The Sochi 2014 Olympics have meant much more than a passing sporting event for Russia. The games were a great strategy to highlight the development of the country and attract foreign investment. Russia’s economy is now the eighth´s largest economy in the world mainly due to oil and natural gas. From 1999 to 2007, the price of oil climbed from $10 USD a barrel to $140 USD, helping Russia’s economy grow, and earning it a spot in the fastest-growing economies of the world, along with Brazil, India and China.   But, corruption and fraud still hold back Russia’s potential.

The Russian government used the Sochi games to attract revenue for a while and to attract more tourists and investors to the city. Having the world tuned into the Olympics offered a way of broadcasting all the natural beauties of the place, the infrastructure now available, and the abilities of their people. All of the above are good reasons to start thinking of Russia as a great destination for investment.  Russia essentially made a plea to the world, to consider investment.

During 2013, Russia’s gross domestic product grew by 1.3 per cent, its weakest growth rate since the global financial crisis that escalated in 2008. It has been said that it is due to evaporating investments and the weakening demand for its exports. However, Russia still remains as a stable economy for the most part.  Russian investigators urge caution before investing, and say the most difficult part of investing in Russia is verifying who is real and who is a fraud, as scams abound.

Expert economists who recently met with Vladimir Putin have reported that the main reserve of growth for the Russian economy was its scientific, technical and intellectual potential, which in practical terms means that Russia is definitely going to attract foreign investment and that Russians will be hired and appreciated in foreign countries as a high quality workforce.  But, there are skeptics!

So what should be the real concerns for investors in Russia? The country has its reputation for being a high risk country for fraud. Corruption has also made its way, escalating from regular citizens to country diplomats. Russian scam cases are getting complex and they are increasing. But minimizing the risk is possible with a competent investigation company, and it is a key part of doing your homework and due diligence.  Having facts verified and the right information before you invest is key.

If you are planning to invest or hire someone from Russia, make sure you get proper due diligence or a pre-employment screening to spot any fraud. Many organizations get into a lot of trouble with the FCPA or just lose a lot of money because they didn´t care about investigating the real circumstances from the beginning. When investing, never send money upfront without verifying first.  International investments are always more risky than domestic, and Russia is a high risk country for fraud.

Have you invested in Russia and had a positive experience?  Tell us about it.

C. Wright
© 2014 Russia PI™

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