**PROMOTING GOODPRACTICES FOR BUSINESSES IN RUSSIA**

 

by Igor Abramov

 

The U.S. and RussianGovernments are taking steps  todraw attention to the importance of good business conduct and to facilitatechange among Russian businesspeople and officials. Working bilaterally tocreate conditions for significantly increased trade and investment is a keygoal of the U.S.-Russia Business Development Committee (BDC) under the JointCommission chaired by the U.S. Vice President and the Russian Prime Minister.The BDC, in cooperation with the Chamber of Commerce and Industry of theRussian Federation and in consultation with Russian and American businesses,has developed *Basic Guidelines for Codes of Business Conduct* to promotegood business practices and ethical behavior in commercial relations. 

 

The *Basic Guidelines*are a set of general principles that are widely accepted in internationalbusiness. Key areas addressed by the code of conduct include: 

$               Principles inPersonal and Professional Relations

$               CorporateGovernance: Relationships with Shareholders

$               Relationshipswith Employees

$               Relationshipswith Other Enterprises

$               Relationshipswith the Global Community

$               Relationshipswith Government Authorities

$               Proper Checksand Balances

$               Prevention ofExtortion and Bribery

 

Recognizing that laws, regulations, and other circumstances specific toan industry or company might require special adaptation in implementing the *Guidelines,*they are offered as a tool that can be used by businesses as a foundationfor developing their own codes of conduct and professional standards.  

 

The BDC is alsoworking on several other commercial rule of law projects, including (1) ahandbook on commercial dispute resolution in Russia to assist companies andpractitioners in better understanding the existing mechanisms for resolvingcommercial disputes in Russia, which is expected to be ready for distributionbefore the end of this year; (2) a handbook on corporate governance toencourage fairness and transparency for shareholder rights and best businesspractices; and (3) a manual of recommendations on recognition and enforcementof foreign and domestic arbitration awards and court judgments as a means forimproving mechanisms for arbitral awards and court judgments.  

 

**Novgorod as PilotProgram Region**

As part ofimplementation of the *Guidelines,* the BDC reached an agreement with theNovgorod regional government, city, and businesses to implement the *Guidelines*in Novgorod as a pilot project. Understanding that foreign investment iscritical to developing and fostering an open economy in the region, thegovernment adopted investor friendly legislation in 1996. Currently, some 200joint venture companies with foreign capital are active in the region. 

 

Novgorod=s efforts to prove itself an investorfriendly environment make the region an attractive site for testing the *Guidelines*.The region of Novgorod views implementation of this project as an importanttool to attract additional foreign and domestic investment. Having a reputationas a noncorrupt region where business is done legally and ethically gives theNovgorod region a better image than an expensive public relations campaign. 

 

**OECD Conferencein Novgorod**

A number ofinternational organizations are working to promote integrity, accountability,and transparency in business in Russia. The Organization for Economic Cooperationand Development (OECD) and other international organizations have expressedkeen interest in the *Guidelines*, and the BDC is working with theseorganizations to establish cooperation on implementing the *Guidelines*through  private-public partnershipinitiatives. As a first step in this cooperation, the OECD held a two-dayconference, AIntegrity in Private Sector Development inthe Russian Federation,@ in Novgorod on July 22B23, 1999. The conference concentrated on the issue of ethical behaviorfor the private and public sectors, establishing codes of conduct withincompanies, administrative barriers to doing business, and adhering to theprinciples of rule of law in conflict resolution. Attended by approximately 90participants, the event attracted Russian federal and regional officials,Russian private sector executives, and nongovernmental organizations (NGOs).

 

**Next Steps****C****Creating an Enabling Environment**

The BDC wishes toprovide a long-term, sustainable initiative that can be institutionalized overtime and that will best serve the business community in Novgorod and Russia=s other regions. To achieve this purpose, theBDC has developed a pilot program to train individuals from Moscow, St.Petersburg, and Novgorod in the United States as consultants for three months.Following the training, these individuals will return home to help localcompanies design and implement business codes of conduct and professionalstandards.

 

Implementation ofthe *Guidelines*through broad-based participation of multilateral andlending institutions, goverments, the private sector, and NGOsCsuch as the U.S. Export-Import Bank and theOrganization for Security and Cooperation in Europe (OSCE)Cis a key goal of the BDC. As part of thiseffort, there are plans for a follow-up workshop in summer 2000 in anotherregion of Russia to demonstrate the results of implementing the *Guidelines*in Novgorod and other regions. The OECD will organize the workshop incooperation with multinational institutions, Russian federal and local governments,and NGOs.

 

*The*Basic Guidelines for Codes of BusinessConduct *can be found, in both Russian and English, on OECD**=**s website atwww.oecd.org/daf/psd/acnetwork.htm and **BISNIS****=**website atwww.bisnis.doc.gov/bisnis/country/codebusen.htm.*

 

*Igor Abramov isSpecial Advisor for Trade and Commercial Projects in the **U.S. Department ofCommerce******=****s Office of Russia and Independent States.*

* *

*The BDCencourages companies to provide feedback on the*Guidelines*. Please address your commentsto: Igor Abramov at tel: 202-482-2042 or [email protected].*