Economics

I dedicate this work to all my family, classmates, and friends who have helped me greatly achieve success in my research.

Acknowledgment
A great philosopher, Socrates, once emphasized the need for reflection as a continuous exercise. I say this here because it is truly after a profound reflection that I have managed to get in touch with the enormous number of people who have helped me in developing and completion of this project. I cannot forget the various inputs that I received from various people and the significant contribution of their input to the success of my dissertation.
I would like to extend my heartfelt gratitude, first, to my supervisor who constantly encouraged me to work harder and taste sweetness of academics. He also ensured that I have remained on track by offering professional guidelines constantly. His intellectual integrity increased my trust in him. Moreover, I extend my gratitude further to my friends who through their faith in me boosted my motivation and encouraged me to carry on. There are many more others, whom because of space I cannot afford to mention, but I do keep them in mind, and I genuinely appreciate their support that has made this project a great success.

CHAPTER 1 INTRODUCTION
Introduction
Russian public scenario is that of open corruption that leave a question of whether corruption is a virtue that is jealously guarded, or vice that ought to be condemned for its harmful effect to the Russian society. To illustrate how situation on the ground regarding matter of corruption is, here is a scenario encountered in Moscow. For example, in a scenario where an individual is stopped by a traffic police officer and threatened with a large fine that do not match the offense purported by a officer to threaten the individual, the individual is being streamlined to choose easy way out. In this case, the individual keep waiting for the right moment to negotiate the price of a bribe to avoid heavy charges that are likely to be imposed on him or her.

In another situation that is dominant, when persons get into a government office hopping that they will have assistance they deserve, even after going through the right procedures, the person is made to wait on the queue with no likelihood of assistant needed. This are some of the tactics that are being used by the official involved to propagate corruption practices in the sense that the person is made to realize that if he or she had bribed somebody, he or she couldnt be waiting all that long. This way, corruption is casted to be the might ad rightful way of doing things. Belikov (2003) states that because human nature is one that tend to go for easy and less strenuous options, then, propagators of corruption popularizes it as the way of attaining what one want without much sweat, with little or no regard to side effects.

These two scenarios represent a day-in-day-out reality in various offices both in the government and in the corporate world of Russia. The scenarios imply that corruption has become part of people so much such that both parties involved tend to promote it. As much as a criminal is hopping that the arresting police officer through bribery means will set him or her free, so is the same case with the police officer who wishes that he or she got a criminal from whom to extract extra cash.
From the above analogies, it is evident that corruption does not originate from a single party, but rather a two way causal of event from both the giver of a bribe and the receiver. Thus, to fight corruption there is need to change attitudes to understand the right way of doing things without having to resort to corruption as well as the cost of corruption. It is a point of worth to realize that corruption penetrates everywhere starting with institutions where students pay for better grades, and to government offices where for one to be employed despite having adequate qualification heshe has to bribe to see the interviewing panel. Unfortunately, in the corporate world corruption is cited as a major obstacle even in the allocation of shares, managerial positions, or to obtain a certain tender. This is made worse with government interference in corporate affairs (Magdi and Naderah, 2000). This is in the sense that once corruption hamper corporate activities, while on the other had the government interferes still and there are high chances that those government officials are also corrupt this becomes double-edged sword tearing into pieces corporate governance. 

Therefore, it is in the light of the above examples that this paper deem it necessary to examine and evaluate how corruption and government interference affects Russia corporate governance. In this regard, the paper shall evaluate and show how corruption and governmental interferences relates to efficiency in corporate governance of Russia. Consequently, the paper shall seek to show how corruption and government interference has affected Russia corporate governance stability and progress.

The problem of corruption has been considered enormous as indicated by the Transparency International Corruption Perception Index that ranks Russia at position 146 out of 180 countries (Transparency International, 2009). The Russian President, Dmitry Medvedev has repeatedly reiterated that corruption is bad as it threatens Russias very stability (Feifer, 2010). Therefore, when corruption inter-marries or intertwine with government interferences in running of daily corporate affair, then definitely Russia corporate governance is affected. This acknowledgment from the President ignites and gives this paper an impetus to tackle corruption.
Objectives
The general objective of this study is to find out how corruption and governmental interferences have affected the Russian Corporate governance. This involves an examination of the Russian Corporate governance structure, followed by an understanding of the various ways in which corruption is carried out, the various instances of governmental interferences, and finally ways of alleviating this vice.
The Specific Objectives of the study are as follows
To find out how efficient corporate governance leads to improved operational efficiency
To find out how reduced corruption and reduced governmental influence leads to easy access to capital markets
To find out how efficient corporate governance leads to reduced cost of capital
To find out how compliance with legal and regulatory requirements leads to better reputation of the company, its directors, and managers
To find out how advanced corporate governance systems leads to reduced cost of capital
To find out how increased corruption activities damages the reputation of company, the directors, and the managers.

