2010: State of Government Affairs in Russia

From Jungle to FCPA/UKBA Compliance

December 12th 2010, Paris

EU-Russia Lobbying Roundtable

About Kesarev Consulting

•Established in 2004 in Moscow

•One of the first Russian firms to provide professional services in the spheres of GovernmentRelations and Lobbying

•Kesarev Consulting has two offices – in Moscow (Russia) and Kyiv (Ukraine)

•15 associates and 6 full partners, who have long-term experience in government or GR and PAconsulting

•Strategic partnership with Alber & Geiger (Brussels) and Graling

•Priority areas of the services accomplishment: in the sphere of agricultural sector, on the issues ofthe customs tariff regulations, protective measures, in the area of the international trade andforeign affairs, infrastructure development, energy/utility, defense, finance and others.

•Regions where the services are available: CIS including Ukraine, Central Asia, South Caucasusand Georgia; South-East Europe and Balkan States.

State of Government Affairs in Russia: 2010

•Owners and top-management continuingly leave once their owned government affairs function to

professionals

•International growth of Russian business with expansion of foreign investments into Russia

• rapid development of Customs Union

•Growth and development of trade associations

~ 5 in 2000; a couple of dozens in 2010

•Core of GA and PA professionals was made in western, multinationals and Russian top-200

corporations

•about 1500-2500 GA professionals total; most successful do not have government career

experience

•GA /PA in different capacities involved in corporate structure

•specialization within GA

•solid growth of professionalism and ethics within GA

•constant dynamics of carrier transfer between multinational and Russian corp.

•GA moving into federal district capitals (ФО)

•GA has dominantly Russian & CIS nationality, times of expats on GA function have past

•Networking

•More and more often compliance (general. FCPA and etc. incl. UKBA/2011) is mandatory

State of Government Administration: 2010

•Professional beurocracy formed

•growth of professionalism of mid and upper level of public officials

•Legislative environment rapidly fulfilled

•Demand on strategic planning and decision-making quality

•Major sophisticated legislation is now made in longer terms with obliged involvement of

expertise

•«Retail Regulation Law» - more than 1year.

•«National Payment System Law» - more than 1,5year

•Development of anticorruption and self-administrative regulations

•ФЗ «О противодействии коррупции» 2008г.

•ФЗ «Об антикоррупционной экспертизе нормативных правовых актов и проектов

нормативных правовых актов» 2009г.

•ФЗ «О государственной гражданской службе РФ» + административные регламенты

•E-government

Challenges•High corruption

• higher than in Turkey, Kosovo (Kesarev’s experience of 2010)

• but still not like Ukraine

•High level of “corruption expectance” (arouse business environment)

•Still quite low conciseness & ethics and knowledge of top-management regarding government

administration and corruption (including multinational companies)

• Quite high number of so-called “corruption brokers” or “mighty-lobbying brokers”

•High disproportion of people declaring to belong or wanting to transfer into GA industry (but not really

belonging to it)

• 1 to >10 (public officials, lawyers, PR, marketing and commercial, etc.)

• overstated salary expectations (>10000$)

•Underdeveloped GA/PA consulting

• virtually no competition in defense, agribusiness, utilities and etc.

• some in pharmacy, FMCG and tobacco

•Possibility of loosing Moscow as GA/PA center for CIS/SEE/EMEA region

• we observe not clear, bus tendency in moving government affairs & public affairs leads into CIS

countries themselves or other regional centers (Prague, Budapest,

Istanbul and etc.)

• GA self regulation

• Mandatory compliance (International Compliance Certification for enst. or etc.)

Moving forward

Kesarev Consulting

9 Zemlyanoy val, 4th Floor, office 4010

105064 Moscow Russiaphone/fax : +7 495 662-9859

Kesarev Consulting – Ukraine72 Gorkogo str., office 156

03150, Kyiv, Ukrainephone/fax : +38 044 200-5559

www.kesarev.com

Thank you!