Activities through 2011

This section includes everything published on this website through 2011, when Founding Chair Matthew Murray left for a position with the Obama Administration and Patricia Dowden was named President.  

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March 2012 CFBE Founding Chair Murray named US Deputy Assistant Director of Commerce

The Center for Business Ethics and Corporate Governance is proud to announce the Presidential Appointment of its founding Chair, Matthew Murray, to serve as Deputy Assistant Director of Commerce for Europe and Eurasia

 INTERNATIONAL TRADE ADMINISTRATION NAMES MATTHEW MURRAY DEPUTY ASSISTANT SECRETARY FOR EUROPE AND EURASIA

 

WASHINGTON – Assistant Secretary of Commerce for Market Access and Compliance Michael C. Camuñez today announced that Matthew Murray, an expert in Russian affairs and a strong leader in promoting good governance and anticorruption, will join the U.S. Department of Commerce’s International Trade Administration (ITA) as the Deputy Assistant Secretary for Europe and Eurasia on March 12.

 

Murray will be responsible for recommending, developing, and implementing policies and programs that promote U.S. economic and commercial relations with 52 European countries. He will also lead the Department of Commerce’s efforts to help solve trade policy and market access issues facing U.S. firms engaged in commercial activity throughout Europe and Eurasia.

 

“Matthew will bring deep expertise and years of important experience working throughout Europe and Eurasia in the public and private sectors and in civil society,” said Camuñez. “In particular, his deep expertise on Russia will be especially valuable as we deepen our commercial engagement there as the country accedes to the World Trade Organization.”

 

A native of Syracuse, N.Y., Murray most recently served as President of Sovereign Ventures, Inc., a risk management firm he founded to advise multinational corporations and multilateral institutions on how to reduce governance and corruption risk in Russia, Central Asia, and Eastern Europe.

 

Murray previously served as chair of the Center for Business Ethics and Corporate Governance in Moscow, and co-chaired the U.S.-Russia Working Group on Anti-Corruption and Institutional Integrity, an organization of U.S. and Russian non-government organizations formed at the behest of President Obama and President Medvedev to help the two nations cooperate to counter the transnational threat of corruption. In 2004, Murray co-authored the U.S. Department of Commerce’s Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies, which was published in Russian, Chinese and Spanish.  

 

ITA’s mission is to strengthen the competitiveness of U.S. industry, promote trade and investment, and ensure fair trade through the rigorous enforcement of our trade laws and agreements. For more information, please visitwww.trade.gov.

 

 

 

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March 2000 Investor Magazine "Declaration of Integrity in Business Conduct"

This article is translated from Russian

The Governor’s Foreign Investment Council in St. Petersburg approved the “Declaration of Integrity in Business Conduct” during its quarterly meeting. It decided to recommend various social associations to facilitate the process of adopting professional codes of ethics and codes of internal business conduct.

Leading businessmen and the city administration supported the idea, which was brought to the city on the bank of Neva river by the president of an American company “Sovereign Ventures Inc” Mr. Matthew Murray.


“Declaration of Integrity in Business Conduct” is the foundation for the ideology of ethical business. The “Eurasia Foundation” has provided funding for the project.

The idea of Mr. Matthew Murray is consonant with the traditions of Russian entrepreneurship at the dawn of the century when the word of honor of a Russian businessman was known all over the world. If modern Russia wants to fit into the world community, forming of “integrated practices” in business should be essentials for the country’s economy.

The appearance of socially and ethically responsible participants in the investment market in Saint Petersburg will indeed influence the amount of investment. Such results will serve as evidence that there is a connection between ethical culture and profit. It is important to educate a new generation of managers on business ethics. But first of all it is necessary to create conditions under which the managers can make sure for themselves that ethical business in cost-effective and more profitable. In order to maintain a favorable investment climate in developing economics of the city, participation in this positive process is a required condition.

