Savour International

Russia’s wealthiest businesspersons aren’t interested in leaving their companies to their children, and are instead ready to pack their bags on a moment’s notice. And they’ve already transferred their assets abroad.

When Russian businesspersons talk about their country, they generally say pretty negative things about it and express equally downbeat feelings about the business climate in Russia now and in the future. “You’re better off not being a businessperson in this country. Only bureaucrats make real money here,” the owner of a large company told the Russian business daily Vedomosti. Another businessperson seconded this view: “I’d really rather not pass on to my children all of the troubles and uncertainty that plague large companies in Russia.”

Apparently most Russian business tycoons feel the same. According to a recent UBS and Campden Research study, two-thirds of Russian millionaires do not want their offspring to take over their businesses. The remaining third of the millionaires surveyed aren’t jumping for joy at this prospect either. The survey respondents were owners of companies with annual sales amounting to more than $100 million and personal net worth ranging from $100 to 500 million.

Modesty as a disguise

The survey respondents readily admit that they expect their children to transfer the family assets abroad, since their offspring are more familiar with the ways of finance and Western culture. In fact, 84 percent of the respondents’ assets have already been placed outside of Russia, chiefly in Cyprus and Switzerland – but not, the respondents emphasised, to evade taxes but rather to protect their capital from corrupt government officials.

The survey respondents mainly complained about the bureaucracy and attendant corruption in Russia, where the latter continues to flourish despite repeated government attempts to eliminate it. Russia’s National Anti-Corruption Commission estimates that anywhere from $240 to 350 billion – 20 percent of Russia’s GDP – has been paid in bribes in Russia. The Transparency International Corruption Perception Index ranks Russia 146th out of 180 countries, along with Kenya and Ukraine.

“You’re better off not being a businessperson in this country. Only bureaucrats make real money here.” According to the UBS survey, rich Russian businesspersons keep a low profile out of fear of bureaucratic capriciousness and have no plans to list their companies on the stock market.

The members of Russia’s business elite apparently also keep a low profile in their private lives. For example, only two of the 25 millionaires surveyed indicated that they own a yacht, a watch collection, or art. The 2003 imprisonment (apparently at the Kremlin’s behest) of the then richest man in Russia, Michail Chodorkowski, and the collapse of his oil concern Yukos have made the respondents extremely nervous, particularly in view of attacks that other businesspersons have fallen victim to over the years.

And even when Prime Minister Dmitri Medvedev adopts a businessman-friendly tone, Russia’s CEOs are acutely aware of the fact that the power of Russia’s entrenched bureaucracy is based on anti-businessperson sentiment among the general populace.

“We’re still feeling the effects today of the loss of trust engendered by the fall of Chodorkowski,” Yevgeni Yasin, former economics minister and now head of Moscow’s Higher School of Economics told Die Presse. “Our political leaders really need to withdraw from the business sphere and leave businesspersons alone.”