Abstract
Governments in certain countries have directly and indirectly influenced the activism of non-governmental organisations (NGOs). This study extends prior studies on NGO accountability by showing the potency of accounting in enabling governments to use the pretext of visibility to indirectly achieve an outcome – curbing activism – similar to that resulting from the direct prohibition of foreign funding. It examines how an accounting regulation was utilised to discipline human rights organisations (HROs) and their members of staff by using the case of the ‘foreign agents’ law in Russia. This accounting regulation abruptly changed accounting for foreign funding to stigmatise HROs and influence their political activism. More specifically, the ‘foreign agents’ law: created a new group of governable objects by labelling them as ‘NGOs performing the functions of a foreign agent’ to distinguish them from other types of NGOs; encumbered NGOs with costly reporting requirements; and empowered government authorities to discipline ‘deviant NGOs’ and their employees. The threat of inspections, penalties, damaged reputations and spoiled identities through public shaming campaigns and negative publicity not only resulted in a substantial reduction in human rights activism but also led to the demise of Russian HROs and human rights defenders.
| Original language | English |
|---|---|
| Article number | 102129 |
| Journal | Critical Perspectives on Accounting |
| Volume | 72 |
| DOIs | |
| Publication status | Published - Oct 2020 |
Keywords
- Accounting regulation
- Disciplinary power
- Foreign funding restrictions
- Human rights organisations
ASJC Scopus subject areas
- Accounting
- Finance
- Sociology and Political Science
- Information Systems and Management
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In: Critical Perspectives on Accounting, Vol. 72, 102129, 10.2020.
Research output: Contribution to journal › Article › peer-review
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TY - JOUR
T1 - Disciplining human rights organisations through an accounting regulation
T2 - A case of the ‘foreign agents’ law in Russia
AU - Goncharenko, Galina
AU - Khadaroo, Iqbal
N1 - Funding Information: To ‘normalise’ activism, the ‘foreign agents’ law contained mechanisms to punish and reward behaviour. The government’s regulation enforced by stigmatising labelling, invasive inspections, media smear campaigns and witch-hunting, as illustrated in the previous sections, motivated NGOs to substantially decrease international collaborations, renounce foreign funding and reduce human rights and opposition activism. Initially, Russian HROs and their foreign donors were not prepared to deal with the dramatic change and implications of the new regulation on their activities ( Podrabinek, 2013 ). The law was enforced in a period of less than a year from the moment the government’s initiative was announced, despite strong resistance from the sector claiming that the law would restrict civic space and violate fundamental freedoms of expression, association and assembly ( Gorbunova & Baranov, 2013; Jakobson, Mersiyanova, & Efremov, 2012 ). Moreover, the ‘foreign agents’ law did not allow a transition period, with the consequence that the long-term projects undertaken by Russian HROs financed by overseas donors had to be stopped immediately ( Skibo, 2016, 2017 ). In addition, the largest foreign sponsor of Russian NGOs, the United States Agency for International Development (USAID), was asked by the Russian government to end all activities within Russian territory promptly on 1 October 2012, as “some of the agency’s programs, such as… human rights groups and election monitoring, have undermined Russia’s sovereignty” ( Rojansky, 2012 ). Prior to that, USAID had worked in Russia for 20 years, spending around $2.7 billion in grants of which democracy support programmes had accounted for about a third. 5 5 https://www.usaid.gov/where-we-work/europe-and-eurasia/russia Assessed 21.03.17 Rebellion: The law not only instituted accounting and reporting complexities, but also bestowed the much dreaded and despised ‘foreign agents’ status. Unsurprisingly, HROs resisted the new law, and none of the HROs voluntarily accepted the ‘foreign agent’ label. Modern Russia, reported that: 6 6 As on 15 December 2018, «foreign agent» register includes 102 empowering and advocacy NGOs/HROs. A research and analytical think-tank, the Institute of The [Moscow] Helsinki Group’s chair, Lyudmila Alekseeva, proudly declared that her organization would never register as a ‘foreign agent’ – by renouncing its foreign funding. One can put a brave face on a sorry business for as long as one wishes, but the fact remains: the Moscow Helsinki Group had to comply with an illicit legislation and accept the rules of the game imposed by the regime ( Podrabinek, 2013 ). From 2013 until 2017, 66 Russian HROs complained to the European Court of Human Rights (ECHR) against the Russian regime and claimed that the ‘foreign agents’ law violated their rights to freedom of association and expression that are protected under the European Convention on Human Rights ( Gorbunova & Baranov, 2013; Skibo, 2017 ). In 2017, the Institute of Law and Public Policy, which plays a third-party mediating role in the hearings on the complaint, claimed that the ‘foreign agents’ law “exceeds the limits of acceptable state involvement in the private lives of citizens”. 