The one who has the information is master of the situation.
Money is most often made in Russia through the use of sensitive information. Through knowledge of which events will or won’t happen in the near future. This would include decisions to be made by the government. What will be forbidden, and what will be allowed. For which projects will government funds be used in financing. What equipment is to be bought. Whose business will be taken. Who will be appointed to office, and who will be dismissed.
The more powerful the office, the greater access it has to confidential information, and the more it costs. The more it costs, the more you can earn on it. The best product in Russia is knowledge of what will happen tomorrow. What people will be saying tomorrow on TV and radio. The one who knows tomorrow’s news today can earn a lot of money on it.
Russia is one of the few countries in the world where confidential information is a saleable good.It is freely bought and sold. Everything depends on the price. Success in Russian business depends on knowing information that your competitors do not know.
- The most valuable product in Russia is confidential information.
In Russia, some are able to use not only confidential information of what will happen in the near future, but also to earn money on false information about what will never happen in real life. Rumors with the ring of truth have more than once turned a great profit for their originators in Russia. In Russian history, there have been instances when patently false information has been deliberately spread through the highest channels of government pipelines.
Case Study: “Let’s make money on information”
In his memoirs, Artyom Tarasov, one of Russia’s most notable businessmen, wrote:
Once a colleague of mine told me, “I’ve bought ITAR-TASS! Now I can tell the whole world any information I want, and it will be official Russian state news. Let’s make some money on it!” [These events would have occurred in 1992 – L. L.]
How could that make any money? It’s very simple. For example, if you broadcast something at night, it will be morning for the Americans. Nobody in Russia will be able to refute the broadcasted information. That means people will be nervous all day in America before they hear the truth explained. Couldn’t you make money on that?
Soon ITAR-TASS was reporting that a fuel leak had occurred at the Leningrad Nuclear Power Plant. That announcement was repeated right away by news agencies around the world. The world, terrified by Chernobyl, literally boiled over—there was such a wave of information in the press as hadn’t been seen in years. Despite official denials, the scandal kept going for about two weeks. Brokers hired by my colleague bought up stocks in leading Scandinavian companies that had fallen monstrously in price.
At the request of my client, who had a major business in St. Petersburg, I sent a buddy of mine to the nuclear plant to check the information. He met with the director. “Everything is fine here! There wasn’t anything! We also heard the story from TASS, but it’s complete nonsense. Nothing happened! Who is doing this? Why? Several monitoring groups are coming here, including international ones!”
For that consultation, I received thirty thousand dollars from the client. How much did my colleague make on the Scandinavian stocks he bought? That doesn’t even matter. Wild capitalism had come to Russia, with all its criminal consequences.
Russians are very inventive and sharp-witted by nature. They are well-trained in searching for efficient ways to violate the law. They are capable of discovering and carrying out original plans. They are able to work with confidential information. They are willing to pay big money for the information they need. This makes them very dangerous in business.
(This has been an excerpt from the upcoming book How Business is Done in Russia: Secrets of a Russian-American Executive. Click “HBDR the Book” on the menu to learn more)