Problem Statement
Corruption is a transnational threat and should be minimized globally. Alarmingly for Russia, early July this year when U.S. President Barrack Obama visited Russia, top on his agenda was the issue of corruption. Corruption in Russia according to Welu and Muchnik (2009), they state should be added to the countrys list of issues to be urgently addressed so as to have Russia placed in the list of powerful countries globally. Consequently, corruption has seen international investors leave the country with high incidences of tax evasion, harassment, unfavorable working environment, and disputes over corporate governance have actually made investors lose interest in Russia as an investment ground.

Another revelation provided by Transparency International regarding Russia Corruption Perception Index, ranked Russia number 146 out of 180 countries in terms of corruption with a 2009 CPI score of 2.2 and a confidence range of 1.9-2.4 (2009). Roughly, as reported by Welu and Muchnik (2009), 50 of Russians believe corruption is a permanent fact of Russia life that results from official greed and wickedness.

Therefore, it is very clear that Russia has a problem of corruption, which according to the evidences given has become like an engine that drives everyday activities. Since there is rampant problem of corruption propagated by government officers, it is therefore quite logical that government inference in rightful operations which therefore validating and justifying this research paper, while at the same time gives this dissertation an impetus to search for better ways of promoting the Russian corporate governance.

Hypothesis
The study examines the relationship between corruption and governmental influence, on corporate governance. The hypothesis to be tested is that reduced cases of corruption and interference from the government, determines efficient corporate governance. In addition, the vice versa is true.
Alternate Hypothesis
Corruption and governmental interferences does not affect the Russian Corporate Governance
Null Hypothesis
Corruption and governmental interferences affects the Russian Corporate Governance

Theoretical Framework


Independent Variables
Dependent variable

    Therefore, the conceptual framework put in plain words how the independent variables impacts on the dependent variable which in the long run has an influence on ability to access capital, gain shareholder trust, and reduce vulnerability to financial crises. For example, false a accusation in a country that leads to punishment without crime as a result of corruption to implicate someone have impact on trust in justice system and thus, investors or shareholders may withdraw. Whereas, vices such as favorism in hiring may lead to selection and recruitment of incompetent workforce that may hamper productivity, and in the end company fail to compete effectively leading to losses and even closure of business.

CHAPTER 2 LITERATURE REVIEW
Introduction
This chapter mainly concerns laying a clear understanding of the concept corporate governance and then taking an advanced step to explore how corruption and governmental interference hamper corporate governance. This involves getting a clear picture of the status quo with regard to corruption in Russia, and in turn provides a platform for the formulation of recommendations, supported by evidences. Which when adopted shall be capable of making countrys corporate governance effective and therefore increased corporate access to capital, reduced vulnerability to financial crises, and increased shareholder trust.

2.2 Corporate Governance in Russia
Corporate Governance is a complex concept right from its definition. Defining corporate governance as a concept is easy because there are various situations and jurisdictions such that a single definition cannot fit into all of them (International Corporate Governance Network, 2008). Therefore, definition of corporate governance greatly depend on the institution that will define it, or author, as well as country and legal tradition within which the definition is made. However, this hurdle in definition has not been a hindrance rather a motivation to seek a best of fit definition. 

In this regard, according to the International Finance Corporation defines Corporate Governance as the structures and processes for the direction and control of companies (IFC, 2004, p.5). To add to this definition, the Organization for Economic Cooperation and Development (OECD, 1999) gives a more detailed definition of corporate governance as the internal ways in which corporate are operated and managed. This involves a network of relationships between various parties, such as, the management of the company, the board of directors, the shareholders, and other stakeholders. Additionally, corporate governance as defined by OECD (1999) provides the structure that governs the formulation of the company objectives, as well as the means through which the goals are to be attained. Therefore, effective corporate governance has to give incentives for the management and board to set out to achieve the objectives with a clear perspective on the company agenda, as well as monitor how company resources are being utilized (Magdi and Naderah, 2000 The World Bank, 2008 Stott, 2010).

Therefore, it is very clear that corporate governance is a system by which companies are directed and controlled (ICGN, 2008). Moreover, corporate governance involves a set of relationships between a companys management and its board its shareholders and other company set the means of attaining objectives and monitoring performance of the company.
However, a clear look at the internal perspective of corporate governance definitions, a certain number of elements are very common they include

That it is a system of relationships defined by structures and processes. For instance, between shareholders and management, whereby the latter provides the former with financial and operational reports on regular basis, whiles the former providing capital in order to achieve return on the latters investment. Additionally, shareholders elect a body referred to as a supervisory body, which represents their interests. The supervisory body gives the company the strategic direction and control over the companys manager. Thus, making it clear that  managers are accountable to the supervisory body, which in turn is accountable to shareholders during the General Meeting of Shareholders (IFC, 2004).

Another common element relates to the fact that the relationships concerned may involve parties with different and sometimes contrasting interests especially between the GMS (General Meeting of Shareholders), Supervisory Board and General Director. These can be manifested in the principal-agent problem. This according to the Oxford Dictionary of Economics, is The Problem of how Person (A) can motivate Person (B) to act for (As) benefit rather than following his self-interest (IFC, 2004p.5).