The project representatives from the Russian side – an attorney Anna Ossipova and a member of the Bar Association Anton Andreyev - emphasize that the most prominent representatives of the city’s business community took part in development and distribution of the Declaration. Among them is the Saint-Petersburg Constructors’ Association “Soyuzpetrostroy”, Saint-Petersburg International Business Association (SPIBA), the Chamber of Commerce, “Lenspetssmu Inc.” and other credible organizations.

The main principle of project participation is following the high standards of business ethics on a volunteer basis. As of today, over 100 companies sharing these principles have joined the Declaration. It facilitates the creation of a kind of club of counterparts. Many signatories are working on development codes of internal business conduct. Below is a copy of the Declaration:

A shocking number of both foreign and Russian private businesses regularly pay bribes to government officials. Most justify the practice on the basis that in a highly regulated market where officials of every level are poorly paid, bribery is a harmless means to facilitate government approvals and avoid penalties.

But bribery is a two-way street. Not only must a governmental official require a bribe, a company representative must offer it. Moreover, corruption imposes many hidden costs on Russia's economy. What may appear as a small transgression helps weave a web that is entangling the economy.

In a system fueled by bribery, the free market forces of competition, efficiency and quality are displaced. Economic decisions are taken by government officials on the basis of ulterior motives. For example, when a bribe helps secure a government contract, public funding is not being allocated for the best service at the lowest cost. As artificially high project costs use up limited Russian budgetary resources, bribery diminishes the funds available for government spending on basic infrastructure.

Bribery is also a brake on competition in Russia, which is desperately needed as a catalyst for economic growth. For example, bribes are sometimes paid in order to keep a competitor out of the market, by preventing it from receiving a license or winning a bid.

Competition forces companies to upgrade their performance to meet the requirements of shifting supply and demand. Due to widespread corruption in Russia, the consumer preferences that drive competition are over shadowed by those of government officials receiving bribes. When companies in Russia choose to rely on bribe payments to secure market position, they are less concerned about increasing operating efficiency, or developing new products, services and technologies. They can also remain in or enter industries for which they are ill-suited. As manufacturers, wholesalers and retailers transfer the cost of bribes to the Russian consumer, the prices of goods and services are inflated.

Ultimately, the practice of bribery undermines the ability of many firms to manage Russian operations efficiently. They must allocate a disproportionate amount of resources to the concealment of bribe payments and to the maintenance of the bribe-based relationship. When they alter accounting records, however, they lose control of finances. As they grow dependent on bribery, they find themselves without a plan and vulnerable to higher bribes by competitors.

The private sector companies that engage in bribery both contribute to Russia's economic stagnation and limit their potential. Together with many government officials, they have created a web of corruption that has ensnared Russia's free market reform.

In order to promote a free market and advance their long-term interests in a high-growth economy, private businesses operating in Russia should help fight official corruption. Indeed, as a practical matter, they are in the best position to stop bribery from the supply side.

In order to advance this goal, businesses could individually and collectively adopt no-bribe pledges on a voluntary basis. By reducing bribery on the supply side, a well-orchestrated private sector initiative would help prevent the further spread of corruption. It would assist those reformers in the government who seek to improve and enforce Russian laws which prohibit bribery on the demand side.

Ultimately, by adopting and implementing no-bribe pledges, business would help to create new rules for competition in Russia. Volunteering to refrain from bribery would give the private sector the collective leverage it needs to reduce the control that government has over private sector activities. Rather than seeking the favor of government, companies would thereby be freed to compete on a level playing field on the basis of quality, reliability and efficiency.

Matthew H. Murray is president of Sovereign Ventures Inc./Bronze Lion ZAO,a management consulting group specializing in direct equity investment and small business development in Russia. Martin S. Hupka, Sovereign Venture's managing director contributed to this article

There is, however, little time for hope. Russia's transition from communism to capitalism is dominated by a privileged political class which is amassing an alarming amount of wealth through illicit means. The criminal quality of Russia's nascent capitalism could dominate the country's economic and political development well into the next century. Russia's future leaders are being spawned in an environment of lawlessness and greed.

