After the U.S. financial scandals surrounding Enron, WorldCom and Xerox, a number of Russians are feeling a sense of affirmation that their graft-riddled corporate culture is no worse than that in the West.
The American Chamber of Commerce, impressed with how some Russian companies have of late been cleaning up their act, intends to tell the U.S. Securities and Exchange Commission that it should take a lesson from Russia.
The scale of theft in Russia in the 1990s was certainly of a greater magnitude than anything that has been uncovered in the United States in recent months.
But that means little to Russians weary of a decade of allegations about corruption and money laundering.
"For many years we were told that Russians are corrupt and nontransparent," said Yevgeny Yuryev, president of the Aton brokerage. "Now this stereotype has finally been broken and people will see that Russia is no worse than other countries, probably even better."
Economic Development and Trade Minister German Gref said an Enron-style scandal in Russia would be years away because business is not yet transparent enough to meet the international standards under which Enron was being audited.
"It is too early to talk about the full transparency of Russian companies," Gref said at a news conference this week, answering a question from The Moscow Times.
"They are not yet a part of the international accounting system, and this might happen only after most Russian companies and banks -- not only the large ones -- introduce generally accepted accounting principles or international accounting standards," he said. "This will not happen earlier than 2004."
Furthermore, Gref said, the financial consulting and auditing market in Russia remains in its infancy.
Some Russian companies are already suggesting that this lack of financial infrastructure might be to their advantage.
"I have already heard a lot of people saying: "Look how bad America is, why do we need to improve ourselves?'" said William Browder, head of Hermitage Capital Management.
But he cautioned: "If Russia uses America's problems as an excuse to stop fully implementing the transparency and corporate governance reforms that have been pushed in the last couple of years, then this will be doing harm to Russia."
Browder said the major difference between the U.S. and Russian markets is that in the United States people value companies as if everything is clean. Therefore, investor confidence and stock prices dove during the current scandals.
In contrast, Russian stocks tend to be cheap because people price in risks such as possible corporate fraud, he said.
Andrew Somers, president of the American Chamber of Commerce in Russia and a lawyer, said the problem in the United States is that the rules of running a business have become overly complicated.
"We often create rules on top of the rules. Although in the end they work and people will be punished, it does not help make business more transparent," he said.
As a result, lawyers and consultants often dominate business activities and sometimes even the top managers don't have a clear picture of what is going on in their companies, Somers said.
Yuryev agreed that the U.S. market is overregulated. "As the head of a company that received a brokerage license in New York in the middle of the Bank of New York [money-laundering] scandal, I can say that Russian regulation is nothing compared with SEC rules," he said.
Somers said Russia was taking a better road than the United States with a voluntary corporate governance code the Federal Securities Commission approved last year.
He said he was going to present the code to the SEC as an example of what it should be doing. "It looks like they have forgotten what their real business is," he said.
Federal Securities Commission head Igor Kostikov said he was pleased that Russia's corporate governance code was being considered a model.
"Before the scandal with Enron, a lot of U.S. laywers were criticizing us for the wording and mechanisms in our code," said Kostikov, who spent several days last week meeting with SEC officials and investors in New York. "But those corporate scandals showed that Russia is looking to the future with its corporate governance code."
He said the Federal Securities Commission is now drafting a new code to regulate the activities of analysts who work for investment banks. The so-called Code of Conduct for Financial Analysts will be voluntary.