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The Return of Old Practices

The Financial Times has a good piece today about the concerns of international investors that the old tactics of the 1990s are making a comeback in Russia, whereby oligarchs were able to hide their assets beyond the reach of creditors thanks to instrumentalized courts and bureaucracies – something we’ve seen from Mikhail Fridman’s stake in Vimpelcom to the Prokhorov-Onexim-TGK4 buyout dispute. All of a sudden it seems like everybody is affected by Russia’s lack of an independent legal system, not just the political prisoners. Excerpt from FT:

“From my point of view as an institutional lender, when choosing between Brazil, Turkey, India or Russia, at this point in time Russia isn’t even on the list because the framework isn’t there,” says a senior executive at a large international lender. “For us to be able to step up to the plate, we need confirmation from the government that people can’t use that strategic asset law as a pretence to walk away from obligations,” he continues. “If you can just readily put your company on the strategic asset list it will be impossible for international lenders to use Russian assets as collateral,” the executive adds. “These days, Russia really needs capital. But as long as this issue is outstanding that’s going to be closed.”