The Russian Way in business - part 2

Just to verify my previous writing about the Russian Way, please check out this article in New York Times: Guilty Verdict for a Tycoon, and Russia

Here are a few delicious excerpts from the text:

But Mr. Putin’s line is just that — a line. In addition to tossing Mr. Khodorkovsky in jail on trumped-up charges, the Russian authorities also brought bogus tax claims against Yukos itself, shoving it into bankruptcy. Then the government created a dummy corporation to take over its assets, which it sold off, for far less than they were worth, to state-run oil and gas companies, primarily Rosneft, a poorly run company that is now the biggest oil producer in Russia.

“I have never witnessed a state steal such a large amount from investors,” said James A. Harmon, who, as president of the Export-Import Bank of the United States in the late 1990s, spent much of his time dealing with Russia. Said Edward Donahue, a Massachusetts accountant who had invested in Yukos: “They stole my investment,” Mr. Donahue was among a group of investors who tried to sue Russia to get their money back. (The case was thrown out of court.)

Even since the Yukos affair, corrupt Russian politicians and businessmen have routinely used arbitrary laws and regulations to grab assets that didn’t belong to them. Royal Dutch Shell was the majority partner in a group that included the state-owned monopoly Gazprom to develop a giant oil and natural gas field. Suddenly, in 2006, it ran into severe environmental and regulatory problems — problems that disappeared as soon as Shell ceded majority ownership to Gazprom.

A few years ago, BP was the controlling partner in a huge joint venture, amounting to 25 percent of its reserves, with a Russian company called TNK. TNK wanted to control the venture — so, naturally, BP suddenly had visa and other problems. Its business began to be disrupted. Robert Dudley, an American who was running the venture — and is now the chief executive of BP — had to flee the country and go into hiding for a time. Needless to say, the joint venture arrangements were rewritten.

And here's an another interesting piece. This is pretty much the same argument I floated in my writing...

To put it more bluntly, assets that were stolen from Yukos investors like Mr. Donahue six years ago are now being recycled to a new group of investors via Rosneft. Plainly, this doesn’t bother the Russian government, and it probably won’t bother whichever investment bank handles the Rosneft deal. But it should bother the rest of us — a lot. After all, if you can steal the assets once, what’s to prevent you from stealing them again?

So, by all means, go and invest in Russia. Your money's perfectly safe... not.