Russia and the Ukraine have a history of disputes that has crossed borders and affected businesses and investments all over the world. Just a decade ago, Europe suffered the consequences of a cutoff of Russian natural gas that was piped across the Ukraine, a cutoff that happened in the most vulnerable season in the middle of the winter, leaving many people in all Europe without a vital supply of heat and companies without the possibility of working (and millions in losses).

A breakthrough of the historical disputes could come at the first-ever meeting between Russian President Vladimir Putin and Ukrainian leader Volodymyr Zelenskiy, which will be held soon. However, the friction between the two countries is not new, it has been going on since the collapse of the Soviet Union three decades ago and it might not be easy to resolve. The impact of this situation and the results of this meeting will reach more companies and more people than we might think of, further and further away from the Russia and Ukraine borders.

However, not all the effects are negative. Some investment strategists state that conflictive times are a good moment to put money into Russian and Ukraine shares directly, because the prices are lower compared to the other emerging markets, and because they are skeptical that the crisis will have a further impact. For those inclined to invest, there is though one important thing to consider. When the shares and prices in a country are very cheap, keep in mind that fraud cases increase.

Investigators in Russia and Ukraine say that both countries are at high risk for fraud due to numerous factors in the past, especially those related to corruption and bribery, and to their recently discovered hacking capabilities that lead to Internet fraud in all of its spectrum (identity theft, phishing, dating scams, business and investment scams, etc). The economic and political situation is now offering a new range of possibilities in the investment scam field.

Investors and businesspeople who do not properly investigate where they’re putting their money in are an easy prey for fraudsters. Due diligence in Russia and the Ukraine should be considered a mandatory step for companies that want to mitigate the risks. Even though shares are at lower prices, the deals that seem too good to be true carry a high risk. Investing at the right time is important and when the clock ticks there is a lot of pressure. Yet it is wiser to invest in the right companies and reputable people than to hurry with the wrong ones, and lose it all.

Risk is not a limitation if you understand how to manage and reduce the chances of being victim to fraud. Local investigators will be very helpful in the process of obtaining reliable evidence and reducing risk, and can also give you some tips on how to start and maintain a good business relationship based on information and not on intuition.

Before making any move in Russia or Ukraine or anywhere else, make sure that you have verified the company you’re investing in and the people who represent them.

Considering investing in Ukraine or Russia?  Contact us today to minimize your risk.

C. Wright
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