IKEA and the Graft Factor
July 23rd, 2009
July 23rd, 2009
The Moscow Times
A decision of Swedish furniture retailer IKEA to suspend further investment in Russia because of corruption is a sign that business here is still fraught with risks for international investors. While President Dmitry Medvedev has taken a clear position on anti-corruption and introduced legislation to curb official bribery, the reality is that corruption continues on a massive scale in the economy and society. However, IKEA’s response to the corruption challenge — to reduce further investment rather than pull out altogether — suggests that the risks can be managed. International companies and governments have an important role to play in helping Russia clean up its act by engaging their Russian counterparts in the fight against corruption.
Amid the financial crisis, governance has been at the center of attention of international regulators. Earlier this year, the G20 meeting showed a new resolve of governments to clamp down on corruption in all its forms. Leaders at the Group of Eight summit in Italy this month renewed their commitment to enforcing the OECD Convention on Combating Bribery of Foreign Officials. In the United States, the Foreign Corrupt Practices Act and its more rigorous application has generated an increasing number of successful cases.
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