Russia Among `World's Riskiest' Locations for Investors, Maplecroft Says.

Russia is “one of the world’s riskiest locations for
business to invest in,” according to a survey of
196 nations by U.K risk-assessment company
Maplecroft.
Russia is the 10th-riskiest country for investors,
sliding from 15th last year to place between
Pakistan and the Central African Republic,
Maplecroft’s annual Political Risk Atlas released
today. Brazil, India and China, which along with
Russia make up the so-called BRIC group of
leading emerging-market economies, are ranked
94th, 26th and 62nd, respectively.
Maplecroft, which assesses factors including
conflict, terrorism, the rule of law and the
regulatory and business environment, rates 11
countries including Russia as an “extreme risk” for
investors.
In March, twin suicide bombers killed 40 people
in attacks on downtown Moscow subway
stations, including one near the headquarters of
the successor to the Soviet-era KGB. The
bombings, claimed by Chechen militants, were
the most deadly in Moscow since similar attacks
in 2004.
Apart from the heightened threat of terrorism,
Russia ’s “poor performance is compounded by
its ‘extreme risk’ ratings for its business
environment, corporate governance and the
endemic nature of corruption, which is prevalent
throughout all tiers of government, ” Bath,
England-based Maplecroft said.
‘Politicized’ Khodorkovsky Trial
While President Dmitry Medvedev vowed to
combat corruption when he came to power in
2008, Russians surveyed at the end of July
ranked former president and now Prime Minister
Vladimir Putin ’s inability to deal with the issue
during his 10 years in power as the
administration ’s biggest failure.
Russia is the world’s most corrupt major
economy, according to Transparency
International ’s 2010 Corruption Perceptions Index
issued in October, sliding to the 154th spot of 178
countries and placing it alongside Tajikistan and
Kenya.
The “politicized case” against Mikhail
Khodorkovsky, the jailed former head of Yukos
Oil Co., who last month was sentenced to
another six years beyond his 8-year prison term
for fraud, reflects the lack of judicial independence
in Russia, the Maplecroft report said.
Khodorkovsky’s new conviction on money
laundering and embezzling oil may have
“unintended repercussions” for business in
Russia, state-controlled VTB Capital said Dec. 31.
The “most disturbing detail” was the court’s
rationale for the verdict, VTB said. Charges based
on Yukos ’s use of internal transfer pricing, which
redistributes cash flows among units of a holding
company, creates a precedent that leaves other
businesses open “to attack.”
U.S. and European government officials criticized
the conviction of Khodorkovsky and his former
business partner Platon Lebedev, saying it
weakened the rule of law in Russia and would
harm Russia ’s image among investors.


Source: Http://www.bloomberg.com/news/2011-01-13/russia-among-world-s-riskiest-locations-for-investors-maplecroft-says.html