7 7 http://www.bearr.org/russian-response-to-echr-on-foreign-agents-law/ Another third party in the hearings, the Council of Europe’s Commissioner on Human Rights, asserted that: [NGOs] should be free to solicit and receive funding not only from public bodies in their own state but also from institutional or individual donors, another state or multilateral agencies, subject only to the laws on customs, foreign exchange and money-laundering, as well as those on elections and funding of political parties. Reporting requirements should be set up on an equal and non-biased basis regardless of the sources of income. 4 In addition, in its intervention to the ECHR, the Council referred the locutions ‘NGOs performing the functions of a foreign agent’ and ‘foreign agent’ used in the law to a linguistic expert at the Modern Russian Language Department at the V.V. Vinogradov Institute of the Russian Language of the Russian Academy of Sciences. The expert confirmed: The locution ‘foreign agents’ was used repeatedly by the authorities and investigative bodies as a standard accusation against tens of thousands of [Russian] citizens during the political repressions of the 30 s and 40 s; this locution was fixed in the accusatory speeches of Soviet public prosecutors… court sentences… on the pages of Soviet newspapers… this locution entered the consciousness of native Russian speakers… as a synonym for an enemy spy or… someone who serves in the interests of an enemy… No reasoning… can rebut the strong connotation accompanying the phrase foreign agent: ‘acting in the interests of … enemy state’. 4 In response, the Russian Ministry of Justice sent the ECHR a memorandum defending the ‘foreign agents’ law and denying the law is excessive or restricts the activities of HROs. As of October 2019, the ECHR has not yet made any decision on this case. Compliance: Despite the ongoing case at the ECHR, when the new regulation came into force, Russian HROs had to comply. The consequences surrounding the new legislation initially fostered a sense of self-discipline among HROs who officially declared that they would no longer accept foreign funding to avoid acquiring a ‘foreign agent’ label associated with reputational damage and spoiling organisational and professional identities ( Gorbunova & Baranov, 2013; Sevortian, 2013 ). In addition, many HROs stopped disclosing information about their former foreign supporters on their webpages and documents. This led to a radical change in stakeholders and accountability relationships and created uncertainties in the financial sustainability of HROs. To replace foreign funding, Russian HROs aimed to conduct crowdfunding campaigns to collect money from individual donors to enable them to operate their programmes and pursue their activities ( Cukier, 2014; Podrabinek, 2013 ). However, they were not able to raise substantial funding nationally due to the lack of philanthropic traditions, an absence of incentives and legislative infrastructure in Russia (particularly in the human rights sector), ineffective accountability instruments, underdeveloped civil society, and a paucity of large institutional funds and corporate donors that support human rights activism ( Jakobson, Mersiyanova, & Efremov, 2012 ). Negative connotations associated with locutions ‘foreign agents’ and ‘political activism’ and the discrediting impact of media campaigns have turned off potential Russian donors ( Sevortian, 2013; Skibo, 2017 ). Russian donors generally avoid direct public affiliation with HROs or particular causes and prefer not to disclose donations made. However, they might support these organisations on an irregular basis by discretely providing cash donations and other types of support (e.g. in kind) that are difficult to trace ( Gorbunova & Baranov, 2013 ). The ‘foreign agents’ law increased the visibility of donations by mobilising inspections, ‘foreign agents’ register and media disclosures and, in doing so, violated the privacy of donation acts and donors. This demonstrates both that the disciplinary effect of the ‘foreign agents’ law has widely spread through the population and that the decisions of potential donors