The Rise of Reiderstvo: Implications for Russia and the West
Introduction
Reiderstvo, or corporate raiding in Russia, is a pervasive practice that involves the illegal acquisition of businesses through corrupt and violent means. This practice has significant implications for Russia’s economy, business climate, and international relations.
What is Reiderstvo?
Reiderstvo distinguishes itself from Western corporate raiding by its reliance on illegal tactics such as bribery, forgery, corruption, intimidation, and violence. It has evolved into a systematic process that capitalizes on the weaknesses of Russian institutions, endemic corruption, and the abuse of legal mechanisms.
Stages of a Raid
A typical raid in Russia follows four stages:
- Preparation: Identifying the target and gathering information.
- Negotiation: Applying pressure through various means to force the business owners to comply or sell.
- Execution: Implementing the takeover using tactics such as falsifying documents, malicious prosecutions, and regulatory harassment.
- Legalization: Laundering the acquired assets to make them appear legitimate, often through rapid reselling.
Impact on the Business Environment
Reiderstvo significantly undermines Russia’s business environment. It deters new business ventures, decreases investor confidence, and contributes to the country’s unfriendly business climate. The lack of judicial protection and rampant corruption makes it difficult for legitimate businesses to operate and thrive.
International Implications
The practice of reiderstvo not only affects domestic enterprises but also has international repercussions. Foreign businesses operating in Russia are at risk, and high-profile cases have discouraged international investment. The use of international legal mechanisms, such as Interpol red notices, to target business owners further complicates the global business landscape.
Conclusion
To address the issue of reiderstvo, Russia needs to implement significant legal and institutional reforms. Strengthening the rule of law, reducing corruption, and ensuring judicial independence are crucial steps toward creating a stable and attractive business environment. Without these changes, reiderstvo will continue to hinder Russia’s economic development and its integration into the global economy.
Sources
Shelley, L., & Deane, J. (2016). The Rise of Reiderstvo: Implications for Russia and the West. TraCCC Consulting LLC.