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Managing investment risk in Russia/CIS

Managing investment risk in Russia/CIS. Antony Dutton, Partner. #12537001. Global legal and regulatory risk. Russia and the CIS. Russia ranked as one of the top 20 riskiest jurisdictions worldwide Corruption a key concern, particularly re judicial independence Presidential Decree No 460

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Managing investment risk in Russia/CIS

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  1. Managing investment risk in Russia/CIS Antony Dutton, Partner #12537001

  2. Global legal and regulatory risk

  3. Russia and the CIS • Russia ranked as one of the top 20 riskiest jurisdictions worldwide • Corruption a key concern, particularly re judicial independence • Presidential Decree No 460 • Recent conviction of Alexei Navalny • Implementation of • Convention on Settlement of Investment Disputes (unratified) • UN Convention Against Corruption (in force December 2005) • Prosecution for embezzlement / misappropriation of funds only • High threshold of RUB1.5m for prosecution • Articles 290-291 of Criminal Code limit penalties to fines • Lack of protection for whistleblowers

  4. Risk factors – business practices • Undocumented agreements • Use of personal corporate vehicles • Complicated ownership structures • Ultra vires transactions • Aggressive interference • Do your own business practices contribute to risk?

  5. Other risk factors • Corporate raiders • Corrupt officials • Corporate governance • Shareholder disputes • Money laundering • Enforcement

  6. Criminal authorities • Risks of involvement • Loss of control (including corruption risk) • Possible delay to civil, private and domestic investigations • Tipping off other creditors • Unwanted publicity • Expenditure by wrongdoer • Timeframe • Potential benefits of involvement • Is there an obligation to notify? • Cross border co-operation • Enhanced power of criminal authorities • Criminal conviction may form basis for civil action • Sends a message to the marketplace

  7. Risk mitigation • Global risk policy • Warning signs • Tailored countermeasures • Offshore holding companies • JV arrangements • Multiple registrations • Reputational/media management • Local risk policy • KYC on counterparties • Legal system - procedure and advice • Regulatory landscape • Criminal authorities • Political environment - profile and contacts • Commercial realities

  8. Dechert worldwide

  9. Dechert LLP Definitive advicePractical guidancePowerful advocacy dechert.com Almaty • Austin • Beijing • Boston • Brussels • Charlotte • Chicago • Dubai • Dublin • Frankfurt • Hartford Hong Kong • London • Los Angeles • Luxembourg • Moscow • Munich • New York • Orange County • Paris Philadelphia • Princeton • San Francisco • Silicon Valley • Tbilisi • Washington, D.C. Dechert practices as a limited liability partnership or limited liability company other than in Almaty, Dublin, Hong Kong, Luxembourg and Tbilisi.

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