Corruption seen as a top problem for Russia at World Economic Forum

Russia is hugely represented here at the World Economic Forum.

Bill Browder of Hermitage Capital takes issue with that. "There are so many examples of high level government crime in Russia that it's almost ridiculous that Russia is allowed to come here as a country displaying its wares. It's like inviting the Cali drug cartel to Davos."

Browder was one of the biggest foreign investors in Russia and a vocal anti-corruption campaigner. He was expelled from Moscow in 2005. His offices were raided in 2007. Subsequently his lawyer, Sergei Magnitsky was arrested.

Browder says, "he was tortured for 358 days and ultimately killed in prison."

Magnitsky uncovered $230 million in tax money Browder's company had paid to the state, but which was ultimately stolen, according to Browder, by tax police who squirreled it away in bank accounts in places like Switzerland.

Browder vows he will not stop talking about this case until justice is done for Magnitsky. He is in Davos trying to learn more about the global investment environment. But he uses this high profile venue to lobby for action in Magnitsky's case.

No one has been convicted. Browder has managed to get the people he says were involved in Magnitsky's killing sanctioned in the United States and some European countries -- they can't travel to those places. And he got $11 million of stolen assets frozen in Switzerland.

Andrei Kostin, Chairman and CEO of VTB Bank, disagrees that organized crime is a big problem in Russia. "I think corruption and bureaucracy are much worse evils today." He adds that he does a lot of business in China, and it's not much better there.

Kostin says these problems are unavoidable in emerging markets. He says a combination of carrot and stick need to be employed in Russia to eliminate these problems once and for all. Bureaucrats need better pay.

I ask if Russia's trade orientation is more to the East, than to the West. He says Russia is standing on two legs.

"Being a country that is half European and half Asian, we are always trying to develop lines. Frankly speaking, though, it's not only Russia. Leading American investors are looking to Asia much more than to Europe."

Kostin points out that Russia has growth and is one of the few countries that finished last year with a budget surplus.

When asked how prime minister and probable future President Vladimir Putin appears equipped to deal not only with issues of corruption and bureaucracy but the protest movement that has cropped up in Russia he says, "Russia has a growing middle class. It has doubled in the last ten years when Putin was in power. There are lots of younger people with good income. They have a different point of view of political and economic systems in Russia. They want a bit more economic opportunity and probably more political freedoms. Putin has to take that into account if he wants to keep control of the country."

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