Can Navalny make a difference in Russia? The Kremlin seems to think so.

“I want changes,” wrote Navalny in a blog post last week. “I want to live in a modern democratic state and I want our taxes to be converted into roads, schools and hospitals, not into yachts, palaces and vineyards.”

Bold words from Alexei Navalny, the public face of Russia’s rising anger with widespread graft and corruption. Can he make a difference? Can he trouble Putin’s grip on power? Unlikely just yet, but his words are striking a chord with an increasing number of voters.

Full story from Reuters here: http://www.reuters.com/article/us-russia-opposition-protests-idUSKBN192167

Trump’s SEC pick clears Senate panel, controversies abound

Jay Clayton, President Trump’s pick to head up the Securities and Exchange Commission (SEC), has cleared the Senate Banking Committee, and now heads to the Senate floor for a final vote.

Of particular interest are Mr.Clayton’s comments on FCPA, which he opined in 2011 caused ‘lasting harm’ to US Companies, and his client list while a star lawyer at Sullivan & Cromwell.

As CNN noted, “Clayton’s list of clients at the elite law firm Sullivan & Cromwell reads like a who’s who list of companies accused of the shady practices the SEC nominee wants to stop.

He’s represented Volkswagen, (VLKAF) which pled guilty to criminal charges over cheating on emissions tests; Valean, (VRX) a drug maker accused of being the “Enron” of the pharma world for fraud; and Deutsche Bank, which has been charged in a $10 billion Russian money-laundering scheme.

Clayton’s also advised Goldman Sachs on its controversial government bailout and Bear Stearns on its fire sale to JPMorgan (JPM).”

Other controversies have come to light, including a Reuters report on possible conflicts of interest, that states “he communicated with more than a half dozen of President Donald Trump’s transition representatives, including one whose company has a multi-million-dollar contract with the SEC, according to documents seen by Reuters.”

We await the Senate vote with interest.

Russia’s anti-corruption champion to challenge Putin

Russian opposition leader Navalny plans to run for president in 2018, Reuters reports.

“”There have not been competitive elections in Russia for 20 years,” Navalny, 40, the founder of Russia’s Anti-Corruption Foundation, said in his statement.

“I’m sick and tired of watching ‘elections’ with the candidates just making up the numbers, not daring to criticize the pre-determined winner. I understand very well that for me even to become a candidate would not be easy.”

Read the full story here: Navalny to run for 2018 Russian presidency

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

 

Turkmenistan: Corruption, Risk and Reward

While recent improvements have been made, extreme caution and sound risk management are still advised.

In January 2016, Human Rights Watch, Freedom House and Transparency International released their 2015 reports on human rights, political freedom and corruption, respectively. All three reports bring into focus the pervading situation across Central Asia: the ubiquity of severe human rights violations, a blatant disregard for democratic values, and an ineffective fight against corruption at government and corporate level.

Freedom House named Turkmenistan and Uzbekistan among “the worst of the worst” with regard to political rights and civil liberties, while Transparency International placed Turkmenistan 154th out of 167 on its annual Corruption Perception Index. Human Rights Watch stated Turkmenistan’s “atrocious” record had actually worsened in 2015.

The International Monetary Fund visited Turkmenistan in November last year and immediately lowered its forecast for 2016 GDP growth by 2.9% to 6%. The general message on the state of Turkmenistan’s government and economy is unequivocally negative.

After the collapse of the Soviet Union there was a strong belief that Turkmenistan would quickly undergo a transition to democracy and free market economics but owing to its historical dependency on Russia and other authoritarian regimes with no tradition of democracy, political pluralism or the rule of law, the transition was de facto doomed. As a result, the investment climate for international companies has remained limited and extremely risky.

But we are observing small green shoots of change. In July 2015 the Turkmen President Gurbanguly Berdymukhammedov dismissed several high ranking government officials for various crimes. This March, the President publicly raised serious concerns over the level of graft in the domestic oil and gas industry, a clear response to the exit of Germany’s DEA Deutsche Erdoel AG, citing corruption and bureaucratic delays. In the same month, the World Bank held a practical training session on fiscal policy and macroeconomic management.

We might therefore conclude that Turkmenistan’s leadership has understood that real and lasting change must be carried out: the rule of law, the free economy and anti-corruption measures must be significantly strengthened before the country may make full use of its natural resources, develop its attendant industries, and deliver substantial economic growth.

Currently the main foreign investors in Turkmenistan are its neighbours, politically and geographically – China, Russia, Kazakhstan and Uzbekistan. A wider audience should understand Turkmenistan’s fantastic potential, but while the potential rewards are great, Central Asia’s authoritarian regimes are not an easy sell in the boardrooms of the west.

CNS Risk has a deep understanding of how business is done in the country and specifically how its oil and gas industry functions; while we acknowledge that this is a difficult country for western corporates to operate in, we have the experience and capability on the ground to help steer businesses through this often hostile environment.

For a demonstration of how we can help, please contact our Former Soviet Union (FSU) & Central Asia team directly. The team is led by Gareth Babbs, a skilled navigator of the bureaucracies of the FSU with 20 years of direct experience as MD/CEO of multinational businesses across the regions.

A.H.

References:

HRW: https://www.hrw.org/world-report/2016/country-chapters/turkmenistan.

Freedom House: https://freedomhouse.org/report/freedom-world/freedom-world-2016.

TI: http://www.transparency.org/cpi2015/

The long arm of the SEC – Ford, Germany and Russia

A few weeks ago the SEC joined a long running German investigation into alleged bribery and corruption of Russian customs officials by Ford Germany and DB employees.  Sources suggest that if the allegations are proven to be true, the accumulated penalties could run into several hundred million euros.

The case raises two important issues.

1. Catching up to UK and US prosecutors, the German authorities are now taking firmer interest in the conduct of German registered companies abroad.

2. If a parent company has any exposure whatsoever to FCPA regulations, the SEC’s reach is long and punitive.

Reuters has the background to the story here: SEC joins German Bribery Investigation

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