Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 18, 1992 TAG: 9202180008
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: MOSCOW LENGTH: Medium
RUSSIA HIRES CAPITALIST GUN
Russia announced Monday it has hired one of capitalism's best-known experts to recruit foreign investors and guard its interests in business deals with the West.The move to retain the Wall Street investment bank Goldman, Sachs & Co. indicates that President Boris Yeltsin is intensifying his efforts to revive Russia's moribund economy through foreign investment.
"We want to create a new image of Russia for foreign investors," said Leonid Grigoriev, deputy economics minister in charge of Yeltsin's Committee on Foreign Investment.
Goldman Sachs will be "a new force inside the country to work on the side of the Russian government," Grigoriev said at a news conference.
Goldman Sachs won the contract over three other firms. Officials refused to disclose the terms but indicated that the company will receive commissions for bringing business to Russia.
Goldman Sachs senior partner Robert Rubin said his firm's reputation will reassure foreigners who are skittish about investing in Russia.
Russia has sought the advice of many Western experts in creating a market economy. The International Monetary Fund now advises on managing the foreign debt, and Harvard University economist Jeffrey Sachs works as a consultant on overall economic policies.
Some Russians have raised questions about the rising influence of such advisers; one parliament member has gone so far as to allege that the IMF now runs Russia's economy. Newspaper stories have cited alleged examples of American firms swindling naive Russian partners.
Rubin said Goldman Sachs would implement a small number of projects with "a good chance of success," including ventures in the oil and gas sector, food processing, consumer goods and clothing.
Rubin stressed that Goldman Sachs will mainly negotiate deals with foreign companies, not advise Russia on managing its economy. But, he said, the firm will offer advice on making Russia's tax laws attractive to foreign business and on providing special tax breaks.
Since November, the government has received similar advice from the U.S. law firm of Cleary, Gottlieb, Steen and Hamilton, which has an office in Moscow.