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A lifetime of innovation

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Toni Schönfelder
A lifetime of innovation

U.S. to Russia: Clean corruption up
Associated Press 31 Jul 2002

By SHARON THEIMER, Associated Press Writer

WASHINGTON (AP) - Armed with harrowing stories of death threats and shadowy guards seizing their factories, American corporations have gotten the Bush administration to put the squeeze on Russia in a campaign that is benefiting from good timing.

The message delivered by senior diplomats and President Bush ( news - web sites) is pointed: Moscow needs to clean up corruption and other obstacles to expanding business if it wants to convince the world it belongs in the World Trade Organization.

The beneficiaries span the gamut of corporate America from a politically connected vodka distributor and MTV to a Seattle investment firm and the Subway sandwich chain.

"We tell them (Russia) as one friend to another, `Youve got a problem here," said Alexander Vershbow, the U.S. ambassador to Moscow, who is doing much of the legwork for the companies.

Though corruption and government interference have long hurt domestic and foreign business expansion in Russia, the U.S. campaign has been staged at an opportune time as Moscow aggressively seeks WTO membership.

"Its important that their rule of law apply to these cases and that theres due process and theres transparency," said Commerce Secretary Don Evans, another key player in the effort to lobby Russia.

The Russian government says it has been trying to improve its record and believes it is ready to join the world trade body. The Bush administration is supporting Russias bid for the WTO, granting the country the key designation of a market economy.

"We have substantial legislative reform in Russia and we are changing our legislation in order to put it in accordance to WTO standards," said Nikolay Platonov, an attorney with the Russian trade representatives office in Washington.

"Maybe we have some corruptive practices in Russia, but I think these reasons dont have much in common with WTO rules and WTO standards," he added.

The campaigns origins are a textbook example of lobbying.

Companies reached out to members of Congress and administration officials, relaying detailed stories of being wronged.

A Seattle investment company, Euro-Asia Investment Holdings, wrote to Bush, Cabinet officials and members of Congress telling how a Russian grain company failed to pay $6 million it owed - even after being ordered to do so by a Russian court.

The grain business mysteriously dissolved, leaving no recourse. One Euro-Asia employee even received a death threat when she pressed to collect the debt.

Henri Bardon, Euro-Asias president, described the business climate he encountered in Russia as "jungle capitalism," alleging high-ranking Russian officials offered to recover the debts in exchange for 20 percent to 50 percent of the proceeds. He said Euro-Asia was left to pursue "a company without assets, without money, without employees and basically no prosecution."

The U.S. government placed Bardon and about a dozen other companies on a high priority list, assuring the attention of Evans, Vershbow and other top officials.

Others on the list include MTV, Ohio quartz maker Sawyer Research Co., the Subway sandwich company and Russian animated films distributor Films by Jove, based in California.

Allied Domecq Spirits & Wine USA, which also won U.S. assistance, is no stranger to political circles.

The company and its employees donated just under a quarter million dollars in the last election - more than 90 percent of it to Republicans - and it helped sponsor a GOP congressional fund-raising dinner headlined by Bush that raised a record $30 million in June.

Allied Domecq is trying to free 55,000 cases of Stolichnaya vodka that the Russian government seized.

Rep. Dana Rohrabacher, R-Calif., a member of the House International Relations Committee, and other members of Congress enlisted the help of U.S. Trade Representative Robert Zoellick.

"We have been in contact with our embassy in Moscow on this issue and will continue to work with both them and the company toward a prompt resolution," Zoellick said, noting his office had also heard from Allied Domecq.

Ambassador Vershbow said Bush has delivered to Russian President Vladimir Putin his own message that increased U.S. investment in the country must be accompanied by better business practices and laws.

Bush also personally raised the concerns of American poultry producers that their chickens were being unfairly kept out of Russia, Vershbow said.

The National Chicken Council was another sponsor of the June GOP congressional fund-raising dinner.

Key members of Congress are adding to the pressure, suggesting theyll hold hearings to investigate Russias dealings with U.S. companies.

"I keep telling my Russian friends here each of these unresolved disputes, some of which have been lingering for several years, scares off potentially a dozen new investors," Vershbow said. "I think after a year, its slowly beginning to sink in."

Sawyer Research Inc., an Ohio maker of quartz used in cell phones and other products, was forced out of its Russian factory by a private security force - putting an $8.2 million investment in jeopardy.

Sawyer President Gary Johnson said Vershbow has traveled to Russias Vladimir region to secure the help of local government officials.

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