All the parties must take part in the direction and control of the company. Whereby, the GMS that represent the shareholders make fundamental decisions. In matters of guidance and oversight, setting company strategy and controlling managers, the Supervisory takes charge. Finally, the executives run the day-to-day operations such as implementing strategy, drafting business plans, managing human resources, developing marketing and sales strategies, and managing assets (IFC, 2004 p.6). While undertaking the duties of running the corporations, caution should be taken ensure that rights and responsibilities are distributed properly to increase long-term shareholder value. By doing so, minority shareholders are safeguarded against controlling shareholders through related party transactions, similar means or tunneling (IFC, 2004 p.6).

The external perspective of corporate governance relates to the relationships between the company and its stakeholders and by stakeholders it imply that people or institutions with the interest in the enterprise that can arise through legislation or contract or by way of social or geographic relationships (IFC, 2004 p.7). Examples of stakeholders include employees, creditors, suppliers, consumers, regulatory bodies and state agencies, and the local community harboring the company.

2.2.1 A Brief History of Corporate Governance
The systems of corporate governance have undergone evolution over the years because of system failures or crises. The first well-documented failure of governance is that of the South Sea Bubble in the 1700s, leading to a revolution in the business laws and practices in England. On similar grounds, in the U.S. a crash in the stock market in 1929 lead to establishment of securities law (IFC, 2004 p.8). These are some major turn points that have shaped the field of corporate governance to today.
Regarding the Russia context, the events and incidence of privatization can be attributes as the cause of creation of corporate governance model. According to Vasilyev, (2000) It was the particularly Russian model of privatization practiced in 1992-1994 that determined the basic characteristics of the structure of corporate ownership and governance in Russia, and it also outlined the major directors for there development. Thus, it is worthy to look at features of Russian model of privatization to gain understanding of the root of corporate governance.

2.2.2 Principal features of Russian model of privatization
Mass corporation in the course of privatization
Major special advantages for insider employees and managers, and their widespread participation in privatization
Mass sale of shares in privatized enterprises for vouchers, which were issued to all citizens for a symbolic charge
The freely  transferable nature of the vouchers and their free circulation on the market, which made it possible for processes involving the concentration of ownership to begin considerably sooner than the actual sale of shares

The sale of shares under certificate-based privatization both directly and through intermediaries  certificate investments funds

The open nature of joint-stock companies created in the course of privatization, which allowed the processes of redistribution of ownership through the free sale of shares to begin.
Therefore, the initial specific structure of corporate ownership resulted from the implementation of this privatization model. But it is important to note that first time appearance of shares of privatized institutions on the market in 1992-1994 acquisition of these shares was synonymous to lottery hence mixing up the structure of funds assets, but this has gone through better changes (Feifer, 2010).  
A number of concepts encompass the Russian Corporate Governance Model that shapes the corporate governance concept. These are first, Structure of stock ownership and trends in the change of this structure. Secondly, the role of the Russian financial system as a mechanism for the transformation of savings into investments and prospects for its development. Thirdly, regards the relationship among sources of financing Russian corporations and their prospects for change in operations to enhance profitability. Fourth, regards the history and trends in the development of the legal system governing the operations. Fifth, is the macroeconomic policy and its impact on corporations that involves the current commercial practices and business ethics and the traditions and nature of state interference in economic life.

2.3 The International Scope of Corporate Governance
Feifer (2010) state that in order to understand the international scope of corporate governance there is need to evaluate exactly what has taken place over the years and see the various steps taken over years. This is important so that to come up with an international standard of corporate governance. In this regard, there has been a creation of number of codes of best practices and corporate governance over the years, most of which refer to what is expected of the Board of Directors some of them being of international scope (Sokolov, 2004, p.10). Generally OECD Principles of Corporate Governance, recommendations of the European Association of Securities Dealers (EASD), the Corporate Governance Guidelines of the Confederation of European Shareholders Association, the International Corporate Governance networks Statement on Global Corporate Governance Principles (ICGN), and the Commonwealth Association for Corporate Governance (CACG). However, the OECD Principles have had a worldwide acceptance as reference point and framework for corporate governance. They were published in 1999, revised in 2004 with an aim to promote good governance.

2.4 Corporate Governance The Ideal Model and Russian Reality
Magdi and Naderah (2000) affirms that corporate governance involves having a balance of interests between various stakeholders, and it receives attention the world over, with a majority of countries shifting their attention to the development of corporate governance standards. Such is the case when in May 1999 an OECD council approved the Principles of Corporate Governance that are not binding as they seem to serve as reference points for the creation of legal basis for corporate governance both at company and government level.
There are 5 areas covered within this document that represents the Ideal model
the rights of shareholders
equitable treatment of shareholders
the role of stakeholders in management of a corporation
disclosure and transparency and
The responsibilities of the board of directors
Even though there is no 100 compliance with these principles, most developed countries have gone to greater heights in relation to full compliance. These countries include the U.S., Hong Kong, Canada.