The movie "Once Upon a Time in America," a saga about a group of young friends who chose crime as the path towards wealth and power at the turn of the century, illustrates the dilemma of Russia in transition.

During one scene, the lead character, the criminal boss, tries to persuade a union leader to accept a bribe, philosophizing: "This country is still growing. There are certain types of diseases that are better to get when you are young."

The union man responds: "You guys are not the measles. You are the plague."

In the face of this kind of threat, most Russians have come to blame the "mafia." But the existence of a mafia is a myth, diverting attention from the government's role in criminalizing the economy. The use of illegal means to acquire the assets of the state did not start with perestroika or privatization. Under Soviet central planning, the state's resources were divided up by those with access to power, the members of the communist party. Party positions were bought and sold like commodities.

Russia's reformers, and their Western supporters, assure themselves that during the transition to capitalism some illegal privatization is inevitable. The rapid acquisition of assets by a handful of capitalists is required to spark economic growth and strengthen the position of the private sector vis a vis the state. The resulting concentration of wealth in the hands of a class of millionaires will lead to investment into profitable industries and the creation of laws designed to protect private property.

This model is also mythical. During Russia's privatization, the wealth of the state has become concentrated into the hands of a few billionaires cozily allied with the state. They have tended to hide their earnings abroad rather than invest them in Russia.

Progress towards a law-based state has been faltering. The political class who benefit from privatization have a vested interest in a legal system built upon rules that can be manipulated, not laws that can be enforced. The notion that a government official may have a conflict of interest when dividing up of the state's assets is a source of amusement.

The burial of Tsar Nicholas II should remind us of how Russia's political culture fosters myths to sustain weak, self-aggrandizing leaders, and that this phenomenon did not end with the monarchy.

The communist vanguard, the Bolsheviks, seized power illegally and did not let go of the reigns for 70 years. The Soviet Union was born of a revolution from above that never became accepted by the people or institutionalized as a government. Decisions about how to produce goods and allocate resources were made by a select group of party members, the nomenklatura. Market considerations, such as supply and demand, price and quality, rarely entered the picture. This centralization of control over resources took place under the banner of equality for workers and the redistribution of wealth.

Similarly, under Russia's new leadership, the free market and democracy are at risk of becoming mere slogans behind which a vanguard of capitalists privatize the state's wealth for their own benefit. Russia is in danger of becoming a plutocracy, ruled by a group of individuals whose stolen wealth is the source of new power over the people. The threat of the mafia could become the myth by which they sustain this power.

There is little time. If history is of value, it teaches that when Russia transforms itself from one system to another overnight, the leadership will advance its interests at the cost of social chaos, economic disintegration and, finally, an unmitigated and fatal dependence of the people on the state.

Matthew H. Murray is president of Sovereign Ventures Inc./Bronze Lion ZAO,a management consulting group specializing in direct equity investment and small business development in Russia.

There is, however, little time for hope. Russia's transition from communism to capitalism is dominated by a privileged political class which is amassing an alarming amount of wealth through illicit means. The criminal quality of Russia's nascent capitalism could dominate the country's economic and political development well into the next century. Russia's future leaders are being spawned in an environment of lawlessness and greed.

The movie "Once Upon a Time in America," a saga about a group of young friends who chose crime as the path towards wealth and power at the turn of the century, illustrates the dilemma of Russia in transition.

During one scene, the lead character, the criminal boss, tries to persuade a union leader to accept a bribe, philosophizing: "This country is still growing. There are certain types of diseases that are better to get when you are young."

The union man responds: "You guys are not the measles. You are the plague."

