Arkadi Gontmakher, the owner of Global Fishing Inc., based in Bellevue, Washington, was the largest importer of the Russian crab in the United States. Gontmakher was arrested in Moscow in 2007 when he was arrested and charged with poaching, money laundering and organizing a criminal organization. After being acquitted in December 2010, he was rearrested and charged with the same charges again. The Washington Post describes his situation this way:
Gontmakher was caught up in a criminal justice system that makes doing business here a high-risk enterprise – one in which those in power, or with access to power, routinely use the police and courts to crush their commercial rivals, and in which being tried twice for the same crime is a matter of course, if that’s what it takes to keep someone out of circulation.
This hand’s on approach to managing the economy is also shown through the capital markets. The Russian leadership of Vladimir Putin, Dmitry Medvedev and Igor Sechin have all called for increased foreign investment and strategic asset sales to boost the economy. Of the four companies that announced IPOs to close last week, only one, VTB, the state-owned bank came to the market. The other three, all private sector companies, Severstal, Chelpipe and HMS all abandoned their IPOs due to poor market conditions.
Here is the Financial Times’s assesment of Russia’s capital markets:
Russia’s private entrepreneurs have to take their chances when they know the Kremlin is in the market. The fact that three non-state issues were pulled reflects badly on the sellers and their advisers – the prices they sought were clearly too high. But the Kremlin should be concerned about the damage done to Russia’s reputation in the market.
