Corruption is a serious issues when doing international business in our increasingly globalized world. When companies consider doing business overseas, corruption is something that is seriously considered because it can increase the cost of doing business within that foreign market. The recent news of Putin's unlawful actions goes to show that corruption may be a serious problem within the country of Russia. Therefore, it is possible that this might deter multinational companies from doing business with Russia, which could have negative implications for the economy of Russia as well.
Monday, April 4, 2016
Revealed: the $2bn offshore trail that leads to Vladimir Putin
It was recently discovered in a massive leak of documentation that loans worth as much as 2 billion dollars were hidden by the Russian president, Vladimir Putin. He did this by giving his friend, Sergei Roldugin, a renowned cellist in Russia, millions of dollars. Then using a bank and the 4th biggest offshore law firm, Mossack Fonseca, to make the money disappear to benefit Putin and others involving. Even Katerina, his youngest daughter, used this money to rent out a private ski resort for her 2013 wedding.
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Looking into scandals like this have serous negative effect on the world economy. Just recently the second largest REIT in the U.S, Brixmor, was found to have flat lined income statements over the years. This resulted in a decrease of 24% in its stock price in just one day and a credit rating drop to C, dipping below investment grade. Although companies and even nations are still having problems with this, hopefully the release of these types of issues will continue to limit the amount of financial corruption.
ReplyDeletePutin's scandal will certainly not help his relations with the United States. The Panama Papers also showed the corrupt nature of FIFA and its association with a number of offshore tax havens. I believe attacking these tax havens is beneficial for the global economy, but may have negative implications on certain nations.
ReplyDeleteThe most enthralling part of the article was the fact that the money taken from Russian Commercial Bank was actually lent back to Russia at higher interest rates. While this isn't an accounting scandal, my curiosity is whether this news creates an impact similar, to a much smaller degree of course, to the 2001 Recession. This could theoretically shift LM to the right and IS to the left, and if it does in the short run will be a sad reflection of the state of Russia.
ReplyDeleteI agree with charlie. This sort of business is not good with international relations. I have seen similar types of scandals in south Africa. Our President, Mr. Jacob Zuma was caught trying to launder money through a company he owned many shares in. Luckily, our minister of finance put a stop to it.
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