In the face of this kind of threat, most Russians have come to blame the "mafia." But the existence of a mafia is a myth, diverting attention from the government's role in criminalizing the economy. The use of illegal means to acquire the assets of the state did not start with perestroika or privatization. Under Soviet central planning, the state's resources were divided up by those with access to power, the members of the communist party. Party positions were bought and sold like commodities.

Russia's reformers, and their Western supporters, assure themselves that during the transition to capitalism some illegal privatization is inevitable. The rapid acquisition of assets by a handful of capitalists is required to spark economic growth and strengthen the position of the private sector vis a vis the state. The resulting concentration of wealth in the hands of a class of millionaires will lead to investment into profitable industries and the creation of laws designed to protect private property.

This model is also mythical. During Russia's privatization, the wealth of the state has become concentrated into the hands of a few billionaires cozily allied with the state. They have tended to hide their earnings abroad rather than invest them in Russia.

Progress towards a law-based state has been faltering. The political class who benefit from privatization have a vested interest in a legal system built upon rules that can be manipulated, not laws that can be enforced. The notion that a government official may have a conflict of interest when dividing up of the state's assets is a source of amusement.

The burial of Tsar Nicholas II should remind us of how Russia's political culture fosters myths to sustain weak, self-aggrandizing leaders, and that this phenomenon did not end with the monarchy.

The communist vanguard, the Bolsheviks, seized power illegally and did not let go of the reigns for 70 years. The Soviet Union was born of a revolution from above that never became accepted by the people or institutionalized as a government. Decisions about how to produce goods and allocate resources were made by a select group of party members, the nomenklatura. Market considerations, such as supply and demand, price and quality, rarely entered the picture. This centralization of control over resources took place under the banner of equality for workers and the redistribution of wealth.

Similarly, under Russia's new leadership, the free market and democracy are at risk of becoming mere slogans behind which a vanguard of capitalists privatize the state's wealth for their own benefit. Russia is in danger of becoming a plutocracy, ruled by a group of individuals whose stolen wealth is the source of new power over the people. The threat of the mafia could become the myth by which they sustain this power.

There is little time. If history is of value, it teaches that when Russia transforms itself from one system to another overnight, the leadership will advance its interests at the cost of social chaos, economic disintegration and, finally, an unmitigated and fatal dependence of the people on the state.

Matthew H. Murray is president of Sovereign Ventures Inc./Bronze Lion ZAO,a management consulting group specializing in direct equity investment and small business development in Russia.

 

 

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August 2010 Russian Energy Compliance Alliance Launched

A company operating in an environment where corrupt practices are perceived to be the norm may fear “going alone” on an ethical path and losing business. The perception often exists that all other companies take part in bribery and other corrupt practices, such that there is nothing to be gained by acting ethically. When companies choose to work together, however, they can dramatically reduce the opportunities for official corruption and create a more transparent, fair and stable environment for competition. Since 2000, the Center for Business Ethics & Corporate Governance (CFBE) has led Russian and foreign companies to undertake such collective action.

In August 2010, CFBE launched a new initiative to focus collective action on a specific sector in Russia – the power generation industry. CFBE formed the “Russian Energy Compliance Alliance” (RECA), which includes business and civil society leaders in this important sector. RECA’s objective is to increase the scale of public and private sector compliance with law prohibiting official corruption in the market for state procurement of technology and equipment to increase energy efficiency. This multi-stake-holder alliance is also building capacity in Russia to hold the public and private sectors accountable for compliance with anti-corruption law. RECA promotes the exchange of best practices of compliance between foreign and Russian companies. It acts as a “Compliance Alliance”. For more information on this collective action initiative, please contact the Center’s President and CEO Patricia Dowden at  This email address is being protected from spambots. You need JavaScript enabled to view it.


