Corruption is also a problem in some of the new companies. And the problem was not just limited to internal corruption. Foreigners took advantage of individuals, some of whom were very naive. McCunn recently acted in a case arising from a joint venture between a Russian and a Greek company. Our client put its ships into the joint venture and the Greeks were then supposed to bring them up to scratch and manage them, but the Greeks went off with all the money.
Internal corruption is also a problem.
Although the ships were re-flagged and transferred to Cypriot owners, some as long ago as 1992, the detentions have been based on claims against their previous Russian owners. Buss says that the ships are likely to be sold in Russia for a fraction of their 1999 market value, in which case the bank will lose its security. As the ships will probably be purchased by Russian interests, the net effect of the detentions will have been to return the ships to Russian ownership. Buss accuses Governor Nazdratenko of Vladivostok, a port in South East Russia, who has repeatedly called for the confiscation of the ships, of being behind the detentions. He says that the message to western banks is clear.