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. Last Updated: 07/27/2016

Darling Calls for Clearer Rules

bloombergAlistair Darling speaking Tuesday at the Russian Economic Forum in London.
LONDON -- Despite stellar economic indicators, Russia remains mired in a sea of poor corporate governance, shady business ethics and a state focus limited to oil and gas that could hinder the country's prospects, investors warned Tuesday.

Delegates at the 10th annual Russia Economic Forum spent the last day of the conference tempering the optimism that marked the forum's first full day.

Alistair Darling, British secretary of state for trade and industry, told the forum that while the British-Russian business relationship was "robust," it needs "clear rules, openness and understanding on both sides.

"Commercial considerations should be the beginning, middle and end of business relations," he said.

Darling's tough words came as relations between London and Moscow spiral to a new low, prompted by the unsolved murder of former KGB officer Alexander Litvinenko and Britain's continued refusal to extradite businessman Boris Berezovsky.

Speculation swirled at the conference that top state and business officials withdrew from attending the London conference after the Kremlin privately expressed its displeasure.

Darling, the only British government official to speak at the forum, opened his remarks with condolences for the death on Monday of former President Boris Yeltsin.

Yeltsin's death made barely a ripple through he conference. Tuesday's sessions featured half-empty rooms as ever more delegates drifted away. The first session began with a call for a minute's silence, but delegates observed the request for barely 30 seconds.

Darling praised Russian-British trade ties, which stood at a record $5.5 billion last year, before launching into a multi-pronged criticism of the country's business practices.

"Russia needs us and we, in turn, need Russia. We welcome Russian investment and we want to invest in Russia," he said. Yet he warned against creeping protectionism and economic nationalism in the country.

"Protectionism dressed up as patriotism is still protectionism," Darling said.

Darling's words came just one week after Gazprom formalized its entry into Sakhalin-2, a major oil and gas project once run mainly by British-Dutch Shell, and amid widespread speculation that the state-run gas giant will soon buy out the Russian shareholders in TNK-BP.

"Russia's business reputation does not match its economic success," said Vladimir Pozner, "Vremena" anchor and moderator of Tuesday's first session.

Citing an Edelman Trust Barometer for 2007, Pozner said Russian business was the least trusted in the world because of a lack of corporate governance, lack of transparency and poor business ethics.

Tuesday's sessions, and the absence of high-ranking businessmen and state officials, allowed smaller investors a larger platform.

Alexei Gurin, CEO of tire maker Amtel-Vredestein took the floor in a personal appeal to President Vladimir Putin to diversify the economy from oil and gas.

Boris Mints, chairman of the board of the Otkritiye Financial Corporation and former head of the Union of Right Forces executive committee, echoed Gurin's remarks.

"We need to create an environment in which a large number of enterprises can attract funds to develop their businesses," he said, saying major firms on average got a 6.6 percent borrowing rate while small and medium-size businesses tended to get double that.

While the shadow of Yeltsin's death failed to cast a heavy pall over the event, several delegates were keen to share their opinion of the former president's legacy.

"We have to pay a good tribute to him for being a brave man, with very strong democratic convictions," Duma Deputy Alexander Lebedev said late Monday.

"The legacy is mixed. Loans for shares will not be easily forgotten," said Igor Yurgins, vice president of the Russian Union of Industrialists and Entrepreneurs. "But the [legacy of] freedom will outweigh the chaos."