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March 15, 2011 Meeting of Russian Energy Compliance Alliance

On March 15, 2011, the Center for Business Ethics and Corporate Governance hosted the third meeting of the Russian Energy Compliance Alliance (RECA) on the threshold of the «Russia and CIS Summit on Anti-Corruption» in Moscow. The meeting was key-noted by U.S. Assistant Attorney General Lanny Breuer who came from Washington, D.C. for these events. As reported by the U.S.-Russia Bilateral Presidential Commission, Mr. Breuer called the Alliance an “innovative effort to promote voluntary compliance in a difficult environment”.

We were privileged that the Russian government sent Sergey Belyakov from the Ministry of Economic Development to address the March 15 meeting of RECA. Mr. Belyakov is the Head of the Ministry’s Department of Investment Policy and Private-Public Partnerships, which is crucial to Russia’s economic growth strategy. Mr. Belyakov made a dynamic presentation on several new initiatives underway, which was very well-received by business executives. Antonina Firsova, Chief Specialist of Strategic Development at the Russian Energy Agency, also provided remarks on Russia’s energy efficiency goals. The Government of the Kaluga region sent a delegation of three officials to discuss its plans to attract investment in the power sector.

The RECA meeting was attended by representatives from more then 10 leading companies in the Russian power generation industry. The Center of Business Ethics and Corporate Governance facilitated discussions around enforcement of Russian domestic and international law and increasing the level of cooperation of all stakeholders in power generation industry.

Mr. Breuer opened the meeting by giving the participants of the meeting an overview on the importance of internal anti-corruption compliance programs in companies and their supply chains. Mr. Breuer emphasized that RECA is the type of initiative that can make a free market system work. He noted that the environment in which RECA members are doing their business is very challenging and that leaders in their industry should take this opportunity of collective action.

The Russian federal government speakers emphasized that they are ready for an open dialog with business leaders in RECA on improving transparency in procurement and stimulating responsible investment in Russia’s national energy grid. Experts from the Kaluga regional government introduced their program on increasing energy efficiency and investment into the region based on transparent procurement processes.

Matthew Murray, Chair of CFBE, provided an update on “4 Modules for Collective Action” that RECA is developing. These include:

Module 1: Increase Compliance in Power Generation Industry Partner Chain

Module 2: Exchange Best Practices with Government for Public Procurement

Module 3: Dialogue with Law Enforcement Authorities

Module 4: Integrity Pact for Specific Public Tender for Equipment

This review was followed by presentations from Elena Zheltovskaya of General Electric, Ilsur Akhmetshin of ABB and Andrei Shpilenko of Technopark Sistema-Sarov. These speakers discussed steps for implementing Module 1, including a proposal for a conference in which multinational companies would present their global best practices of compliance to Russian partners in the power generation industry. The meeting concluded with a group discussion that generated many practical ideas including an initiative under Module 2 to cooperate with Russian government agencies to support reform of public procurement laws.

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February 2011 CFBE Chair Matthew Murray speaks at the Utilities and Energy, Compliance and Ethics Conference

On February 28, 2011, CFBE Chair Matthew Murray spoke at the Utilities and Energy, Compliance and Ethics Conference in Houston, Texas. Mr. Murray presented the Russian Energy Compliance Alliance (RECA) and its goals to achieve a new scale and quality of voluntary anti-corruption compliance in Russia. He invited conference participants to join RECA and help form a public-private partnership between leading multinational corporations, Russian businesses and state regulatory agencies will lead to an agreed standard of compliance in the procurement process in the Russian power industry.

CFBE welcomes the support of U.S. and Russian companies in helping to modernize the national energy grid. For further reference, please contact the Center’s President and CEO Patricia Dowden at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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November 2011 What Civil Society is Doing New Phase of U.S.-Russia Civil Society Cooperation Launched

70 leading non-profit organizations from the United States and Russia launched a new phase of cooperation during a conference organized by the Civil Society Partnership Program (CSPP) in Moscow from November 12-14. The CSPP is designed to facilitate cooperative action to address social problems that affect both nations. It includes working groups focused on such areas as anti-corruption, local community development, environmental protection, education, migration, child protection, youth, gender equity, new media, public health and human rights.