Core Values for Corporate Governance
Sokolov (2004) highlights the Core Values for Corporate Governance. First, fairness that value ensures that shareholders rights are protected as well that they are treated equally (minority and majority shareholders). In other words, when any of the shareholders rights is violated heshe should be able to obtain redress (Sokolov, 2004, p.10). Second, Responsibility as a value calls for a recognition of the rights of stakeholders under the establishment of law as well as encouraging an active-co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises (Sokolov,2004, p.10).

Thirdly, transparency relates to the accurate and timely disclosure of relevant matters regarding the company  company, financial situation, performance, ownership, and governance structure (Sokolov, 2004, p.14). Transparency is important value because it promotes trust among the investors, shareholders and all team players. The fourth, core value is the accountability that ensures that the strategic guidance of the company, the effective monitoring of management by the board, and the boards accountability to the company and shareholders.

2.4.1. 1 Distinction between Corporate Governance and Corporate Management
The difference between Corporate Governance and Corporate Management is in the sense that the main focus of corporate governance is on the structure of the company and the processes to ensure fair, responsible, transparent, and accountable corporate behavior. While on the other hand, corporate managements main focus includes the tools necessary for the business operation (Sokolov, 2004, p.18).

2.4.1.2 The Distinction between Corporate Governance and Public Governance
Sokolov (2004) gives the distinction that Public governance is concerned with the structures and systems of governance in the public sector. Corporate governance is also different from good corporate citizenship, corporate social responsibility, and business ethics (Sokolov, 2004, p.22).

Benefits of Corporate Governance
The company derives from good corporate govarnace especially at advanced phases various benefits. Research by Feifer (2010), found out that early phases of corporate governance that involves legal and regulatory requirements compliance, the company is likely to benefit from better reputation of the company, its managers and directors. While at advanced phase of corporate governance that involves corporate governance leadership that corporation aspire to achieve, the company is likely to benefit from improved operation efficiency. However, a well-executed processes and efficient running of organization is paramount to lead to improved operational efficiency, access to capital markets, reduced cost of capital, and better reputation of the company, the board of directors, and the managers. The figure below illustrates the benefits vs. level of corporate governance.


Source Sokolov, Part 1, p.13

2.5 The Impact of Corruption and Governmental Interference on Corporate Governance
After having discussed through the structure and operations of the corporate governance in Russia, it is important that we take a deeper analysis of the ways things have been and still are in Russia with regard to corporate governance against corruption. To do this there is need to understand the various cases in which corruption is manifested in the Russian Corporate Governance. They include
Violation of rules of corporate governance by top managers while being protected against dismissal
Increased cases of insider trading
Lack of explicit definition of transactions with affiliated parties
Lack of mandatory preferential rights for shareholders
Lack of restrictions on cross shareholding

2.5.1 Insider information and Dealing
Insider information and dealing has actually been a common phenomenon in the corporate world when corporate insiders, including officers, directors, and employees buy or sell shares in their own companies within the confines of company policy, law, and regulation (Sokolov 2004, p.7-8). Within Russian context, illegal insider dealing occurs in several forms. For instance, it can take place when those who have access to important and confidential information, they take and use this information at their own advantage either by obtaining profits or avoid ending up in losses in the securities markets. In the case of Russia, insider information is any information about a company and its securities, which is not easily accessible and which provides privileges to those who have access to it due to their official position, contractual obligations vis--visthe company in comparison to other participants of the securities market( Feifer, 2010).

According to Feifer (2010), the following persons access insider information easily
Members of the companys governing bodies or securities market professionals with a contractual agreement with the company
The External Auditor of the company or securities market professionals having a contractual agreement with the Auditor
Officials of regulatory agencies having legal rights to control or monitor the company.

There is however a problem that is actually addressed in the Russian Corporate Governance Manual which involves disclosure and transparency. The manual asserts that the two terms are not the same simply because companies may disclose an enormous amount of information that is of no particular value to the users of such information. Important pieces can be withheld. Disclosure can be irrelevant or, worse, appear to be manipulated in such a way as to conceal the true picture of the state of the enterprise (Sokolov, 2004, September part IV p.10). As a remedy, the IFC Survey on Corporate Governance Practices in Russians regions, have emphasized the fact that companies are to be liable when they cause damages to third parties by providing false, incomplete, or distorted information (IFC Survey, p.25).

As a guideline, the OECD Principles of Corporate Governance suggest that
timely and accurate disclosure be made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company (OECD Principles, Principle IV).

