SOCIAL RESPONSIBILITIES OF RUSSIAN BUSINESS: PROSPECTIVES ON KHODORKOVSKY

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SOCIAL RESPONSIBILITIES OF RUSSIAN BUSINESS
PROSPECTIVES ON KHODORKOVSKY

• Dr.Yuri E.Blagov
• School of Management
• St.Petersburg State University

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SRB CONCEPT STAGES OF DEVELOPMENT IN RUSSIA

• Till August 1998 - just in theory and in
  textbooks
• Since August 1998 growth of interest from
  business community as well as society
• 2003 new wave of interest connected with
  presidents approach

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SOCIAL RESPONSIBLE BUSINESS (BUSINESS VIEW)
Association of Managers
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RUSSIANS ON PRIVATIZATIONS RESULTS
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SOCIAL GROUPS DIFFERENTIATION (2003)
VCIOM
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THE PYRAMID OF CORPORATE SOCIAL RESPONSIBILITY

PHILANTROPIC
Responsibilities
ETHICAL Responsibilities
LEGAL Responsibilities
ECONOMIC Responsibilities
Caroll, 1991.
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STAKEHOLDER/RESPONSIBILITY MATRIX
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YUKOS CASE

• YUKOS
• Biggest Russian oil company (2003)
• 80,7mill ton extracted oil
• 2,22 bill net profit
• Since the mid 2003 attacked by the Kremlin for
  taxes cheating (98 bill Rb)
• Mikhail Khodorkovsky, CEO and principal
  shareholder of YUKOS arrested in October 2003 and
  put into jail

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YUKOS CASE

• REASONS?
• Economic (taxes)
• National security (deal with Exxon Mobil)
• Political (support to parties)

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YUKOS CASE

• Mikhail Khodorkovsky
• Manager of the year (2003, Association of
  Managers)
• Man of the year (2003, Expert)
• YUKOS
• No 2 in Good Corporate Governance List (2003,
  Energy Intelligence)
• No 1 in Good corporate Governance List (2003,
  Russian Investors Association)

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YUKOS CASE

• 1986 Student, Secretary of Komsomol Committee
  in Moskow Mendellev Institute (chemistry)
• 1986 Café-discotheque Director
• 1987 Youth Center for Scientific Creativity
  (NTTM) Director

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YUKOS CASE

• 1987 Deputy Secretary of the Frunze district
  Komsomol Committee (Moskow)
• 1987 Director of the network of NTTM centers
  (5000 empl.)
• 1990 Co-owner of MENATEP-INVEST bank (PCs
  import, raw materials export)

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YUKOS CASE

• 1992 Co-owner of MENATEP-INVEST bank (government
  accounts service)
• 1993 Deputy minister of fuel and power
• 1995 CEO and principal shareholder of YUKOS
  (loans-for-shares privatization

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WILD OLIGARCHY CAPITALISM
REGULAR CAPITALISM
Social contract?
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PUTINS APPROACH

• I keep hearing that laws were complicated and it
  was impossible to respect him. Yes, laws were
  complex and intricate, but it was quite possible
  to respect them
• Those who were involved in deliberate fraud put
  themselves in more favorable conditions than
  those who played the rules. The latter may not
  have earned so much money, but they now sleep
  well. December 2003

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POTANINS APPROACH

• Business, by definition, cannot be in opposition
  to the authorities.
• December, 2003

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SRB CONCEPT AND RUSSIAN BUSINESS
Chart of Corporate and Business Ethics 2002
Moral Unity II
Amoral business
Moral Unity I
Social Contract
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INSTITUTIONAL SYSTEM CAPITALISM VS.SOCIALISM
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RUSSIAN AND AMERICAN BUSINESS ETHICS
UNITED STATES
Ethical
Unethical
I Keeping ones
word Maintaining trust Fair competition Rewards
commensurate with performance
III Personal favoritism and
grease payments Price fixing Manipulating
data Ignoring senseless laws and regulations
Ethical
RUSSIA
IV Maximizing
profits Exorbitant salary differentials Layoffs
Whistleblowing
II Gangsterism, racketeering
and extortion Black market Price
gouging Refusing to pay debts
Puffer McCarthy, 1995.
Unethical
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MAJOR RUSSIAN POLITICAL PARTIES/MOVEMENTS (2003)
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RESULTS OF 1999 DUMA ELECTIONS
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RESULTS OF 2003 DUMA ELECTIONS
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OPINION POLL PUTIN RESEMBLES...
ROMIR