction. People are talking about some things, for example, the Constitutional Court's move from Moscow to St.Petersburg. In addition to the fact that this is quite a serious political decision, very serious money directed to create infrastructure was allocated for it. Reconstruction of the Senate complex in St. Petersburg, where the Constitutional Court in fact moved to, is complete. Very great, very extensivere construction. This is a world-class monument, a masterpiece that was restored and reconstructed, and as specialists acknowledge, it was done quite well.

 

We are continuing work in St.Petersburg. The second major project there is the presidential library next to the Constitutional Court in the historical building called the Synod. Next spring we will finish this site. It is also fairly serious capital. We have quite a few such sites.

 

Big money is being directed to reconstruct our sanatorium complexes. To illustrate, the Russia-European Union summit meeting was held on the Volga in the Volzhkiy Utes (Volga Cliff) Complex. It was in effect rebuilt and converted into a top level contemporary hotel. To sum up, we can say that 90% of the increase in the budget was used specifically for these purposes.

 

(Tsvetkova) What phase is construction of the presidential library now in? Supposedly difficulties have arisen there because of archeological discoveries, true?

 

(Kozhin) There were no difficulties there. It was an anticipated problem. It is a unique building in the center of St. Petersburg. When the builders came, we expected that at some point they would run into something while working in the earth, with the foundation. That is in fact what happened. It modified the program in just one aspect -- the time table. We wanted to finish the entire project by the end of this year, but when truly unique finds were discovered and archeologists asked us to allow them to work for a while, this opportunity was granted. Naturally it entailed a small increase in the time table for finishing the work. So we will not be able to finish all the work in the Synod complex atthe end of this year. It will be completed in March of next year. The library will be ready. Then another month or perhaps a month and a half will be needed to launch and debug all the systems. After all, a unique library like none other in our country is being created. It is an electronic library with unique multimedia halls. We will officially open the library in April or May (2009).

 

(Tsvetkova) We were looking at the documents, and they showed that certain competitions for construction were cancelled. Why?

 

(Kozhin) Working there are an enormous number of organizations -- construction, restoration, and information. An enormous project and enormous work. All of them go through the competition procedure. We keep track of this. I do not have the information that something was cancelled by someone.

 

(Tsvetkova) Will there be something else there besides the library? For Lukashenka, for example, the library serves in part as his residence where he holds meetings with heads of other states. Is something similar planned here?

 

(Kozhin) Since it is called the presidential library, there will be a president's office where he will be able to work when he is in St. Petersburg, and that includes using the entire range of materials on the history of the state that are concentrated in the library. The complex is being created so that quite large events can be held there. It will have a multipurpose hall suitable for measures of any level. All the conditions will be created there.

 

(Tsvetkova) How large events? A Big Eight summit meeting, or bilateral talks at the most?

 

(Kozhin) In speaking of Big Eight summit meetings, you must understand that in addition to permitting eight heads of state to gather at one table, you need a place where they can live and their delegations can be lodged, where people are fed and your journalist colleagues live -- all this must occur in a single space, in a single complex. So Big Eight summit meetings always meet in an enclosed area, with a single complex where all these tasks can be accomplished.

 

(Tsvetkova) What do you think of the fact that the presentation of the president's message this year was moved to a different building in the Kremlin? Instead of the Marble Hall, where the CPSU (Communist Party of the Soviet Union) Central Committee met --St. George's Hall in the Grand Kremlin Palace. Is there symbolism in that?

 

(Kozhin) It seems to me that the president's decision was absolutely justified. The president's message is a program document that establishes the country's policies for the near future. St. George's Hall is truly more suitable for this purpose than the Marble Hall. It has that kind of history; you cannot get away from it. We do not intend to erase everything that is associated with the CPSU Central Committee. A great many events happened there in Soviet times. St. George's Hall is the history of the Russian state, the history of the Russian Empire, and the history of Russia. It is all there on the walls in the form of people's names and in the form of the names of the military units. So of course it is very formal, very solemn, and more appropriate for making such a document public.

 

(Tsvetkova) No competitions are held for providing housing for deputies; the business administration does it. Is such a system efficient?

 

(Kozhin) No competition is needed here; there are other norms and other laws. For example, under the law on the status of a State Duma deputy, the state provides official housing during the period he is performing his duties. This housing was built at one time, and after presenting a set of documents, the elected deputy receives an official apartment. Naturally, without any competition. His term in office ends-- and a different deputy, the newly elected one, comes there.