2.5.2 Presenting Financial Information
Financial information is of utmost importance to shareholders, potential investors, creditors, and other stakeholders (Sokolov, 2004, p. 14). These include
The Balance sheet  companys assets, capital, and liabilities on a particular date
Income statements  Performance information over a specified period of time
Statement of changes in owners equity  changes in the charter
Cash flow statement  - sources and uses of cash
The notes to the financial statements  explain companys statements with additional information
Explanation to financial statements  features of the activities of the company, performance indicators
The External Auditors report with conclusions

2.5.3 Non-adherence to the Codes of Ethics
A code of Ethics, or code of conduct, or ethics, or responsibility statement refers to a basic guide of conduct that imposes duties and responsibilities on a companys officers and employees towards its stakeholders, including, among others, colleagues, customers and clients, business partners, government, and society (Welu and Muchnik, 2009, p.56).
A code of ethics carries with it a number of advantages, including
Enhancement of the companys reputation
Improvement of risk and crisis management
Development of corporate culture
Advancement of stakeholder communication
Avoids litigation

Therefore, the code of ethics greatly uplifts a companys overall performance and failure to adhere to it leads to an expression of corruption. A great deal of practices in the Russian Corporate world have ended up abusing this code of ethics and as a result leading to declined productivity and poor image on both internal and external investors.

The Corporate Governance Manual outlines the need for the establishment of a Supervisory Board which is responsible for setting the companys strategy and business priorities as well as guiding and controlling managerial performance, and for making decisions on matters that do not fall under the GMS authority (Sokolov, 2004, September part II p.14l).
The following responsibilities rest on the Supervisory Board
Setting company priorities and strategic direction
Establishment of the Executive Bodies
Terminating the Executive Bodies Powers
Suspending the Executive Bodies Powers
Appointing interim Executive Bodies
Concluding Contracts with the Executive Bodies
Suspending the Executive Bodies Operations
Appointing the Corporate Secretary(FCSM Code, Chapter 5, Section 2.1)
Approving By-Laws (LJSC, Article 65, Clause 1, Section 13
Establishing Branches and Representative Offices

It is therefore a great responsibility for the Supervisory Board to ensure that there are no conflicts of interests between the various stakeholders within the company. However, a number of these members sometimes overstep their authority and thus lead to tremendous disorder within the companies they are governing. Bribery is one of the major problems that affect these people and as a result, they appoint people without consideration of the Code of Ethics that should enable them appoint and regulate the various activities of the company with transparency and accountability. This has in turn led to reduced performance, poor company image, and increased cost of capital.

Another area that has received a lot of attention as regard payment for shares is that of dividends allocation. It is the work of the Supervisory Board to recommend on the amount to pay out to the General Meeting of Shareholders. In addition, the General Meeting of Shareholders possesses authority to approve dividends. In addition, in a number of cases, been the directors who end up allocating huge dividends for their own share. This provides a violation of duties ands responsibilities. This in turn drives away existing and potential investors and as such makes the company vulnerable to securities risks.

2.5.4 Governmental Interference
The government plays a major role in the country, Russian government being no exception. In this case, many cases of corruption originate from government offices right from the start of company establishment, and registration to the process of regulation of. It is at this point that the Russian President, Dmitry Medvedev promises to fight corruption (Johnson, 2009 Lazarea, Rachinsky, and Stepanov, 2007). Corruption has greatly affected Foreign Direct Investment. This has been as a result of white-collar crimes consisting of two problems

Crime without punishment  this problem has actually led to loss of trillions of rubies (32 billion) according to the Oxford Analytica (2010, June 28).

Punishment without crime  this involves the abuse of law to intimidate or eliminate business rivals, expropriate companies or renege on debts and contracts, something all too often done with impunity. A better illustration is given by MikhallKhodorkovsky trial which indicates that courts have failed to protect the innocent, and have become extortion and persecution agents, according to the Oxford Analytica (2010, June 28)

Sacking scapegoats  involves the sacking of people to conceal the actual criminals in the government. An example is given of Major-General AnatolyMikhalkin, the head of the MVD Moscow regions tax crimes department who was the main target but was dismissed, along the head of the prison. Some of Milkhalkins cohorts were simply given new duties (Oxford Analytica, June 2010).

Partial Reform  These reforms are made as a way of concealing the truth. These types of reforms do not cover the area they are supposed to cover in terms of reform.

Thus, this has implication on the corporate governance and hampers business at large. To validate the claim, the paper next section presents methodology approach to collect necessary data to prove the assertion.


CHAPTER 3 METHODOLOGY
Introduction
    This chapter relates the manner in which the research was approached. Various statistical and theoretical issues that are related to the research are provided. The chapter therefore addresses the actual methodologies used in the research process from its time of inception to the end. In the chapter, the role of both the secondary and the primary date in the process of addressing the various research questions has been addressed. Additionally, the manner in which data was collected and later analyzed to reach a reliable conclusion has been discussed. This has been done with an in-depth reflection of the research design and other related economic issues.

3.2 Methodology
    The methodology used in this research contains the use of primary and the secondary methods of data collection. The primary method depends on collecting data from the Russian Corporate Governance Principles and various Russian government reports, concerning the various cases of corruption and governmental interferences with the aim of realizing reduced vulnerability to financial crises, increased ability to access capital, and increased trust from the shareholders. Employees opinions were also collected and fully incorporated throughout the research process. Various views of different stakeholders have also been put into consideration. Questionnaires administration played a very crucial role in ensuring that potential respondents who were at different locations and who could not be reached easily (physically) could still participate in the research process.

