No more bribes, say foreign firms in Russia

International companies working in Russia have pledged not to offer backhanders. Good luck to them...

Last Updated: 06 Nov 2012

More than 50 international firms have signed an agreement to help clean up business done with the Great Bear. Among the predominantly German bunch are Siemens, Deutsche Bank, Deutsche Bahn and Axel Springer AG. Their aim certainly seems noble enough - anti-corruption group Transparency International reckons bribery in Russia totals $300bn a year.

Indeed, we can't help thinking that attempts by outsiders to tackle such an endemic element of Russian business are a little optimistic. Corruption is so ingrained in the Russian way of working that saying you won't give cheeky backhanders is a little like wading into a British office announcing a ban on tea, or proclaiming to the French that you won't stand for polishing off half-a-dozen bottles of plonk over a four-hour lunch.

And it's not just the natives who are at it. A couple of major international firms have been stung for possible corruption there recently. A few German executives at Hewlett Packard are accused of paying Russian officials $11m in bribes to win a $47m contract. Meanwhile German carmaker Daimler has agreed to pay $185m to settle a US corruption case involving offences committed in Russia. They've now come unstuck courtesy of domestic investigations, but they could argue they were simply playing the game as it's played in those parts. When in Russia...

President Medvedev has - in public at any rate - made fighting corruption one of the main goals of his presidency. Over the past year or so he has tightened the laws on bribery, uncovering thousands of violations of state laws on a largely small-fry level. But he's keen to show he means business, and can point to some real heavy-hitters among the signatories to this latest accord, launched with much fanfare at an official ceremony in Moscow. We so hope the doormen for that event were taking sweeteners to let people sneak in.

But while the intentions may be pure, we'd be surprised if the results of the international accord match up to its lofty aims. Russia's current wealth was built on an almost lawless period of smash-and-grab capitalism that followed the fall of the USSR, and which gave rise to many wealthy oligarchs. For a company to come in saying they won't stoop to bribery is likely to simply hand business to others who will.

We suggest the system might be more effective if it punished the companies receiving the backhanders, rather than the ones nodding and winking as they passed them on. And of course the whole thing relies on the anti-corruption authorities themselves remaining whiter than white - pretty hard to gaurantee given the prevailing business culture there...


In today's bulletin:

Borrowing hits record high, but could boost Labour...
Ryanair first as O'Leary backs down
Punctual Deutsche Bahn punches Arriva's ticket for £1.6bn
No more bribes, say foreign firms in Russia
Pearl & Dean: the reel deal?

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