 

(Tsvetkova) The business administration recently held a competition and bought a lot of apartments in the Monomakh housing complex in Sokol in a very good building. For whom?

 

(Kozhin) We did not buy anything in Monomakh. But if you are speaking of housing, housing construction is done in two ways. Either we build an entire building ourselves, or because of limited internal resources, we recruit investors. The land parcel for housing construction is allocated and a competition is declared for whoever offers the best terms. And the winner of the competition, a private company or an investment company, in fact manages this construction and is responsible for the erection of the particular residential building. After it is finished, a certain number of the apartments are transferred to us. They go into our housing fund and later are distributed within the established framework. There are no special rules about specifically which building a particular officia lshould live in. There is a general waiting list. Housing commissions operate in all the organs of power, and documents from people needing housing go to them. They in fact make the decisions and submit them to us, and we then allocate an apartment to the particular official.

 

(Tsvetkova) And are there norms, for example, about how many square meters a deputy minister should actually have, and how many the boss of an administration should have?

 

(Kozhin) No, there are no norms other than the Housing Code.

 

(Tsvetkova) But does the business administration or the state organ's housing commission make the final decision as to who gets how many meters and where?

 

(Kozhin) The final decision is made on the basis of the documents. There is a fairly lengthy procedure where we analyze the makeup of the person's family, and after that the amount of housing area that he can hope for is determined, but then where he will obtain the housing is determined by what possibilities we have. We do not build so very many. As a rule it is, of course, not in the central part of Moscow, but not on the outskirts either. The decision on the particular address is made in our office.

 

(Tsvetkova) So then an official who does not have very high status might get a four-room apartment?

 

(Kozhin) If he has the grounds for that, the number of members in his family, then yes, he will receive a large apartment.

 

(Tsvetkova) There were a lot of rumors going around about your possible new appointment -- as vice premier, the Moscow city chief, oblast governor, that they were expecting you in St.Petersburg... So just where (are you going), Vladimir Igorevich?

 

(Kozhin) You know, just where haven't your colleagues had me appointed in the last eight years? I can say one thing: I am now working in the business administration and for now I will continue to work here.

 

Kozhin's Catalogue

 

"With the election of the new president, no cataclysms or changes in absolutely everything occurred in our office. Everything is the same, and there is also continuity with respect to presidential residences," Kozhin reflects.

 

Officially the Kremlin, Gorki-9, Borcharov Ruchey in Sochi, and a "small residence in Valday" have been assigned to the president. "All the rest, including the Konstantin Palace (in a suburb of St. Petersburg) are not residences of the president," Kozhin explains. "Konstantin Palace is a state residence, and measures on the state level are held there -- under the aegis of the president, the prime minister, and the Federation Council, as well as international measures. As for other cities, there is usually a governor's residence. The president comes and spends the nights there. That's all." In St. Petersburg on Kamennyy Island today, the K-4 complex consisting of four small historical buildings is being reconstructed. "When necessary the president, the prime minister, top level St.Petersburg guests, the Federation Council speaker, and the State Duma speaker will be able to stay there. To make it clearer -- it is a state hotel (within the city limits)," Kozhin adds.

 

The Mayyendorf Castle, which Dmitriy Medvedev often uses, has the status of a guest residence. "There was nothing there before. Earlier it had fallen down and been demolished and abandoned. We restored it just a couple of years ago. The president simply liked to use it. That is why events with his participation occur there so often," the president's business manager says.

 

According to Kozhin, Novo-Ogarevo, which was considered President Vladimir Putin's official residence, is now simply a state dacha, like Boris Yeltsin's home in Barvikha. No one is living in Yeltsin's dacha now, and when necessary it may be transferred to some top federal official. "We have several dachas where no one is living now. Because everything is changing. Today there is a particular vice premier, and tomorrow -- a different one. One has his own dacha, and the other does not, because he came from Siberia, for example. We are obliged to offer him a place to live and relax," Kozhin relates.

 

Kozhin Will Build a Parliamentary Center

 

"The position of the president and the premier is that we need such a center. But everything depends on our budget's potential," Vladimir Kozhin says. According to him, the center will not be located in Moskva-Siti (Moscow-City), as was believed earlier.

 

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Source: "Vedomosti"