From Russia With(out) Love: Oligarchical Capitalism and Corruption
Posted by piblogger on January 31, 2010 · Comments Off
What is amazing about doing a radio show is the growing frequency in which I am approached with suggestions of both possible guests and thought-provoking show topics.
From the controversial Bill C-6 that potentially threatens to euthanize the Natural Health Products Industry in Canada, to the less ominous but nonetheless important impact of Buy American legislation on both the domestic and global economies, and finally the absence of a sound immigration policy regarding foreign students who after graduation from some of the best U.S. institutions are forced to return home to build businesses that would create jobs here in America.
Suffice to say, I am both delighted as well as challenged to give each and every suggestion their due consideration. That said there are stories that seem to hit a resonating chord with me from the standpoint of my natural curiosity to understand, and the potential to share insights that are interesting if not beneficial to you my listeners and readers.
The story of William Felix Browder and Hermitage Capital Management’s experience in Russia is one of those stories.
What stands out is the seemingly symmetrical alliance of opportunity and history converging in an emerging Western-style market to deliver prosperity to a nation in transition.
What became the reality was the dramatic shift from being the “largest foreign portfolio investor in Russia,” to what is “now the biggest enemy of the State of Russia.”
It is an intriguing story of “corrupt bureaucrats and their businessmen accomplices,” false accusations of an apparent “risk” to national security and the unlawful seizure of company assets in the hope of gaining access to $230 million. A story in which one might be inclined to see this as the persistent and pervasive remnants of a fatally flawed state.
Certainly one that would warrant speeches such as the following; “reforming our broken system of government contracting,” which includes; massive cost overruns, contracts being awarded without competition, contractors overseeing other contractors, outright fraud and, the absence of oversight and accountability” are the targeted problem areas upon which this new initiative will focus.”
What is interesting, is that the above speech was delivered on March 4th, 2009 by President Barack Obama who at the time was making the commitment to “changing how government contracts are awarded and who can get them.” The estimated potential savings of $40 billion “per year” associated with the Obama initiative makes the Hermitage’s $230 million look like chump change.
Now before the phones start wringing off their proverbial hooks, I want to state with the highest degree of clarity that I am a capitalist through-and-through! Without a doubt, we live in the greatest nations on earth, where the opportunity to succeed and prosper is unrivaled by any other country in what is becoming a progressively shrinking global community.
Therefore, the issue is not one involving the apparent failings of an ersatz democracy or even the establishment of a westernized monetary system. The real issue is oligarchical capitalism and corruption, the examples of which flash across our collective consciousness when captains of industry (regardless of national origins) such as the Bernard Ebbers, Kenneth Lays and Conrad Blacks are caught with their hands in the corporate cookie jars.
What is interesting according to John Berling Hardy, who is the author of “The Hidden Game,” is that what manifests itself in the form of public awareness of malfeasance only represents the tip of the iceberg in terms of the depth and power of the true oligarchical hierarchy. Or to be succinct, capitalism and corruption have little to do with political affiliations or societal influences, and more to do with control.
While greed is always a factor to varying degrees, Hardy is quick to point out that the depth of one’s wealth actually reaches the stage where financial considerations take a back seat to pure and simple power. In essence, the real puppet-masters states Hardy are those who actually avoid the trappings of wealth versus those who voraciously pursue it.
Turning our attention back to the Hermitage experience in Russia, the real question that needs to asked and answered is simply this . . . is the Bill Browder story an example of a flawed political state resurfacing in the guise of capitalistic aspirations? Or is it an example of the toxic mix of oligarchical capitalism and a country that is susceptible to an artificially created concentration of wealth and power?
Joining me on February 16th on the PI Window on Business to expand on the Hermitage story, as well as look at other areas of concentrated influence is author John Berling Hardy.
Use the link to “From Russia With(out) Love: Oligarchical Capitalism and Corruption” to access the live broadcast on February 16th starting at 12:30 PM EST.