May 23, 2008

Thug Capitalism

The latest issue of Forbes has a cover story on Thug Capitalism in Central Asia: "Without warning, 24 foot soldiers of the Pavlodar Oblast Financial Police showed up, carrying AK-47 Kalashnikov automatic rifles. Their target: the Maikuben coal mine in northern Kazakhstan, owned by the American firm AES Corp."

Yet, despite this unique form of, well, hostile takeover, "'It's a lot easier to do business in Kazakhstan than Russia,' says a Western diplomat in the region."

Even AES was impressed that its Kazakh workers would diligently dig for coal in sub-freezing temperatures. What's more "Kazakh employees always showed up for work on time," said AES exec Dale Perry.

Nevertheless, Perry did have to grow accustomed to frequent shakedowns. Yet, as a US company -- and therefore subject to the US Foreign Corrupt Practices Act -- AES was forced to regularly pay draconian fines rather than minor bribes "to make a problem go away." One such fine cost the company $2.8 million.

Anyway, Forbes was nice enough to provide us with a nifty little rundown on the extraneous fees which the Kazakh government has levied on Western companies:

--ExxonMobile: $5 billion for "project delays"
--ArcelorMittal: $2.5 billion in tax claims (won court fight)
--Chevron: $310 million for “improperly storing sulfur”
--AES: $200 million in “antitrust fines”
--Parker Drillion: $26 million in “miscellaneous tax fines”

Then again, at least in Kazakhstan the government lets you keep the company. Isn't that right Khordokovsky?

1 comment: said...

Little doubt, the dude is totally just.