“Your first 50 right steps to enter the Russian food market”.
Step № 10 – “Corruption and crime”
This step is exclusively for foreign companies that already have a business in Russia or intend to open it. As in any country, there is corruption and crime in Russia, and it is foolish to deny it. According to the 2018 Corruption Perceptions Index, Russia ranks 138 out of 180 countries along with Mexico, Papua New Guinea and Iran. Sounds scary right?And now let me tell you a little about how to protect your business from corruption and crime in Russia. What I will tell you is not a theory, it is my practice. I have two degrees in law and I am a police officer by my education. I became a top manager later in my career. Therefore, I will begin by telling you about crime, and then about corruption and how to avoid it.
Crime in Russia.
Crime in Russia has two main reasons – low standards of living and alcohol. Unfortunately, alcoholism in Russia is a big problem, both women and men drink. Alcohol is probably the biggest reason for committing crimes. If you already have a business in Russia, immediately ban any use of alcohol in the company. In Russia, beer is alcohol too. So do not allow alcohol neither on holidays nor on Fridays.
If you have a production facility in Russia, be sure to prohibit alcohol in the factory, employees with alcoholic intoxication at a workplace, which is normal for Russia, should be immediately dismissed. Many foreigners feel sorry for Russian employees who work when they are drunk, but this cannot be done. Fire them immediately. You will always find a new person.
Therefore, introduce in your company an official order that prohibits alcohol in the office and in the company. Every employee must sign this order to ensure that he is aware. If this employee violates your order and gets drunk at work, you can dismiss him/her immediately without violating the labor legislation of Russia. Oblige the HR department head to strictly monitor the execution of this order.
The second thing you might encounter is theft. Your workers can steal products, raw materials, money, or information. I always recommend a foreign company operating in Russia to have its own security service or at least a security adviser.
Immediately put cameras of video surveillance in your offices, warehouses, and production facilities. Everywhere you have your property or assets. Remember, no matter how long you live in Russia, you will always be a foreigner and people will always want to steal something from you. Because everyone thinks that they are smarter than you since you are a foreigner.
Ensure there is a monthly inventory of your assets and check of balances and stocks (money, raw materials, goods). It should be every month and not less often! If there is an opportunity to do it more often, do it more often. Your Russian employees should see that you are the owner of your company and you take care of your property.
Never trust your accountant. Once every 3 months, invite an independent auditor to verify your accounting. In Russia, a lot of sales are made in cash, always have a separate safe for cash. Keep the keys of this safe. In general, it is a good rule to get a separate safe where you will keep important documents, company stamps, and cash. Do not give passwords or keys to anyone.
In Russia there is a saying “If you are notified in advance, it means you are armed”.
Over the time, you will understand who of your Russian employees you can trust. There are a lot of honest, decent, non-drinking and hardworking people in Russia. And there will be such people in your company too.
In case you learn about theft in your company, immediately call the police. Theft is a crime and should be punished according to the criminal law of Russia.
Note – in Russia it is not considered to be theft to take paper or pens from the office. For Russians, this is a normal thing, accept this and do not pay attention.
Now there are not as many as about 10-20 years ago when there were thousands of them in Russia. They usually make businessmen pay them every month for the fact that they do not interfere with their business. Also, many groups offer their patronage from interference of other gangs.
Since you are a foreigner, many groups will think that it is very easy to intimidate you and get money from you every month. You can resolve this situation very simply: as soon as you or your company in Russia are offered such “proposals”, immediately go to the headquarters of the police of your city and write a report. The police will help you write such a report correctly. I also recommend immediately contacting a division of the Federal Security Service (FSB) in your city.
The two organizations that fight crime in Russia are the police and the FSB. You are a foreigner and everyone understands that a crime against you or your company is not just a crime, it is already politics. Do not be afraid to contact the FSB and the police, they will always help you.
You can also delegate to resolve these issues to your security chief or security adviser.
Like in many other countries corruption is a problem in Russia. It can be at different levels, but mainly Russian government officials are engaged in corruption. Usually these are bribes for signing specific documents or speeding up specific decisions.
Several years ago, Russia began to introduce a system of electronic applications for different documents and electronic “queues”. You can address many state-owned organization in Russia via their “online receptions”. Even to the President of the Russian Federation. When preparing any documents or permits in Russia, do everything officially. Do not try to solve issues personally. You will not be able to resolve them since you are a foreigner (I have repeated it many times just to protect you).
In Russia, it is a crime to get a bribe and to give a bribe. Remember this. The main defender of your business in Russia from corruption is the Governor of the region where your business is located. There are 85 regions in Russia, each has a governor who is appointed by the President of the Russian Federation. In other words, the Governor is the person to whom the President himself has entrusted to govern the region.
Since 2014 the embargo has been imposed on Russia and the attitude towards foreign companies and foreign businessmen has changed for the better. Each Governor is very interested in the fact that foreign companies open their offices in his/her region. New businesses mean new jobs for Russians and taxes to the budget of this region.
Therefore, to avoid problems in general when you work and open your production facility or office in Russia, introduce yourself to the Governor with a courtesy visit. The purpose of such a visit is to meet personally and present your business and what you want to do in Russia. You will always be welcomed, but be sure to make an appointment in advance and write a letter stating your desire to arrange such a visit.
You need to plan such a visit for two reasons. Firstly, in Russia people do not like when somebody comes without an invitation (this is not acceptable). Secondly, Deputy Governors and ministers who are responsible for the industry in which your business will be able to prepare and get ready for your visit in advance. In this way you will immediately get to know people you really need and will have contacts to resolve any possible issues in the future.
To summarize, I would like to say that crime and corruption in Russia are not as scary as it may seem from foreign mass media. Russian laws will always protect you. Do everything only according to the law.
Business Adviser in the Russian Food Industry
Please read the same my other steps:Backward