Tuesday, December 18, 2007


Doing business in Russia:
Highly educated and well connected, former Federal Security Service officers include among their number Russia's president, Vladimir Putin. And Putin has seeded former colleagues throughout government and appointed them to boards of state-run corporations

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 KGB 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 Sergeyeva, said, referring to Russia's largest carmaker, "so we work with the people who manage the factory. That person is Chemezov." Sergei Chemezov, chairman of the state-run Russian Technology, is a former KGB agent who served with 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.

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