Russia hired Goldman Sachs Group Inc. (GS:US) to boost its image abroad as the most corrupt country among the Group of 20 last year seeks to attract foreign investors.
The Economy Ministry and the Russian Direct Investment Fund have signed a memorandum with Goldman under which the New York-based bank will advise on issues such as communicating government decisions, according to Deputy Economy Minister Sergei Belyakov. State-owned banks including OAO Sberbank (SBER) and VTB Group will also assist, he said.
“We don’t know how to communicate with investors,” Belyakov told reporters today in Moscow.
President Vladimir Putin last year ordered the government to improve Russia’s standing in the World Bank’s Doing Business rating to 20th by 2018. It climbed eight positions to 112 in the latest study, issued in October. While that’s better than BRIC peers India and Brazil, Russia is still the worst among major economies in terms of graft, Transparency International said last month in its annual Corruption Perceptions Index.
The world’s largest energy exporter plans to raise a record $10 billion from asset sales this year, First Deputy Prime Minister Igor Shuvalov said in an interview with Bloomberg Television this month. While corruption continues to be an issue, it’s less of an issue for foreign investors who have already committed to Russia, Shuvalov said.
Russia’s benchmark Micex Index (INDEXCF) has gained 6 percent this year, beating the MSCI’s Emerging Markets Index’s 0.7 percent advance. The ruble-denominated equity gauge was little changed at 1,563.37 by the close of trade in Moscow. The ruble, which has gained 1.3 percent against the dollar in 2013, fell 0.5 percent to 30.1920.
A working group will draw up a list of measures to bolster Russia’s image next month, according to Belyakov. The group will include Economy Ministry, Goldman and state bank representatives, as well as Finance Minister Anton Siluanov and central bank Chairman Sergey Ignatiev, he said.
The death in custody in 2009 of Sergei Magnitsky, a lawyer for Hermitage Capital Management Ltd. who accused officials of embezzling $230 million, is a symbol of Russia’s failure to tackle corruption, according to Christopher Granville, managing director of Trusted Sources, a London-based emerging-markets research group.
Magnitsky and Hermitage head William Browder are being tried in absentia on tax-evasion charges. Browder, who denies wrongdoing, has lobbied for U.S. and European legislation targeting Russian officials who he says are responsible for Magnitsky’s death with visa bans and asset freezes. Hermitage was once Russia’s biggest foreign equity investor.
“To say that Russia is equal only to this tragedy is not quite right,” Belyakov said, referring to Magnitsky’s death. “To some degree the work that we announced today is to ensure that all our actions won’t be annulled by statements like those from Browder.”
The U.S. in December imposed a visa ban and asset freeze on Russian officials implicated in Magnitsky’s death. In retaliation, Russia banned the adoption of Russian children in the U.S.
Prime Minister Dmitry Medvedev said last week at the World Economic Forum in Davos, Switzerland, that Magnitsky’s death has been “politicized” by investors.
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