Russian Law Enforcers' Meddling In Private Sector On The Rise
"There are numerous examples with law enforcers' attempts to put pressure on business," says Thompson: "Cases against Alexander Lebedev, owner of NRC bank, against Ikea and other major businesses are well-known."
Business ombudsmen, an institution recently established in Russia to protect business rights, is swamped with complaints. More than 700 companies have turned to business ombudsmen in a year, predominantly with complaints against law enforcers. The Russian leadership is attempting to win back the trust of domestic and international companies and entrepreneurs by improving the available infrastructure and enacting new business-friendly laws, but until the corrupt link between the private sector and law enforcers is broken or at least severely limited, trumped-up criminal charges, even if they do not stand up in court, still can damage the reputation of companies and their managers, and will interfere with operation of both Russian companies and international investors in Russia.
"Criminal investigations against industrial companies have become a fact of life in 2013 Russia. The mere fact of a criminal investigation can cause trouble for a company by making debt more difficult to procure, and affect the stock price, and corporate raiders and blackmail artists take advantage of that," Michael Thompson comments on the general situation. According to the RUXX Index, which includes a majority of publicly traded Russian companies, inflow of investment in Russia is on decline. "We explain this primarily by the pressure from law enforcement agencies getting out of control."
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