When it comes to corruption, Russia takes the cake. And it’s not a cake its political leaders enjoy, as the country tries to position itself as a well-respect and modern emerging market leader

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Kenneth Rapoza, Contributor
Covering Brazil, Russia, India & China.
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I N V E S TI N G | 6/17/2011 @ 5:42PM | 1,608 views
Russia Plagued by Corruption
Perception
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When it comes to corruption, Russia
takes the cake. And it’s not a cake its
political leaders enjoy, as the
country tries to position itself as a
well-respect and modern emerging
market leader. In fact, plagues of
corruption not only have big
international fund managers like
Foxhall Capital Management out of
Russia, it also keeps foreign
For a country as important as Russia, its high marks companies at bay, and hurts the
for corruption scar the new image Russian leaders
are trying to put forth to the world. local economy.
According to a 2010 year-end
corruption perceptions report by Transparency International, on a scale from
1 to 10, with 10 being ultra-clean, Russia scored a 2.1 on the index, down from
a 2.2 in 2009, making it the most corrupt large nation on earth, and as
corrupt as the smaller nations of Southeast Asia and Libya. Moreover,
Russian citizens are the least likely out of their global peers to believe they
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undemocratic view of the world,” says Shan Nair, CEO of Nair & Co, a global
http://www.forbes.com/sites/kenrapoza/2011/06/17/russia-plagued-by-corruption-perception/ 11/2/2011

2. Russia Plagued by Corruption Perception - Forbes Page 2 of 4
risk management solutions firm. Nair, an Oxford nuclear physicist who was As Report Reveals Toxic Ingredients in
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the corruption comes from an anti-West animosity following the break-up of
the Soviet Union in 1991. One client was having tax problems in Russia, so Why Most Women Will Never Become
they sent a female Lithuanian employee from Britain to handle the matter. CEO +34,641 views
She was stopped because of her British passport, and whisked off to Rome to + show more
meet with Russian tax inspectors in an office Nair said was loaded with pin-
up posters of half naked women. “They talked to this woman for nearly an
hour, not about taxes, or what she was doing heading to Russia, but about Kenneth Rapoza
Contributor
how Britain is no longer an empire, though acts like it still is,” he says.
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Alcoholism, widely accepted atheism, and a gangster’s take on morality has
hindered Russia ever since Mikhail Gorbachev officially closed the office of I covered Brazil pre-Lula and post-Lula and spent
the last five years covering all aspects of the country
the president of the USSR in December 1991. Since then, Russians have been for Dow Jones, Wall Street Journal and Barron's.
increasingly ravaged by disease and death. It is the only BRIC country facing a Meanwhile, for an undetermined amount of time,
and with a little help from my friends, I will be
shrinking population. Alcohol related health problems have life expectancy parachuting into Russia, India and China. (I figure
for men at just 60 years old, about the same as in Myanmar and Haiti, Public if Anderson Cooper can parachute, I can parachute.)
Radio International reported last year. The author is a Forbes contributor. The opinions expressed
are those of the writer.
In Russia, elected officials, civil servants and police are viewed as the most
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“Compare corruption in India, with its 2G telecom scandal, to Russia. India
corruption leads to prosecution,” says Nair. “The Supreme and High Courts
are incorruptible; you never hear of judges being bribed. They deal with
problems as they come. In China, there is official awareness of corruption and
Kenneth’s News Stream
accounting tricks, which they use to their corporate advantage. It’s a different
Show all activity (20)
ball game in India,” he says.
Comment 2 hours ago
One of the biggest problems with corruption, whether in Russia or elsewhere, Hey Doug. Thanks for reading and commenting.
is that it makes market competition in next to impossible. You gotta read those articles in [...]
on Getting Over Our Over-Levered Selves
“Political corruption influences competition,” says Sam Fouad, a global
managing partner at Ernst & Young in New York. “Right now we are seeing a Comment 3 hours ago
lot of government and private partnerships, which is ripe for corruption and I was being a little tongue in cheek, Bob. But for
those guys [...]
can definitely skew competition when you have a government largess at your on The Sell Side Of Investment Banking Slowly
service. US companies are focused on this, both in the US and abroad, Being Dismantled
because how do you be successful in those markets and stay true to US rules
Comment 11 hours ago
of governance and corporate transparency? It’s a very delicate balance.” My guess is that the market comes back, maybe
with a force. It [...]
Russia may be the black sheep in the big emerging markets, and that’s had on The Sell Side Of Investment Banking Slowly
Being Dismantled
most of its stocks and the Market Vectors Russia (RSX) exchange traded fund
trading at a risk premium to the MSCI EAFE index. It’s a volatile investment,
Comment 11 hours ago
and a volatile country. Russia wants to change that. It’s hosting the emerging Yeah, its bad. What I want to know is who is
market and Russia-centric International Economic Forum in St. Petersburg going to [...]
this week, now in its 15th year. Corruption was not on the table. on The Sell Side Of Investment Banking Slowly
Being Dismantled
http://www.forbes.com/sites/kenrapoza/2011/06/17/russia-plagued-by-corruption-perception/ 11/2/2011

3. Russia Plagued by Corruption Perception - Forbes Page 3 of 4
Russia is not alone when it comes to corruption. According to Transparency • • • • •
International, when it comes to bribery, India’s got Russia beat hands down.
Percentage of Users Who Paid a Bribe to One of Nine Service
Providers in 2010
India is No. 1. The US is tied with Brazil.
India: 54%
Russia: 26%
China: 10%
Brazil: 5%
USA: 5%
Institutions Perceived as Corrupt by Country
In Russia, elected officials and the police are corrupt. In the US, the
Democrats and Republicans are considered corrupt.
Brazil: Political parties, parliament, congress
Russia: Public officials, civil servants, police
India: Political parties
China: Business, private industry
US: Political parties
Corrupt-o-meter
10: squeeky clean. 0: filthy.
Russia: 2.1
India: 3.3
China: 3.5
Brazil: 3.7
USA: 7.1
Denmark, New Zealand and Singapore: 9.3
Source: Transparency International
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