The Handbook of Board Governance, 3rd Edition

79The Russian Corporate Governance Story

Alexander A. Filatov PhD

IoD Chartered Director, Independent Director Association in Russia co-founder

Learning to Fly: Russian Corporate Governance Origins

Dmitry Zimin, founder and first Chairman of Vympelcom (Beeline) telecom, which released the first Russian IPO on the New York Stock Exchange in 1996, once said to me: “Corporate governance is all about conflict of interest resolution.” In a country where the wife of the Moscow mayor became the richest businesswoman in the nation while her husband was in the office, conflict of interest is not seen as a problem. Moreover, in many cases, legal judgments and court procedures are subordinated to orders from federal or regional authorities rather than to independent courts’ decisions. Some Russian scholars and practitioners would speak about a different model of corporate governance existing in Russia, which is not similar to the one in the West. It looks similar to the model of “sovereign democracy,” which differs from democracy in the West. It does so in the way that it demonstrates imitation of democratic institutes. So implementing an imitation of corporate governance, which in practice violates basic principles of it, is simply bad corporate governance, as if distorted monopolized market in a stagnating market is not attractive to major classes of investors.

Russia corporate governance originally came from the West, driven by private businesses selling shares to institutional investors ...