Tag Archives: corruption

Democracy that Delivers #24: Karina Orlova on the Risks Reporters Face in Russia and Why She Had to Leave

Podcast guest Karina Orlova (right) with hosts Ken Jaques (center) and Julie Johnson.

Podcast guest Karina Orlova (right) with hosts Ken Jaques (center) and Julie Johnson.

The American Interest journalist Karina Orlova discusses the risks reporters face in Russia and why she had to leave. Orlova talks about her experience reporting on Russian politics and business, and the powerful forces that exert control over journalists and media outlets in that country.

She also shares fascinating insights into current living conditions in Russia and citizen attitudes towards corruption and governance. Follow Karina’s work at The American Interest or on her Facebook page.

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Privatization in Ukraine: Not So Fast

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In Ukraine, thousands of companies are still owned and operated by the government — a legacy of Soviet central planning that bleeds money from the already strained state budget. With the country in economic crisis, there have been renewed calls for Ukraine to speed up its privatization process and sell these firms to private owners who can restructure them and run them more efficiently.

Ukraine’s former Minister of Economic Development and Trade, Aivara Abromavicius, recently made a well-reasoned argument for faster privatization on the Atlantic Council’s blog. Similarly, the IMF has also urged Ukraine to speed up the pace of privatization.

However, focusing on the pace rather than the quality of privatization will likely result in a botched privatization process — which will undermine the little bit of faith Ukrainians have left in the free market and state institutions, potentially leading to the growth of populist movements and destabilizing the current government.

Ukrainian state-owned enterprises (SOEs) remain a drag on the national budget. They serve as incubators for corruption and gray market deals and in some cases serve as piggy banks for Ukrainian politicians. While I agree with Abromavicius that “simplicity, clarity, and transparency,” must be maintained in order to successfully privatize Ukrainian state owned enterprises, his concept of creating a simplified privatization procedure (without advisers) through an online auction of over 1,000 smaller SOEs will likely lead to public anger over a process that would surely enrich insiders.

Without independent advisors overseeing the due diligence process and hiring independent auditors, bidders will not have transparent access to information about the companies listed. This would, in effect, be like buying from an unrated seller on eBay with only a vague description of what is for sale – something that would not inspire confidence in potential buyers.

A lack of independent advisors–and the transparency and investor assurances they would bring to an auction—can lead to lower realized prices for the Ukrainian government, attracting only those bidders with inside knowledge of the true status of the enterprises for sale.

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Democracy that Delivers Podcast #21: After Serving Time for Violating the FCPA, Richard Bistrong Counsels Others on How to Avoid the Same Fate

Podcast hosts Julie Johnson (left) and Ken Jaques (center) with guest Richard Bistrong.

Podcast hosts Julie Johnson (left) and Ken Jaques (center) with guest Richard Bistrong.

Former FCPA violator and current anti-bribery consultant Richard Bistrong (@richardbistrong) was convicted of violating the Foreign Corrupt Practices Act, cooperated with the FBI, and served time in prison. Today he works with companies to help them deal with anti-bribery and compliance issues around the world. He discusses what led to his conviction, and what he learned about corruption risks and the incentive structures that make bribery more likely. He also shares the advice he would give his younger self before he embarked on that first international sales trip overseas that started it all.

Learn more about his work at www.RichardBistrong.com.

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Charting a Way Forward for Business in Kandahar, Afghanistan

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On April 27, the Kandahar branch of the Afghan Chamber of Commerce & Industries and 28 other major business and sectoral associations in Kandahar province, with CIPE’s support, released the Kandahar Provincial Business Agenda report at an official launch event in Kandahar City.

The PBA report lists the primary concerns of the private sector and impediments to commercial growth in Kandahar and other neighboring provinces, as well as a set of concrete policy recommendations intended to overcome these barriers.  These policy recommendations include requests to simplify business registration procedures and documents, lowering tax rates, and improving public infrastructure, as well as recommendations more specific to Kandahar province, including taking steps to improve security conditions at the border crossing in Boldak, on the Pakistani border.

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Russia’s Rent-Seeking Downward Spiral

It is clear that if we do not start taking action today, including by carrying out structural reforms, we could end up going into a lengthy period of economic stagnation tomorrow. Our economy is still based primarily on natural resources rather than on manufacturing. Our economic system has changed little in essence. Where does most of our money come from? From oil, gas, metals and other raw materials.

– Vladimir Putin, Annual Address to the Federal Assembly, April 3, 2001

Fifteen years later, the Russian economy envisioned by that progressive speech by Putin in April 2001 seems to be a distant memory. Russia’s economy, and budget, are still largely dependent upon the sale of oil and the majority of Russian industry is still based on extractive industries. The modern vision of Russia in that speech, one deeply embedded into the international system, where property rights are protected by the undiscriminating rule of law, has been replaced by a cynical “managed” system of crony capitalism where profits are skimmed off by insiders while Russia has isolated itself by its actions on the international stage.

Since 2001, record-setting commodity prices have supported increased social benefits, military spending, and infrastructure investments, each of which has supported corruption schemes where insiders profit off of the state’s largess (see the cost of the Sochi Olympics as Exhibit A). High commodity prices also allowed the Russian government to slowly smother individual rights and free speech at home and, largely through key investments in media, buy the country a larger voice in affairs abroad.

Rather than pulling away from a resource-based economy, Russia’s entire economy appears to now be moving in near perfect correlation with energy prices (see chart below).

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Democracy that Delivers Podcast #14: Arian Ardie on How Indonesian Companies are Coming to Grips with Anti-Corruption Compliance

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CIPE Indonesia Program Coordinator Arian Ardie (Twitter: @aajkt) talks about the burgeoning Indonesian economy, foreign investment opportunities, and how Indonesian companies are coming to terms with what anti-corruption compliance means for them. Ardie also discusses the challenges of meeting cultural norms while being compliant with international business practices, and the inherent “sloppiness” of implementing decentralization and democracy in one of most populous countries in the world.

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Democracy that Delivers Podcast #12: CIPE’s John Morrell on Tackling Corruption — What Can Be Done to Change “Business as Usual”?

Podcast hosts  Ken Jaques and Julie Johnson with John Morrell (center)

Podcast hosts Ken Jaques and Julie Johnson with John Morrell (center)

In this week’s podcast, CIPE’s Regional Director for Asia John Morrell discusses when he witnessed for the first time how lack of governance and corruption undermines democracy and how that experience shapes his work today. Morrell talks about business-led solutions to corruption challenges and a CIPE project underway in Thailand that is changing the business culture in that country. Morrell also discusses his early career experiences in the Philippines and a non-profit he founded there to support an orphanage for abandoned children.

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