    In order to fully identify the corruption cases as well as cases of government interference with the governance of companies in Russia, the proposed research ensured that all the stakeholders were fully involved in reaching the best solution possible. To achieve cohesiveness in the research, conclusions reached and the acceptance and easy implementation of the research finding, direct interview of personnel at the managerial level, senior level and junior level and filling of questionnaires was done. This was important since it gave the researcher a great opportunity for the vital information and findings made from the previous researches to be studied and vital findings used in this research. In addition to that, the choice of interviews was targeted at ensuring that strategic people in the industry gave their views.

    The researcher did manage to get an opportunity for a face to face interview with the top management this is with personnels at the managerial level, senior level and junior level. This, at times involved telephone interviews and internet conferencing. Similar questions to those used in the administration of the questionnaires were used in the effort to get crucial research information from the Russian top corporate managers. The telephone interviews and internet conferencing were targeted to company executives as well as different shareholders within Russia in government departments and other companies in June 2010.

3.2 Questionnaire
    The choice of questionnaires as a data collection tool was arrived at after a close and in-depth consideration of the research goals and the target group. Random method of sampling was to a large extent employed in order to ensure that the most reliable information that would be a representative of the whole population is arrived at. Employees opinions would be collected through the planned distributive questionnaires among random group of employees. In addition to the questionnaires, other online sources of information, journals, books, written articles and magazines have also been utilized in the data collection process. Questionnaires are cheap, do not require as much effort from the questioner as verbal or telephone surveys, and often have standardized answers that make it simple to compile data. Never the less, such standardized answers at times frustrate the users due to their detailed nature. The method was applied because it provides a link between the theoretical perspectives, research purposes and the data collected which in turn elicits the research findings.

3.2.1 Questionnaire Drafting
    A questionnaire with both open ended and closed ended questions was used in the collection of data from the research sample that is mainly concentrated in the randomly selected companies within Russia. Questionnaires drafting was done with a clear understanding of the diversity of the people in corporate world of Russia. In addition, the target goals of the research process (Maloney 2006). The questions used had different sets of questions that targeted the respondents in different formats. The open-ended questions used target some of the respondents such as chief information officers, chief executive officers, and employees in the industry. The closed-ended questions used enabled the participants in the industry, especially those in the human resource departments, to answer from the numerous given number of options.

3.3 Data Collection
    Data was collected through various methods. The major process of data collection was through administration of questionnaires. In addressing the various issues related to the research question, two types of data were collected. Primary data and the secondary data collected served different roles even though the ultimate purpose of the two types of data collected was to clearly bring an in-depth insight into the role of the various ethical strategies employed in the industry, key factors they have in productivity and other related issues in the industry (Travis, 2002).

    Observation was also done during the course of working hours. This was vital in that it supplemented the validity of answers in the questionnaires aspects observed included indicators of origins of poor performance. Briefs and recorded reviews from resource persons in the Human resources department and recorded reviews from the internet and other various departments was another source of information used to supplement interviews. This was important in obtaining secondary data related to the human resource department techniques in FIL industries limited during various times.

3.3.1 Role of Primary Data
    Even though questionnaires were used in the data collection process, the primary data collected played a very fundamental role in addressing the major research questions. The research question, regarding how ethical human resources management is linked to productivity was asked. This research question was best addressed using the primary data collected. The primary source of data also enabled the researcher to get the most recent set of information that would help doing the comparison between the past sources of data, the most recent sources collected either through viewing, ethnographic research study of very recent journals, and the analysis of the information collected in the questionnaires. On addressing the research that relates to productivity issues and the ethical human resources management strategies, the primary data collected helps in analyzing the core major concerns to the corporate governance and the best way of addressing them.

3.3.2 Role of Secondary Data
    Secondary data that was availed played a very important role towards reaching the research conclusion. The detailed study done on the secondary sources of data available such as journals, information on various websites, information in the national archives and the various books written on the Russian Corporate governance have given a lot of vital information that have aided the formulation of recommendations that could uplift the Russian Corporate Governance. The information also played a crucial role in identifying the various roles played by various stakeholders in addressing all the issues related to the various corrupt practices employed in the industry and the need to ensure that companies, shareholders, and stakeholders are satisfied with company progress in order to be optimistic of the operations of the companies.

    Various issues regarding the best corruption and governmental interferences that have previously been employed and their effects were availed through the in-depth study of the available sources of secondary data. The trends of various parties involved in the corporate world were identified, the  satisfaction of  their needs, security concerns and various past attempted governmental interferences and corruption,  have also been revealed through the analysis of the secondary sources of data.

