Corruption Named As Top Investor Obstacle
www.sptimesrussia.com - By Valeria Korchagina - March 10, 2005
MOSCOW - A survey of 158 foreign companies found that corruption remains the biggest obstacle for investment into Russia, the government said Friday.
A total of 71 percent of the companies polled named corruption as the top barrier to investment, according to the survey, which was conducted by PBN Company for the government's Consultative Council on Foreign Investment.
The companies, about two-thirds of which are already working in Russia, were asked to name five top problems that obstruct foreign investment.
"We all know that corruption is a problem, but the number of people who put corruption at the top of the list came as a surprise," Deputy Economic Development and Trade Minister Andrei Sharonov said Friday after a meeting of the Consultative Council on Foreign Investment.
Sharonov reiterated the government's goal to cut corruption by reducing the number of situations where a bureaucrat can make a subjective decision - a key goal of the yet-to-be completed administrative reform.
The other four obstacles named were administrative barriers (66 percent), selective application of the law (56 percent), conflicting laws and laws that poorly reflect reality (51 percent), and conflicts between the state and business (29 percent).
Surveyed companies put reduction of corruption at the top of their list of suggestions on what the government must do to attract foreign investment.
Interestingly, the survey indicated that foreign businesses working in Russia consider the investment climate to be in a better shape than those that are looking at Russia from abroad. A total 66 percent of investors said noninvestors see the situation worse than it really is.
Almost half of investors, or 47 percent, said the investment climate is better than what is often reported in foreign media, while only 30 percent of noninvestors felt the same way.
While 49 percent of noninvestors expressed concern about their personal safety if they were to work in Russia, only 10 percent of investors shared their fears.
In addition, 70 percent of investors said they had access to enough information to make investment decisions, while only 41 percent of potential investors agreed. At the same time, 35 percent of investors and noninvestors said that information from state officials was not trustworthy. The most trusted source of information proved to be other foreign investors working in Russia.
The survey suggested that the investment climate appears to be improving on many counts but some problems remain the same as they were a decade ago, including bureaucracy, regulations and a weak judicial system.
Viktor Zubkov Made Up a New Black List of Banks
www.kommersant.com - March 13, 2005
Déjà vu
Last Friday, Viktor Zubkov, head of the Federal Finance Monitoring Service announced that ten Russian banks are suspected of laundering. Andrey Kozlov, Chief Deputy of Chairman of Central Bank said ten days ago that they want to revoke licenses from two banks, apparently accessorial to laundering. Neither Zubkov, nor Kozlov named the banks. That is the way a last year bank crisis started. Let’s just hope that this time it will be farce, not a tragedy.
Last Friday, the head of the Federal Finance Monitoring Service summed up the results of the job of his service for the last year. In short, the results are the following: the service ran 3.260 finance investigations and the law-enforcement agencies got 101 materials. As a result, they educed 170 billion laundered rubles. Last year they discovered 70 billion. Still, Zubkov said that the figure is higher not because there appeared more frauds. It’s just because the service began to work more efficiently: “We began to work better, the system is working and we become more professional and built ties with foreign colleagues.”
Later Zubkov went on to the next item- laundering by the Russian banks. The speech created the feeling of déjà vu. According to Zubkov, some banks keep on doing operations that look like laundering. “There are not many of them. Mostly, they are small banks.” Still, it may happen that big banks can be found among the small banks. Ten days ago, Kozlov said that Bank of Russia is examining the possibility of revoking licenses from two banks: “Now we’re working on two more banks.”
Let us remind that last year Zubkov announced that his service suspects of laundering ten banks four days after they had revoked Sodbiznesbank’s license. After that there were lots of rumors about this so called black list. It’s all coming back now.
Last wee, Central Bank revoked tow licenses. The act has nothing to do with laundering. It was done because of a poor financial condition of the banks. Apparently Kozlov meant two other banks. It looks like Russian Depository Bank is one of them. According to Zubkov, its management washed out $20 million and was condemned. The service’s head also accused Bank of Russia on insufficient activity in checking out the laundering banks. The fact is that the service cannot do anything itself. Only Central Bank can execute the examination and revoke licenses. “We offered the Central Bank to do examinations together but got no response.” According to Zubkov, if they had such possibility, it would have been possible to avoid the situation with Sodbiznesnbank.