Business in Russia: Like Pulling Teeth In post-Communist Russia, foreigners who try to run their own small businesses face many challenges. Once an inviting destination for American entrepreneurs, Russia has proved to be a tough place to do business. It is an environment rife with government corruption, crooked business partners and gangsters.
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Business in Russia: Like Pulling Teeth

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Business in Russia: Like Pulling Teeth

Business in Russia: Like Pulling Teeth

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ROBERT SIEGEL, host:

In the 1990s, thousands of adventurous Americans went to Russia to make their fortunes. Some struck it rich. But for many entrepreneurs, life has been far from easy. They say small business owners in Russia are under increasing threat from corruption, crime and government control.

NPR's Gregory Feifer has the story of one American who has decided to throw in the towel.

GREGORY FEIFER reporting:

Giovanni Favero's high-technology American-Russian Dental Center occupies plush quarters in the center of Moscow.

(Soundbite of phone ringing)

Unidentified Woman: (Speaking foreign language).

FEIFER: Favero had run a practice in Sacramento for more than 20 years when he first came to Russia to lecture about American dentistry. It was 1991, and he'd believed Soviet standards were advanced until he examined a Russian patient who'd just visited a dentist. Favero says the man still needed 21 cavities filled and a root canal.

Dr. GIOVANNI FAVERO (Dentist, Moscow, Russia): When I saw the kind of dentistry that was actually done here, I said wow, I can really make a difference. But I never did plan on being here very long.

FEIFER: Favero says he eventually realized he'd only make a real impact by opening his own practice. He also stood to make a fortune from newly wealthy Russians with very bad teeth. Favero opened his first clinic in 1995 and a second several years later. He now employs around 40 people.

(Soundbite of dental drill)

FEIFER: But owning a small business in Russia has been more difficult than he'd expected. One morning Favero found two thugs waiting for him outside his Moscow apartment.

Dr. FAVERO: Instead of going to the elevator, I actually started to go down the stairs. Well they thought I was going to go to the elevator, and two of them would've caught me right there, but the ended up pushing me down the stairs, and I got in the corner. At that point I could defend myself, and only one of them at a time could get to me.

FEIFER: The thugs bloodied Favero and broke several ribs before running off. He now believes they'd been sent by the Russian he'd appointed as his company's director and who wanted to intimidate Favero into leaving the country. The director had set up bank accounts and all the paperwork necessary to transfer ownership of the clinic. He needed only Favero's signature.

Favero went to the police instead and managed to keep control of his company. But he says the authorities provide no guarantee of security. Tax police and other officials constantly demand bribes. And Favero isn't alone. Many small business owners say under President Vladimir Putin, the state has begun to reassert control over private industry. Favero says successful businesses are always under threat of being taken over by someone with better political connections.

Dr. FAVERO: If you go into partnership with somebody and the company is losing money, it's your company. If you make money, it's theirs and they'll find a way to get it from you.

FEIFER: Favero says he caught a former partner of his secretly transferring money to the United States. Another time, Favero says, one of his patients, a government official, informed him he could have him killed.

Dr. FAVERO: And I laughed at him and I said you can't kill me until I get those crowns on your teeth, otherwise you're going to be toothless. And all of a sudden he realized yeah, I had him over the barrel, and from then on he's been my best friend.

FEIFER: But Favero says he's now had enough and is making plans to leave. He believes he won't be able to recoup the investment he's made in his clinics over the past decade. But he doesn't regret his time in Russia. It's a real learning experience, he says, to find out just how lucky we are to live in America.

Gregory Feifer, NPR News, Moscow.

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