Too big to fail? A Balkan retail crisis unfolds

The collapse of Croatian retailer Agrokor Group, one of the most important employers in the Balkans, is sending shockwaves through the region. In April, the government rushed “Lex Agrokor” through parliament in a bid to save the company and prevent scores of bankruptcies among its supply chain. But creditors – including Fidelity, AXA and the Canadian Pension Plan – want their money back and the government itself might fall. Allegations of longstanding accounting fraud are also being levelled, and PwC is being lined up to investigate.

“Agrokor has transformed itself from the biggest private company into one of the biggest systemic risks to the Croatian economy,” Morgan Stanley’s economist Georgi Deyanov wrote in a note to clients. “The government’s action resulted in the implicit state guarantee of Agrokor’s short-term debt and arrears to suppliers.”

Full story & analysis from Bloomberg here: Billions Are Sinking Into a Balkan Black Hole

Turkey’s failed coup – what next?

“The Turkish government moved swiftly to calm investors before financial markets reopen Monday after a failed coup, with the central bank promising unlimited liquidity to lenders and the deputy prime minister posting on Twitter that there’s “no need to worry.”

Bloomberg reports on the immediate fallout of the failed coup – full story here:Turkey calms investors

Columnist Leonid Bershidsky assesses the view from Russia – Lessons for Putin


Kazakh Privatization: Ensuring Safe Investment

On December 25, 2015, the Kazakh National Economy Ministry published a list of large state-owned organizations to be privatized during 2016 – 2020. These include Temir Zholy, the Kazakh railway company; KAzMunaiGaz, an oil and gas company; Samruk-Energy, a company engaged in the production, transmission, distribution, and sale of electricity; Kazachstan Gharysh Sapary, focusing on development of space activity in Kazakhstan; Kazgeologiya, the national geological exploration company; the Kazakh sovereign wealth fund Samruk-Kazyna; and the Astana international airport.[1] According to the Minister, large-scale privatization is a priority of the Kazakh government in 2016.

Given the global relevance of the Kazakh market, many international corporations are expected to participate in this privatization: last month the country became the 162nd member of the WTO, recent trade and investment deals were signed with the UK,[2] US and China[3], and Kazakhstan has been for several years developing a national FDI strategy.

Privatization, as one of the market reforms, often aims at improving economic efficiency by reducing the role of the state. Yet, the process of privatization, which is the cornerstone for prospective efficiency, has to be carried out with great care.

Corruption, which in the words of Joseph Stiglitz, represents “perhaps the most serious concern with privatization, as it has so often been practiced ….”[4] might greatly impair those involved – both the state and the competing investors.

Corruption continues to represent not only a moral disgust, but also a substantial economic burden on corporations. Furthermore, often neglected are the tremendous legal risks for individuals and their respective corporations.

It is of the utmost importance that all companies that take part in this privatization invest considerable time and resources in corruption prevention measures. To that end, deep-dive legal and risk due diligence must be undertaken, and strategic business intelligence must be collected and studied before making any commitment to the undoubted opportunities presented by Kazakh privatization.

CNS Risk has deep and varied experience of advising international corporates in Kazakhstan. Contact us directly to learn how we can help your company.


[1] A complete list of the state-owned companies that will be offered for privatization can be found at:

[2] See e.g.

[3] See e.g.

[4] See Stiglitz, J., Globalization and Its Discontents, 58 (2002, Allen Lane the Penguin Press, UK).

CNS RISK/ CIBG/ HBLF/ DLA PIPER – 2nd Integrity Workshop, Oct 13 2015

How prepared are you to react to today’s growing risks?

Oct 13 2015: CIBG, CNS RISK, DLA PIPER and the Hungarian Business Leaders Forum present a second interactive senior executive workshop with prominent CEE business leaders. The workshop will again explore challenges to business integrity and how they can be mitigated.

  • Interaction with peers & experts on managing whistleblowers or allegations of misconduct.
  • Learn how corporate intelligence is employed as a preventative measure and how it should be a third pillar of any due diligence exercise.
  • Consider how cultural differences across companies can render a compliance system useless.

The event is free of charge, but places are strictly limited.

For more details see here: Budapest Integrity Workshop, October 13

Contact CNS Risk for an invite:   Request an Invite


CNS Risk in Bucharest – Integrity training

CNS Risk is proud to be part of the CEU Business School’s Integrity Training workshops. Held in Bucharest on Jun 29 and 30, this event is the latest in a series of management training sessions held by the CEU’s Centre for Integrity in Business & Government. CNS Risk’s managing partner, Nick Sarvari, is a key speaker and panel member.

For more info on the event:Managing Integrity – Bucharest Jun 29

For more info on the CIBG’s work:Centre for Integrity in Business & Government

Risks in the urban environment

The EIU put out a fascinating piece of research last week, the Safe Cities Index, 2015.  Going beyond crude crime stats, the survey looks at a wide array of evolving risks to public safety in the urban environment: digital security, health security, infrastructure safety and personal safety.

Tokyo tops the overall rankings;  US cities lead on digital security while Europe lags behind. Middle Eastern metropolises show that wealth and resources do not guarantee safety.

Of particular interest to us is that the EIU sought the opinion of our friends at Kroll during this research, evidence that corporate intelligence companies are adept at identifying and mitigating risks on the new digital frontline.

Read the abstract here: EIU Safe Cities Index 2015


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