3.4 Data Collection and its Analysis
    The researcher used a questionnaire for the gathering of data needed in identifying the current principles of practice that represented corporate governance, the evolution of corporate governance, the various cases of corruption, and various ways in which the government interferes with the structure and progress of Russian companies. The questionnaire helped in gathering of information about cases of corruption, effect on company performance, on the quality of productivity in the industry, the possible effective strategies that could be employed in the industry in order o enhance efficiency, effectiveness, and better corporate governance. The data collection used is the sample survey that involved only a small section of the companies executives, stakeholders, shareholders, Board of Directors in the Russian corporate world

3.4.1 Sample size and the sampling strategies
    Purposive sampling strategy was employed in determining the sample population to be used in the research process. In the final analysis and sampling of the data collected, the sample population was divided into subgroups for ease of the sampling process. Only random sampling strategy was used. This method is simple, most effective, efficient and largely the best method of drawing a sample from the population (Preston 2008 149-153). Quota sampling strategy was also used in situations where the use of random sampling strategy was impossible. In very rare cases, stratified method of sampling was used to ensure that large enough samples was used and subdivided on important variables. The major advantage to why the researcher chose purposive sampling is that it ensures inclusion in the sample, of sub-groups which otherwise could be omitted entirely by other sampling methods because of their small numbers in the population. Hence, the researcher was able to increase the representation of a sample of a given size or got an equivalent of information from a smaller population, therefore getting better estimates of the whole. The survey respondents are 60 and are tabulated as table below

3.4.2 Instruments used in the Process of Data collection

    Questionnaires were the major instrument of data collection used. Library findings were also used. To reduce the overall cost of the research process, electronic mailing system was utilized in sending the soft copy of the questionnaires to the prospective study sample. In most cases, this was accompanied by a brief introductory letter with request that the questionnaire be completed in a timely manner as specified. Indeed emailed questionnaires was utilized for administering the questionnaire to far flank sample people in locations which could not be reached in a cost effective manner.

CHAPTER 4 RESULTS, ANALYSIS, AND CONCLUSION
Introduction
From the data collection and analysis that this paper present, it was very clear, that null hypothesis emerged true that a great deal of corruption and interferences from the government tremendously affects corporate governance. I have actually, through the research that I have carried out come to an indubitable conclusion which as well has recurred in the course of the research work, that there is a clear link between incidences of corruption, and corporation efficiency. This chapter analyses these incidences in the light of coming up with a workable model conclusion.

Results and Analysis
An overview of Major Risks of Corporate Governance in Russia
RisksProbability of riskRussian UniquenessOther markets with similar riskInformation disclosureYesShare dilutionNoKoreaAsset strippingtransfer pricingNoIndonesia, Malaysia, Korea, MexicoBankruptcyNoIndiaRestriction on ownership of stocks and disposition of voting rights-NOKorea, Mexico, ThailandReorganization (mergers and takeoversNOIndonesia, Malaysia, KoreaA similar research was carried out to find out whether the above table as portrayed by Vasilyev (April 2000) is true. The results emerged synonymous, indicating that corruption related cases create more risk than other cases such as bankruptcy, mergers, and takeovers. What does this mean That Russia needs to focus more on corruption and governmental interference compared to other issues so as to promote efficient corporate governance.

The research findings that this paper have gathered right from the beginning both from primary and secondary sources, clearly show that corruption has to a larger extent derailed rate of economic growth in Russia. At the beginning, the null hypothesis asserted that corruption and governmental interference tremendously affects corporate governance. In addition, the main concern now relates to the link that exists between governance and corporate success. It should be noted that at the top of the levels of management, is the strategic level manager. It is this leader who unites all the other departments in a company setting hence, our main concern on corporate governance is without doubt, a very informed concern. The Russian President, Dmitry himself is worried of corruption, and that explains why the U.S. President, Barrack Obama during his visit to Russia, as explained earlier, gave prominence to the issue of corruption. Like any other management setting, even though corruption is very prominent in other lower levels of management, it the duty of the top-level management team to ensure that policies designed do not give room to corruption. This does not meet that corruption is the only means to downfall, but rather a major road to organizational collapse.

Organizations collapse as a result of correlated failures, both in terms of personnel, technology, and resource allocation. All these factors are so much networked in such a way that efficiency could come as a result of proper allocation of resources, usage of up-to-date technology, and finally, efficient management team. The main aim here is not to over-emphasize corruption, but rather re-affirm the part it plays in organizational decline, and most especially in the Russian corporate world. Let us now focus on the main events as observed in the literature review section.

This paper rightly concurs with Boylan (Vol. 19 1999) who asserts that corruption has actually become a culture for Russian Government Officials. Actually, in the course of research process and in line with Boylans view, bribery is so prominent in the Russian bureaucracy. Bribery is actually paid some U.S. and Western businesspersons on a regular basis, towards Russian government officials to obtain license to operate in Russia. A number of U.S. and other Western businesses and businesspersons routinely pay bribes to. Bobylan in his survey study has truthfully indicated that the 42 of those involved in bribery in 1993 were government officials and more that 25 were law enforcers. This means that Russian officials do not only regularly accept bribes but also rather enter into partnership that is illegal with organized crime and also with business groups that are clandestine in nature. In his work, Boylan illustrates with example on how a former communist apparachiks does continue to work within the Russian bureaucracy, exploit previously made black-marketeer relationships to profit in the new post-Revolutionary Russian system. Thus, a partnership formed long before the attempted coup of 1991 by organized crime and communist government officials, now threatens Russias democracy growth (Boylan, 1999).