not to support HROs may be attributed to the consequences of unwillingness to be seen with particular ‘others’ (in this case, with antagonists and ‘enemies’ of the Russian government). Coping strategies: outlines HROs’ initial response to the regulation, the three main adaptive strategies mobilised by them (including those that had to bear the stigma attributed to the obtained ‘foreign agent’ status) to cope with the ‘foreign agents’ law, and the implications for their activities. Table 3 Dormant NGOs: The first adaptive strategy of ‘sleeping mode’ , involved HROs renouncing foreign funding, shutting down most of their programmes to cut costs and switching to volunteer labour instead of using paid professionals ( Skibo, 2017 ). For example, during her interview with the National News Service in October 2014, the Moscow Helsinki Group’s chair, Lyudmila Alekseeva, explained the consequences of adopting this survival strategy as follows: We are just surviving at the moment… We have had to stop our most expensive awareness-raising programs… [MHG] used to hold summer schools and winter schools on human rights, which trained 340 people… We can’t do that any longer… The monitoring programs, our primary activity, can be carried out by volunteers. Of course, volunteers work less effectively because they cannot dedicate themselves completely to the task ( Cukier, 2014 ). MHG stopped using foreign funding and relied heavily on national funding. shows the changes in the list of funders between 2012 and 2013 prior to and after the ‘foreign agents’ law coming into force. Table 4 8 8 http://webcache.googleusercontent.com/search?q=cache:GYTOVRbRVDEJ:www.mhg.ru/english/190c97f+&cd=4&hl=ru&ct=clnk&gl=no ;; http://www.mhg.ru/smi/13B6CFA2 . Accessed 21 March 17. The MHG renounced foreign funding to avoid coming under the scope of the jurisdiction of the new law and attempted to launch a crowdfunding campaign in 2013 to raise funding locally. However, it was only able to raise funding of about 60,000 euros towards its annual expenses of 970,000 euros, the remainder of which were covered by foreign funding reserves accumulated prior to 2013. 9 9 https://www.mhg.ru/sites/default/files/files/2013-mhg-ot.pdf According to its 2014 annual report, the MHG was able to raise and spend about 210,000 euros (including two grants from Russian foundations), 10 10 https://www.mhg.ru/sites/default/files/files/2014-mhg-ot.pdf but its scale of operation was about 4.5 times lower than in 2013 after the implementation of the ‘foreign agents’ law. Docile NGOs: HROs that chose not to substantially reduce their activism followed a second adaptive strategy, which we term ‘reorientation’, to seek funding from national sources to finance their activities. This (normal) behaviour, which was desired by the authorities, was rewarded in the form of presidential (i.e. government) grants, which were awarded via the Presidential Grants Foundation ( Lutskova, 2017 ). However, the reorientation towards national sources and cooperation on government-approved projects resulted not only in compromising independence, but also in the annihilation of the network of foreign donors that had taken time to develop. Moreover, the level of funding from national sources is significantly lower than that provided previously by the foreign donors ( Podrabinek, 2013 ). Whilst the Presidential Grants Foundation provided funding of over 55 million euros in 2016 and 90 million euros in 2017 to Russian NGOs ( shows the top five largest grants awarded in 2017. Lutskova, 2017 ), less than 10 per cent of the applicants were successful ( Ivanushkin, 2015 ). HROs face stiff competition from each other and from pro-governmental organisations. Table 5 The process of awarding presidential grants lacks transparency. There are no criteria provided to winners, whilst the Presidential Grants Foundation itself is politically connected with the government ( Cukier, 2014; Podrabinek, 2013 ). The structure of the Presidential Grants Foundation permits Russia’s presidential administration to be directly involved in the selection process and award grants to politically connected organisations ( Kalikh, 2017 ). For example, the Russian president’s favourite motorcycle association, the Night Wolves, has received over 850,000 euros since 2014 ( Bennetts, 2017 ). The presidential grants documentation explicitly prohibits the “financing of political parties, campaigns and actions, preparation and staging of manifestations and protests”. 