MOSCOW -- Leonid Reiman, advisor to Russian President Dmitry Medvedev and former information technology minister, met in Moscow with Michael Oxley, vice-chairman of NASDAQ and co-author of the Sarbanes-Oxley Act, to discuss the Russian climate for foreign investment. Reiman briefed Oxley on the anti-corruption legislation President Medvedev has introduced and discussed the need to increase corporate transparency in the Russian telecommunications sector.
"Russian companies often try to conceal their true size and profitability in order to minimize tax payments, but this hurts their chances of attracting foreign investment," Reiman said. "It's important to create conditions that make it profitable for companies to show their real capitalization and attract foreign capital. This is key in the Russian telecom sector, where the tax burden is especially high given that wage expenses, which are subject to additional taxes, comprise up to 80 percent of overall expenses, compared with the average of 10 to 20 percent in other industries," he added.
Oxley said that Medvedev's anti-corruption legislation "gives a strong signal to investors that Russia is in fact interested in foreign capital. The benefits of this effort are irrefutable and the timing is perfect given that many developing countries compete for U.S. and European capital."
The NASDAQ vice-chairman believes anti-corruption efforts should go along with stronger corporate governance and financial transparency requirements. "Russia's challenge is to improve corporate transparency and to move up in the Transparency International ratings. Investment will follow immediately. Many Russian corporations are planning IPOs in the near future, and stronger financial transparency requirements will ensure maximum attention from U.S. investors," Oxley said.
Leonid Reiman is Advisor to Russian President Dmitry Medvedev and Chairman of Russian Industrial Leaders Index Advisory Board. He was Information Minister of Russian Federation till 2008. Michael Oxley served in US Congress from 1981 to 2007. He is now the vice-chairman of NASDAQ.