According to Chaika, all seven of Russia’s state-owned corporations were found to “fail to comply with their statutory functions” or to “engage in activities not envisaged” in their founding.

Particularly problematic was the Russian Corporation of Nanotechnologies (Rusnano), which spent only ten of the 130 billion rubles allocated to the company in November 2007. Most of the funds had instead “been placed in bank accounts as idle money.”

Konstantin Chuychenko, head of the Presidential Control Directorate, said in the same meeting that the government should be required to submit proposals that would consider privatizing the corporations. “Where there is no competition,” he said, “the Cabinet should set a lifetime for the corporations…determined by the particular purpose of each.”

Chuychenko went on to say that the government should appoint state representatives to the supervisory boards of these corporations because of a current lack of transparency. He also proposed making them accountable to the Audit Chamber and other supervisory bodies by March 2010.

President Medvedev’s call for an audit in August was preceded by widespread criticism of state corporations earlier this past summer. A leaked report by the Federal Anti-Monopoly Service called state corporations a main threat to economic competition, and representatives of the Audit Chamber and Anti-Monopoly service were among politicians calling for their elimination altogether.

Government control over Russian business increased dramatically under the presidency of Vladimir Putin. The current seven state corporations – the bank Vnesheconombank, the industrial firm Rostekhnologii, the Deposit Insurance Agency, Rosatom State Nuclear Energy Corporation, the Sochi 2014 Olympic management firm Olympstroy, the Housing and Utilities Reform Fund, and the Rusnano nanotechnology firm – were created to perform specific state functions, and a separate set of regulations allows them to function under significantly less transparency and supervision than their public counterparts. As a result, they have been repeatedly criticized as prone to corruption and harmful to competition.

The FAS report, titled “On Competition in Russia,” will be presented to the Government and Prime Minister Vladimir Putin. While the report finds that competition is becoming marginally better in the country, it also discusses a number of alarming trends. For one, Russia’s largest companies have “hypertrophied,” or grown exponentially larger in recent years. According to official figures, 52 companies and businesses controlled 10% of GDP in 2003, while the number in 2006 was only 11.

The Anti-Monopoly Service lists the petroleum, air transportation, communications, electric power and mechanical engineering industries as some of the most problematic in terms of competition.

State corporations are especially problematic for competition because they are responsible for performing certain functions of the state. Thus, state corporations may distribute money from the federal budget, or take part in setting federal economic policies. Meanwhile, the corporations have notorious bureaucracies and lack of transparency, and do not share profits or dividends with the state.

A number of state corporations have been created in Russia in recent memory. Some of the largest include the Agency for Deposit Insurance, the Development Bank, Olimpstroy (responsible for organizing the Winter 2014 Olympics), Rosnanotekh (responsible for developing nanotechnologies), Rostekhnologii (responsible for modernizing Russian industry), and Rosatom (responsible for the nuclear sector).