Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Sunday, September 12, 2010

Russia Still Faces Governance Challenges

A Reuters article on Friday discusses some of the challenges of corporate governance in Russia. Russia faces the same types of problems faced by many nations.

Although Russia has corporate governance laws on the books, the challenge is in ensuring consistent, thorough and fair enforcement of those laws. Until the court systems are better developed in Russia, corporate governance will not make the strides it should, international investors will eschew investments in that country, and economic development will be slower than it could be.

Two related problems are discussed in the article. First, enforcement is meager and enforcement scarce. Even when red flags exist, resources may not be committed to investigate and prosecute those responsible. Second, if an investigation does occur and charges are brought, problems in the courts themselves mean inconsistent enforcement of existing laws.

Until Russia steps up to the plate and consistently enforces the corporate governance laws it has on the books, international investors will avoid substantial investments in Russia and its economic development will be stunted.

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