11 11 https://xn--80afcdbalict6afooklqi5o.xn--p1ai/public/home/documents?tagId=9 Kalikh (2017) found that although the applications for presidential grants submitted by ‘foreign agents’ in 2017 were strong, none of them passed the second round of review. Only a few independent HROs that avoided ‘foreign agent’ status were able to receive some presidential funding in 2017 ( Lutskova, 2017 ). Moreover, both Russian and foreign media closely relate the grants with the name of the Russian president, which makes such source of funding inappropriate for certain activist groups ( Bennetts, 2017 ). Deviant NGOs: HROs that were not able to reorient their funding towards local sources, or that revealed traces of foreign funding in their accounting and financial documentation in the process of inspections, fell under the jurisdiction of the ‘foreign agents’ law and were forced to register as ‘foreign agents’ . Undesired (‘abnormal’) behaviour of these governable objects was penalised by the authorities ( Gorbunova & Baranov, 2013 ). All HROs ‘performing the functions of a foreign agent’ had their rights restricted and were subject to significant reporting and scrutiny. According to Russian Law No. 121-FZ (the ‘foreign agents’ law), they were required to maintain separate bookkeeping for any funding received from abroad, undertake an annual paid audit and provide the Ministry of Justice with information about their activities and management control systems every six months and about their expenditures every quarter. HROs registered as ‘foreign agents’ experienced a shift in power relationship and distortion in accountability – from donors to regulators and empowered inspectors ( Rozin, 2013; Skibo, 2017 ). Lack of docility and deviant behaviour resulted in costly administrative reporting hurdles. The prominence of the ‘foreign agents’ law, the scope of what constitutes political activism, and the disciplinary consequences sent strong signals to civil society activists about the need to conform to the expectations of the regime and its supporters. More than 60 HROs had been fined a total of over 215,000 euros for performing the functions of a foreign agent without prior registration as ‘foreign agents’; 33 HROs had been sanctioned for failure to submit financial and activity reports on time; and 27 HROs had been sanctioned for failure to display the ‘foreign agent’ status in their publications ( Mukhametshina & Churakova, 2016; Skibo, 2017 ). Moreover, 33 HROs had been liquidated because they were unable to pay their fines or comply with the legislation ( Skibo, 2017 ). The Ministry of Justice has the power to initiate the liquidation of deviant HROs. For example, in March 2016, Agora (an organisation of 35 lawyers that investigates power and human rights abuses) was liquidated by the Supreme Court in response to a request by the Ministry of Justice to apply the ‘foreign agents’ law ( Skibo, 2017 ). Between 2014 and 2015, Agora experienced intensified tax inspections and was accused of tax evasion. Agora was given the ‘foreign agent’ label in 2014, together with 77 other HROs, as a result of the prosecutors’ investigation, which claimed that Agora received funding from abroad and was involved in political activism ( Litvinova, 2015 ). Agora appealed against the allegation, but the court rejected the appeal. In the same year, “the ‘foreign agents’ law precluded Agora from accepting the monetary contribution awarded as part of the Rafto Prize Foundation for human rights work”. 12 12 https://s3-eu-west-1.amazonaws.com/rafto-documents/Letters/2016–02-15-LetterBrendeonAgora.pdf Additional inspections of Agora led to a liquidation request by the Ministry of Justice on the grounds that Agora influenced public opinion and did not mark the materials it publishes with the ‘foreign agent’ label, and government inspectors were dissatisfied with Agora’s quality of financial reporting and management control systems ( Litvinova, 2015 ). The discriminative character of the ‘foreign agents’ status had its ramifications beyond the ‘foreign agents’ law. New legislative initiatives explicitly imposed restrictions on and removed privileges from governable objects labelled as ‘NGOs performing the functions of a foreign agents’. For example, the Ministry of Justice banned organisations that had been given ‘foreign agents’ status from taking part in the process of providing expert and independent anticorruption assessment of laws ( Grobman & Chernykh, 2018 ). In addition, as a result of the discriminatory status, several HROs lost their strategic partners from the public and non-profit sectors, for whom ‘being seen’ in cooperation with ‘foreign agent’ NGOs became undesirable: In March 2017, the Ministry of Education branch in the Sverdlovsk region advised local government entities and high schools against cooperating with the Ekaterinburg society ‘Memorial’, because it was registered as a ‘foreign agent’ and due to the potentially negative influence on young persons of its ‘politicised actions’… [Local] charity foundations… [denied their financial support to another ‘foreign agent’ NGO, the Civil Assistance Committee], which became unable to carry out any further activity for the benefit of migrants’ children. 