Russian Companies Get Low Scores on Financial Transparency

Vladimir Putin’s annual news conference. Photo: Kremlin
Vladimir Putin’s annual news conference. Photo: Kremlin

Transparency International Russia has published a study that gives low scores on anti-corruption and financial transparency to most of the 200 top companies studied.

The report Transparency in Corporate Reporting: Assessing Russia’s Largest Companies assesses the financial disclosure practices of 200 companies in Russia with respect to their anti-corruption programmes as well as the availability of information on their subsidiaries and foreign branches and payments to government.

According to Transparency, this is the first ever full-scale assessment of Russian companies based on the Transparency in Corporate Reporting (TRAC) methodology developed by Transparency International.

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Profits from these companies comprise more than 70% of Russia’s national income and their taxes are crucial to the Russian state budget. The companies have significant economic and political influence, yet 84% of them rate low in terms of transparency. Their median assessment, according to the study, is just 2.6 out of 10 and only 32 companies received more than five points out of 10.

The study reveals that the five highest-ranking companies are Magnit (7.9), Sberbank (7.9), Kazanorgsintez (7.8), Rosseti (7.5) and Nizhnekamskneftekhim (6.8).

Forty-one companies scored zero on all three of the criteria assessed: the availability of information about their anti-corruption programmes, transparency on the company’s holdings, and the disclosure of key financial information on a country-by-country basis.

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Commenting on the report’s findings, Anton Pominov, general director of Transparency International Russia, said, “Even though companies are driven to be more open in order to meet the demand of investors, public and regulators, there is still lack of commitment to openness from the companies’ owners and top-management.”

“Most of the largest players underestimate how crucial transparency on political party and candidate financing, explicit zero tolerance for corruption and support for special anti-corruption programmes are to their customers, investors and partners,” Pominov added.

On the other hand, according to Pominov, there are a number of examples of best practice that originate from either the good will of management or the negative consequences of past mistakes. “In either case, we welcome any steps taken to achieve a more transparent, responsible and sustainable business model,” Pominov said.

The report also includes recommendations on transparency and disclosure of information for businesses, investors, NGOs, and government agencies.

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Rakesh Raman