PROMOTING GOOD PRACTICES FOR BUSINESSES IN RUSSIA
by Igor Abramov
The U.S. and Russian Governments are taking steps to draw attention to the importance of good business conduct and to facilitate change among Russian businesspeople and officials. Working bilaterally to create conditions for significantly increased trade and investment is a key goal of the U.S.-Russia Business Development Committee (BDC) under the Joint Commission chaired by the U.S. Vice President and the Russian Prime Minister. The BDC, in cooperation with the Chamber of Commerce and Industry of the Russian Federation and in consultation with Russian and American businesses, has developed Basic Guidelines for Codes of Business Conduct to promote good business practices and ethical behavior in commercial relations.
The Basic Guidelines are a set of general principles that are widely accepted in international business. Key areas addressed by the code of conduct include:
$ Principles in Personal and Professional Relations
$ Corporate Governance: Relationships with Shareholders
$ Relationships with Employees
$ Relationships with Other Enterprises
$ Relationships with the Global Community
$ Relationships with Government Authorities
$ Proper Checks and Balances
$ Prevention of Extortion and Bribery
Recognizing that laws, regulations, and other circumstances specific to an industry or company might require special adaptation in implementing the Guidelines, they are offered as a tool that can be used by businesses as a foundation for developing their own codes of conduct and professional standards.
The BDC is also working on several other commercial rule of law projects, including (1) a handbook on commercial dispute resolution in Russia to assist companies and practitioners in better understanding the existing mechanisms for resolving commercial disputes in Russia, which is expected to be ready for distribution before the end of this year; (2) a handbook on corporate governance to encourage fairness and transparency for shareholder rights and best business practices; and (3) a manual of recommendations on recognition and enforcement of foreign and domestic arbitration awards and court judgments as a means for improving mechanisms for arbitral awards and court judgments.
Novgorod as Pilot Program Region
As part of implementation of the Guidelines, the BDC reached an agreement with the Novgorod regional government, city, and businesses to implement the Guidelines in Novgorod as a pilot project. Understanding that foreign investment is critical to developing and fostering an open economy in the region, the government adopted investor friendly legislation in 1996. Currently, some 200 joint venture companies with foreign capital are active in the region.
Novgorod=s efforts to prove itself an investor friendly environment make the region an attractive site for testing the Guidelines. The region of Novgorod views implementation of this project as an important tool to attract additional foreign and domestic investment. Having a reputation as a noncorrupt region where business is done legally and ethically gives the Novgorod region a better image than an expensive public relations campaign.
OECD Conference in Novgorod
A number of international organizations are working to promote integrity, accountability, and transparency in business in Russia. The Organization for Economic Cooperation and Development (OECD) and other international organizations have expressed keen interest in the Guidelines, and the BDC is working with these organizations to establish cooperation on implementing the Guidelines through private-public partnership initiatives. As a first step in this cooperation, the OECD held a two-day conference, AIntegrity in Private Sector Development in the Russian Federation,@ in Novgorod on July 22B23, 1999. The conference concentrated on the issue of ethical behavior for the private and public sectors, establishing codes of conduct within companies, administrative barriers to doing business, and adhering to the principles of rule of law in conflict resolution. Attended by approximately 90 participants, the event attracted Russian federal and regional officials, Russian private sector executives, and nongovernmental organizations (NGOs).
Next StepsCCreating an Enabling Environment
The BDC wishes to provide a long-term, sustainable initiative that can be institutionalized over time and that will best serve the business community in Novgorod and Russia=s other regions. To achieve this purpose, the BDC has developed a pilot program to train individuals from Moscow, St. Petersburg, and Novgorod in the United States as consultants for three months. Following the training, these individuals will return home to help local companies design and implement business codes of conduct and professional standards.
Implementation of the Guidelines through broad-based participation of multilateral and lending institutions, goverments, the private sector, and NGOsCsuch as the U.S. Export-Import Bank and the Organization for Security and Cooperation in Europe (OSCE)Cis a key goal of the BDC. As part of this effort, there are plans for a follow-up workshop in summer 2000 in another region of Russia to demonstrate the results of implementing the Guidelines in Novgorod and other regions. The OECD will organize the workshop in cooperation with multinational institutions, Russian federal and local governments, and NGOs.
The Basic Guidelines for Codes of Business Conduct can be found, in both Russian and English, on OECD=s website at www.oecd.org/daf/psd/acnetwork.htm and BISNIS= website at www.bisnis.doc.gov/bisnis/country/codebusen.htm.
Igor Abramov is Special Advisor for Trade and Commercial Projects in the U.S. Department of Commerce=s Office of Russia and Independent States.
The BDC encourages companies to provide feedback on the Guidelines. Please address your comments to: Igor Abramov at tel: 202-482-2042 or igor.abramov@ita.doc.gov.