Putin signs ban on foreign bank accounts into law

Russian President Vladimir Putin signed into a law on Tuesday a ban on top officials and their families holding foreign accounts in a bid to improve a government image left tarnished by a tax scandal and economic slowdown.

But the measure is a watered down version of the original bill initially agreed by parliament that also banned senior figures from owning foreign property.

Putin never explained why he decided to submit his own version of the legislation replacing the original bill. The Kremlin's draft was ultimately passed by both houses of parliament last month and signed by Putin on Tuesday, state media said.

Yet critics and members of the opposition accuse Putin and other Kremlin officials of owning vast estates in world resorts and watering down the bill to protect their own holdings.

Corruption in Russia is said to stem from huge government contracts that are awarded to insiders for inflated prices and from which officials skim off profits.

Some research institutes speculate that corruption may account for about a third of Russia's gross domestic product, while other studies suggest the figure is closer to 10 percent.

The new measure was drafted just as the first signs emerged of real weakness in a Russian economy that never regained the eight-percent annual growth it enjoyed prior to the 2008-2009 global economic crisis.

The government recently revised down its 2012 growth forecasts to 2.4 percent -- about half the rate originally demanded by Putin from his government.

The law published on Tuesday forbids state officials along with their spouses and children from owning foreign bank accounts or other financial instruments such as stocks and bonds.

Those affected include ministers as well as law enforcement officials and judges along with central bankers and even soldiers.

The law offers a grace period of three months for officials to close accounts after their appointment to high office.

Failure to observe the rules can result in dismissals and adherence is ultimately overseen by Putin himself.

First Deputy Prime Minister Igor Shuvalov -- the highest earner in the Russian government with a 2012 family income of $14.4 million -- has been under particular pressure from the media for his stock dealings before he came into government.

Pressure on Shuvalov increased in April when international media published leaked documents of top officials around the world with offshore accounts and trusts in the British Virgin Islands tax haven.

Those included on the list included Shuvalov's wife Olga -- believed by the Moscow media to be one of the richest women in Russia.

Shuvalov had by that stage already begun repatriating the funds to keep himself in line with the new legislation, according to his spokesman.

Putin's powerful chief of staff Sergei Ivanov said in early April that "there are no -- and can be no -- untouchables in the fight against corruption."

"The system is built in such a manner that we can run checks on the declarations... of almost any official," Ivanov said.

But Shuvalov himself -- seen as one of Putin's closest associates -- later candidly told reporters that he disagreed with the new law.

"We started to adopt rather absurd codes of conduct concerning some sorts of foreign property. The next thing you know, if you worked in the private sector, you will not be able to become a deputy or a minister," Shuvalov said.

"To always think that everyone around you is a crook, and to always think that people who have money, that they should not be able to solve problems -- who is then going to solve these incredibly difficult issues?" he asked.