Corruption In Russia - Thoughts?
http://www.businessinsider.com/hedge-fund-investi…
Interesting video discussing an extortion attempt in Russia on Hermitage Capital, obviously I'm skeptical about the accuracy of the video, but also intrigued to hear thoughts about the current state of Russia.
Great vodka,
that is all
Whenever I hear of business in Russia, I think of this story:
Robert Kraft, owner of the New England Patriots, was visiting Russia and met with Putin, who asked to try on Kraft’s Super Bowl Ring. Kraft obliged. Putin put the ring on and walked away without saying a word. The ring was his. Kraft could do nothing but return ringless to America (fortunately, Belicheck won a few more).
Do you want to do business in a country ran by a petty thief?
Our office has almost a zero tolerance policy for Russian "Private Equity" bids. Some of the biggest crooks in the world reside in that country, which is sad because there are some really great/smart people there. This is funny because I just finished a book on the Beslan School massacre, & its really sad how that country is run. Its a good read if you don't mind being bummed out.
"Cowards die a thousand deaths, but the brave only one," Bill Shakespeare
The first time I stayed in Moscow, I can't remember the name of the hotel, but it was roughly the equivalent of an Embassy Suites (all-interior hotel with an almost identical layout). The rooms were nothing to write home about, but it was $400 a night. A burger, fries, and a beer cost me $25 in the hotel restaurant, and the breakfast buffet (which consisted of powdered eggs, bacon, and coffee) was $24.
The most striking thing that said the most about Russia in my book was the sign on the back of my hotel room door. The door had about 6 locks on it with multiple dead bolts. The sign read something along the lines of, "In spite of the fact that this is an all-interior hotel, we cannot guarantee your safety. Do not open the door for anyone."
My next trip to Russia I actually had to stay awhile, so I rented a converted Soviet project apartment in Moscow where the wall had been knocked out to make it roomier. The landlord had gone from the Russian government to the Russian mob, evidenced by the look of terror on my neighbors faces and the Aston Martin that would cruise through the neighborhood three or four times a day. I speak halfway decent Russian, but it didn't matter because no one will talk to you. People won't even look at you.
In July, I had a few drinks with the head of the Moscow desk for the Atlantic Monthly. He's lived there 12 years now, and there is zero competition for his job because no one wants to live there. He has actually gone native, married a local girl, and can actually speak about a few things he likes there, but even he admits the place is a completely corrupt shithole run by two-bit thugs from the President on down.
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I actually find it funny that this is the topic of discussion, as I can't help but think of something I saw on Zero Hedge on friday about Hermitage Capital Management. Long story short is that they are an activist fund that has been investing in Russia since 1996 and has spent nearly the past three years dealing with the Russian government accusing them of corruption, ill gotten gains and the like. Here's the wiki overview and a few articles that corrorberate.
http://en.wikipedia.org/wiki/Hermitage_Capital_Management http://in.reuters.com/article/fundsNews/idINL965363720091009 http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6282598… http://www.nytimes.com/2008/07/24/world/europe/24kremlin.html?_r=1&hp=&… http://www.efinancialnews.com/homepage/content/1055398803
The Forbes Russia chief editor was assassinated 5 years ago, he was American and of Russian descent. He reported on too many details and published too many rich lists in a corrupt country.
Wow. Thanks a lot for the link. I work with Russian markets and Russian corporate governance issues from the US, and found this illuminating in a lot of ways.
Thanks also to Fried for linking the articles about Hermitage's activities. What Hermitage neglected to mention in the video was that one of their main activities was exposing corruption. And I'm only speculating here, but my guess is they made more than a pretty penny on shorting the stocks they were about to expose (why wouldn't they?). I'm not going to comment on whether or not that's a moral or immoral strategy, or whatever. It's just business, and this is Russia. But if this is the game you play, you'd better understand that you're gonna piss off a whole, whole lot of people. And don't go crying to mama when you get smacked upside the head.
What I'm saying is, Hermitage is trying to play the innocent in that video, and I'm not buying it.
Still, this is probably the most brazen, high level takedown I've heard of this side of Yukos. And same as with Yukos, I doubt it could've happened unless they seriously pissed a lot of high-placed officials.
That being said, what happened to Hermitage really does happen to small firms on a regular basis, if they don't have enough political cover. The legal infrastructure is awful; it's riddled with loopholes. In fact, if you run a successful business in Russia, you can literally expect to be attacked sometime soon. There are outfits that target successful firms for extortion or forcible acquisition, after which they usually gut the firm and sell it for scrap.
The only protection is political krysha - cover. It's knowing high-placed officials who can intervene on your behalf. But even then nothing is assured.
Ah, Motherland, sweet Motherland...
Interesting update to this story...
http://www.zerohedge.com/article/hermitage-saga-turns-tragic-fund-lawyer-dies-jail
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