Russians warned over investment

Problems over corporate governance and the rights of foreign shareholders in Russia are severely damaging the country's chances of attracting investment, a leading banker has warned, writes Richard Halstead.

Jacques de Larosiere, president of the European Bank for Reconstruction and Development, said that while the Russian government was aware of the problem, the lack of adequate transparency and investment rules in the country would choke off western development capital.

"Any attempt to stack the odds in favour of management and to deny shareholders their rights will detract from foreign investment in those countries," he said.

His comments came in the wake of an attempt by the management of Mosenergo, the privatised Moscow electricity utility, to restrict the voting rights of foreign shareholders, who own 35 per cent of the company. Last week EBRD deputy vice-president Guy de Selliers said he had told Mosenergo "we are not going to lend any money to your company if this is the kind of corporate governance principles you are promoting".