“Very Creepy” Business with Spies

Andrew Kramer at the Times digs into the Oleg Shvartsman story, and gives particular attention to Renault’s due diligence and business dealings with AvtoVaz and Sergei V. Chemezov:

For big Western companies, the prevalence of former Federal Security Service agents in Russian business is raising questions of ethics and due diligence, as a growing number — including Boeing, Exxon Mobil and Renault — have business transactions with Russian companies linked to former spies or members of the political police. Boeing and Exxon declined to comment on their companies’ due-diligence criteria for deals with former K.G.B. officials. A spokeswoman for Renault said her company was “not concerned” with the matter.

“We look at AvtoVaz as an interesting partner,” the spokeswoman, Olga S. Sergeyeva, said, referring to Russia’s largest carmaker, “so we work with the people who manage the factory. That person is Chemezov.” Sergei V. Chemezov, chairman of the state-run Russian Technology, is a former K.G.B. agent who served with Mr. Putin in the east German city of Dresden in the 1980s.“Very creepy” was how one European manager of an equity fund invested in Russia described his dealings with the leadership of a company run by former security service officers. He did not want to be identified making the assessment because he wants to do business with the companies.There is nothing illegal about such dealings, and Russia is an attractive emerging market. The country has drawn $45 billion in Western capital so far this year. And as Mr. Shvartsman’s foray into Silicon Valley, presumably in search of investment opportunities for his funds, showed, Russians are also stepping up their investment abroad of tens of billions of dollars, part of the country’s windfall from high oil prices.It could also be argued that the role former members of the intelligence services play in business here is similar to the outsize role the Chinese Army plays in businesses there.Currently serving security service employees are prohibited from working outside the service, according to Gennadi V. Gudkov, a member of parliament and a former K.G.B. agent.Only, according to an old Russian axiom, no one ever leaves the service. Mr. Putin himself said in his 2000 presidential campaign, using a post-1917 revolution name for K.G.B. precursors, that “there is no such thing as a former Chekist.”

Complete article here.