In Russia, Business World Still Lacks Transparency President Obama and Russian President Dmitry Medvedev are pushing to strengthen investment ties between the two countries. But doing business in Russia remains complicated and risky: Corruption is still common, and getting information about a prospective partner can be difficult.
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In Russia, Business World Still Lacks Transparency

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In Russia, Business World Still Lacks Transparency

In Russia, Business World Still Lacks Transparency

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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Melissa Block.

This week, a delegation of powerful Russian lobbyists is visiting Washington. They are urging U.S. businesses to invest in Russian infrastructure. The trip comes as President Obama and Russian President Medvedev are working to strengthen investment ties. But doing business in Russia is complicated and risky.

And as NPR's Anne Garrels reports, just getting information about a prospective partner can be difficult.

ANNE GARRELS: In Russia, politics and business are inextricably linked. Businessmen who have not supported the current government have found themselves the victims of hostile takeovers, often through illegal or highly questionable means. Close friends of Prime Minister Vladimir Putin dominate boardrooms.

Journalist Roman Shleinov with the independent Novaya Gazeta has been looking into how these relationships work.

Mr. ROMAN SHLEINOV (Journalist, Novaya Gazeta): Certainly, I suppose that I have right to monitor this situation and to show how these businesses grow, where they started, how they are doing this business now.

GARRELS: His most recent investigation targeted Gennady Timchenko, who has close ties to Russia's state-controlled oil companies. His network of businesses trades one-third of all Russia's oil.

Mr. SHLEINOV: I asked them questions about the structure. They refused to give any answers, that we will even give them some more time.

GARRELS: In the end, Shleinov published a story describing what he had managed to glean from public records, as far afield as Luxembourg and Switzerland. Quoting information published by Dunn & Bradstreet, he also reported that Timchenko appeared to have an offshore company in the British Virgin Islands with $30 billion in sales. Shleinov says if this leading trader is sheltering money abroad, that would run counter to what Vladimir Putin has publicly demanded.

Mr. SHLEINOV: For me it's a important question. Putin started his campaign against oligarchs with statements that they withdraw money from the country and don't pay any taxes here. So, should like to understand, if the person is a friend of Mr. Putin, he has some right not to pay taxes here, or I'm wrong?

(Soundbite of laughter)

GARRELS: Timchenko's lawyer, also with ties to Vladimir Putin, immediately responded, accusing Shleinov of revealing company secrets and interfering in the businessman's personal life. He has threatened to take him to court and to involve unspecified government agencies in the case.

Mr. SHLEINOV: It looks like a hint not to ask more questions.

GARRELS: Shleinov also wanted to know why Timchenko was chosen to trade so much of Russia's state-controlled oil. Alexei Navalny, a minority stockholder in the largely state-controlled oil companies, had the same question.

Mr. ALEXEI NAVALNY (Oil Stockholder): (Through Translator) I noticed that dividends did not reflect the company's profits and asked about this. I asked the companies what Timchenko's deal with them was. If they showed that he was the best choice to trade oil, fine. But the companies would not provide any information.

GARRELS: Claiming his rights as a stockholder, Navalny sued. The court rejected his case. Fed up with brazen string pulling and favor trading in the corrupt Moscow courts, he, like many Russians, has now turned to the European Court of Human Rights. It was established under the auspices of the Council of Europe. Russia is a member, and the court's rulings are binding.

By last year, the number of cases filed against Russia in the court was 28 percent of the total - far more than any other country. The Kremlin is not happy with this or with the court's rulings that have highlighted Russian corruption and other official misconduct. It's responded by attacking the credibility of the court and it's blocking an overhaul of the European court that's intended to reduce a multiyear backlog of cases, many of them from Russia.

As Russia seeks to encourage U.S. business, all this raises questions about the government's stated commitment to control corruption and open up its books.

Anne Garrels, NPR News, Moscow.

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