4 Although Russian HROs mobilised three main strategies to respond to the ‘foreign agents’ legislation, paradoxically all of them led to the broadly similar outcome of substantially reducing human rights activism. The government was able to use the ‘foreign agents’ law to achieve its covert agenda of transforming the operational setting of Russian HROs to quash human rights activism. This success has motivated the government to broaden the scope of the legislation to discipline and stigmatise Russian divisions of international media and popular bloggers that are mostly critical of government. In 2017, the Russian parliament extended the scope of the ‘foreign agents’ law, which now requires international media operating in Russia to be registered as ‘foreign agents’ and subject to disciplinary measures and implications. 6 Funding Information: We dedicate this paper to the late Lyudmila Alekseeva, the matriarch of the human rights movement in post-Soviet Russia and the chair of the Moscow Helsinki Group, and to all human rights defenders in Russia, for whom human rights are a matter of everyday challenge and ongoing achievement. We acknowledge with thanks the invaluable comments provided by Trevor Hopper, Jim Haslam, Carolyn Cordery, Andrea Mennicken, Matthew Hall, Dorothea Greiling and Sami Adwan. We would also like to give our special thanks to Cheryl Lehman and two anonymous reviewers for their constructive and helpful comments. Publisher Copyright: © 2019 Elsevier Ltd
PY - 2020/10
Y1 - 2020/10
N2 - Governments in certain countries have directly and indirectly influenced the activism of non-governmental organisations (NGOs). This study extends prior studies on NGO accountability by showing the potency of accounting in enabling governments to use the pretext of visibility to indirectly achieve an outcome – curbing activism – similar to that resulting from the direct prohibition of foreign funding. It examines how an accounting regulation was utilised to discipline human rights organisations (HROs) and their members of staff by using the case of the ‘foreign agents’ law in Russia. This accounting regulation abruptly changed accounting for foreign funding to stigmatise HROs and influence their political activism. More specifically, the ‘foreign agents’ law: created a new group of governable objects by labelling them as ‘NGOs performing the functions of a foreign agent’ to distinguish them from other types of NGOs; encumbered NGOs with costly reporting requirements; and empowered government authorities to discipline ‘deviant NGOs’ and their employees. The threat of inspections, penalties, damaged reputations and spoiled identities through public shaming campaigns and negative publicity not only resulted in a substantial reduction in human rights activism but also led to the demise of Russian HROs and human rights defenders.
AB - Governments in certain countries have directly and indirectly influenced the activism of non-governmental organisations (NGOs). This study extends prior studies on NGO accountability by showing the potency of accounting in enabling governments to use the pretext of visibility to indirectly achieve an outcome – curbing activism – similar to that resulting from the direct prohibition of foreign funding. It examines how an accounting regulation was utilised to discipline human rights organisations (HROs) and their members of staff by using the case of the ‘foreign agents’ law in Russia. This accounting regulation abruptly changed accounting for foreign funding to stigmatise HROs and influence their political activism. More specifically, the ‘foreign agents’ law: created a new group of governable objects by labelling them as ‘NGOs performing the functions of a foreign agent’ to distinguish them from other types of NGOs; encumbered NGOs with costly reporting requirements; and empowered government authorities to discipline ‘deviant NGOs’ and their employees. The threat of inspections, penalties, damaged reputations and spoiled identities through public shaming campaigns and negative publicity not only resulted in a substantial reduction in human rights activism but also led to the demise of Russian HROs and human rights defenders.
KW - Accounting regulation
KW - Disciplinary power
KW - Foreign funding restrictions
KW - Human rights organisations
UR - http://www.scopus.com/inward/record.url?scp=85076508240&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85076508240&partnerID=8YFLogxK
U2 - 10.1016/j.cpa.2019.102129
DO - 10.1016/j.cpa.2019.102129
M3 - Article
AN - SCOPUS:85076508240
SN - 1045-2354
VL - 72
JO - Critical Perspectives on Accounting
JF - Critical Perspectives on Accounting
M1 - 102129
ER -