The next corruption practice observed in research is the role of the Mafia who commit theft, murder both in Russia and in the United States. The Mafias involvement ranges from theft, extortion, money-laundering, gug-trafficking, drug running, prostitution, smuggling, loan sharking, contract killing, to name but a few. However, the U.S. Department of Justice is actually committed to address the problem of Russian Mafia in the U.S. in New York, Los Angeles, as well as Miami. This simply means that businessmen who pay bribes as well as protection money in Russia may be unintentionally facilitating Russian criminal activity as well in the U.S. Russia cannot recover if the Mafia still continues to ruin Russia and even the United States. Similarly, Russia cannot recover because of passive foreign investors passiveness. Recently law enforcement agents from the U.S. visited Russia and their message was clear that, as Boylan puts it, the U.S. Government is concerned about crime and corruption in Russiathat the growth of organized crime in Russia and Eastern Europe is a threat to the integrity of government (Boylan, 1999).

The Washington Administration has been searching for ways to fight the rise of crime and criminal elements in Russia. Certainly, it is the basis of U.S. foreign policy and the basis to the post-Cold War era that democracy derives its foundation and flourishes from, in Russia. Determination has been made by the United States and other independent countries to support Russia in its transformation from a corrupt totalitarian regime to a popular democracy. Thus, this paper rightfully agrees that there should not be any tolerance on corrupt officials and corporations by private businesses, contrary to this policy (Boylan, 1999).

So far, the United States has established a Foreign Corrupt Practices Act (FCPA) that is a means of combating bribery by U.S. citizens to the Russian Government officials. Regrettably, U.S. officials have failed to energetically enforce these legal policy vis--vis fraudulent practices in Russia as well as the former Soviet Union. In line with the FCPA government, officials are prohibited from bribing government officials. This law was enacted by the Congress so as to prevent foreign corruption practices by U.S. officials, also as a means of cautioning against poor relationship with foreign investors and businesses so as to promote economic growth. It is therefore important that we appreciate this gesture from the U.S. and encourage other countries to do the same so that Russia can be made economically stable. (Boylan, 1999)

The U.S. business community in Russia should conscious of the fact that the U.S. Government will possibly pursue the enforcement of this law with all due attentiveness. U.S. law enforcement agencies have already started to cooperate with Russian authorities in fighting organized crime and corruption. In addition, as time passes the Russian corporations will come to realize the profound role played by the U.S. anti-corruption policies. U.S. corporations should take precaution that they are operating in Russia in a manner that does not work at collide in purpose, by ensuring that their operations in Russia comply with the FCPA. Only in doing so will they prove that they are promoting their business and economic goals.

The modern harsh east atmosphere in Russia, with any luck, will not withstand. As Russia establishes democratic rule and a market economy, it is highly unlikely that proliferating bribery of government executives will continue to be stomached or that past illegal behavior will be easily forgiven. The implementation and retribution of such practices will begin.

Moreover, the virtually free market in Russia has created many prospects for criminal organizations, including the marketing of stolen nuclear fuel on the global market. Governmental interference is prominent. In fact according to Boylan, (1999) during 1995 criminal proceedings were set up against 2,000 employees of the Russian Ministry of Internal Affairs.

Corruption and governmental interference and their impact on the corporate governance are a major concern of many Russian corporations. This paper actually appreciates Boylan when he notes that, President Boris Yeltsin has strongly acted against crime in his anti-crime verdict. He continues to rightly assert that other members of the Russian legislature have expressed concern that Russia will become a criminalized society if economic reform is not pushed through the Russian Duma and corrupt influences are not eliminated from government(Boylan, 1999).

Russian politicians themselves have not been immune from the crime wave gripping Russia. A communist member of the Duma died on November 5, 1994, from head injuries sustained in attack at the entrance of his home in Moscow four days earlier. The Communist Party issued a statement stating that

Finally, the realization that the a number of top government officials in Russia have actually acknowledged  the role played by the Russian bureaucracy and police force in corruption as they have made alliance with organized crime, and thus becoming a major contender of self-regulating businessmen. There is fear among the Russian businessmen to register their companies with local governments as they tend to feel that their information may be forwarded to criminal groups who will end up extorting money from them.

4.3 Overview Summary and Conclusion
Change has been a constant in virtually all phases of Russian life in the past ten years. Chances are that this atmosphere will continue for another decade. Corporations should hope that the Russian legal system becomes more anticipated and efficient. Russian corporations should also expect continued cooperation between foreign and Russian Governments. Right from the start, it is evident that corruption has a lot of influence on the instability and miss-efficient of the Russian Corporations governance. As explained, there various ways that can describe corruption, corporate governance and the various compositions that makes up a corporate group. In this research, it is noted that Russia greatly suffers in terms of foreign relationship with other states, most especially the U.S., which if corruption is eliminated, will promote the Russian economy to a greater height. This paper strongly recommends that Russia establish anti-corruption laws are enforced and those government officials who promote this vice are brought to book. The research has also emphasized the need to control our organization structures in such a way that they do not encourage corruption.