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Doing Business in Russia is Like Playing Roulette
February 4, 2011 17:04

Russia looks attractive for investment and business development, but the problem of possible risks still remains.

As says CBS Interactive Business Network, due to poor law enforcement, the proliferation of weapons and corruption, Russia suffers from a wide variety of crime. According to the Time, in country exists a thing, "known as reiderstvo, or "raiding," a term that describes an array of illegal tactics — including identity theft, forgery, bribery and physical intimidation — used by corrupt policemen, tax officials, lawyers and financiers to seize a person's business or property". According to the Time, businessmen not only risk losing their assets, but they can also end up in jail on trumped-up charges brought by corrupt law enforcement officials and prosecutors.

One of the most shocking story is Magnitsky's case. Sergei Magnitsky was a Russian attorney and a partner of British law firm Firestone Duncan, his death in police custody generated international media attention.

Sergei Magnitsky was an attorney and represented American Investment advisory firm Hermitage Capital Management on charges of tax evasion and tax fraud. Hermitage firm had been supplying press with some information on a number of occasions related to corporate and governmental misconduct and corruption, according to Wikipedia. One of the company co-finder, Bill Browder, was expelled from Russia as a threat to national security after allegations that his firms had evaded tax.

In November, 2008, Magnitsky was arrested on charges that he helped Mr. Browder with tax evasion. Magnitsky's colleagues say that during the investigation he accused of corruption a number of employees of Russian law enforcement agencies. From the moment of detention, Magnitsky had been interrogated for three or four times, but no investigation was carried out. Sergei called himself a hostage. In the court he said, that he was a hostage and nobody as interested in his person, as all the attention had been paid to the head of Hermitage.

In July, already imprisoned, Magnitsky was diagnosed with gallstones and appointed a regular treatment. At the end of the month he was sent to another prison Butyrka and deprived of medical treatment. Browder says, "they basically said to him if you sign the following false confessions then we'll give you medical treatment - otherwise we won't". Magnitsky wrote numerous complaints to the court and prison authorities requesting medical treatment but all his requests were ignored and denied. On November 16 Magnitsky died for reasons that prison officials called "rupture to the abdominal membrane". It became known that he had complained of worsening stomach pain for five days prior to his death.

According to RIA Novosti, Magnitsky's death "caused public outrage and sparked discussion of the need to improve prison healthcare and to reduce the number of inmates awaiting trial in detention prisons."

It is sad that this is not the only one case, there are too many of them. Even the foreigners say that there is no rule of law in the country — journalists are getting murdered for turning up dirt on corrupt officials, also it is not unusual for foreign companies to have their assets taken. As Mr. Browder says, "Why shouldn't Western companies invest in Russia? The answer is because it's Russian-roulette capitalism. It's entirely possible at any point to literally have your head blown off doing business in Russia, and my own case is a prime example".

Ksenia Dzha

Author: Ksenia Dzhalagonia

Tags: Russian business Hermitage    

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