CFBE Chair Matthew Murray and Transparency International Russia’s President Elena Panfilova participated in the CSPP conference in Moscow as co-chairs of the “US-Russia Working Group on Anti-Corruption and Open Government”. The Working Group made a presentation before the CSPP plenary on priority areas for cooperation action by U.S. and Russian civil society for the next year, including:

  • Priority Action I: Create conditions to encourage and protect whistle-blowers by sharing best practices and success stories
  • Priority Action II: Identify incentives for business to engage in collective action to counter corruption in specific high-risk industries, such as the Russian Energy Compliance Alliance
  • Priority Action III: Develop a framework for business and civil society to apply social network tools to protect whistleblowers and facilitate collective anti-corruption action in specific industries

The CSPP is being implemented by the Eurasia Foundation (USA) in partnership with the New Eurasia Foundation (Russia). For further reference on the goals of the CSPP and the Working Group on Anti-Corruption and Open Government, please see the CSPP web site.

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March 2012 Center Supports ACI’s Fourth CIS Anti-Corruption Summit

The Center is proud to be a “Support Association” for the American Conference Institute’s fourth annual “Russia and CIS Summit on Anti-Corruption”, which will take place on March 20-21 at the Lotte Hotel in Moscow. Once again, this Summit brings together an exceptional faculty of senior corporate ethics and compliance executives, attorneys, and government officials to help business address their most pressing anticorruption compliance challenges in Russia and the CIS. Center Chair Matthew Murray will speak at the Summit on March 20 on how to minimize corruption risk in joint ventures. To register for the “Anti-Corruption Summit” on-line, please click here. To obtain a 15% discount, please contact us.

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November 2011 CFBE Chair Murray Participates in Launch of World Forum on Governance

CFBE Chair Matthew Murray was invited to participate in the inaugural event of the “World Forum on Governance”, a new initiative being sponsored by the Brookings Institution to tackle that fundamental threat the corruption poses to growth in global markets. The event, which took place in Prague, Czech Republic from November 9-11, was also led by the American Enterprise Institute, Yale’s Millstein Center for Corporate Governance and the Honorable Norman Eisen, former Special Counsel to President Obama for Ethics and Government Reform and current U.S. Ambassador to the Czech Republic. The World Forum on Governance was founded to explore the synergies between public and corporate governance in fighting corruption and promoting accountable and effective government. It highlights problems of corruption and governance in mature, new, and emerging democracies and in non-democratic regimes—including both unique and common ones. All major stakeholders are represented, including governments, corporations, institutional investors, NGOs, journalists and whistleblowers.

During the Forum, Murray had the opportunity to propose public-private solutions to governance problems to participants. He presented the Energy Compliance Alliance, CFBE’s innovative model to improve governance in a single industrial sector in Russia – power generation – by increasing voluntary compliance with anti-corruption law in state procurement. He also met with leading institutional investors to discuss how to organize collective action to address risks posed by official corruption in Russia.

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November 2011 New Phase of U.S.-Russia Civil Society Cooperation Launched

70 leading non-profit organizations from the United States and Russia launched a new phase of cooperation during a conference organized by the Civil Society Partnership Program (CSPP) in Moscow from November 12-14. The CSPP is designed to facilitate cooperative action to address social problems that affect both nations. It includes working groups focused on such areas as anti-corruption, local community development, environmental protection, education, migration, child protection, youth, gender equity, new media, public health and human rights.

CFBE Chair Matthew Murray and Transparency International Russia’s President Elena Panfilova participated in the CSPP conference in Moscow as co-chairs of the “US-Russia Working Group on Anti-Corruption and Open Government”. The Working Group made a presentation before the CSPP plenary on priority areas for cooperation action by U.S. and Russian civil society for the next year, including:

  • Priority Action I: Create conditions to encourage and protect whistle-blowers by sharing best practices and success stories
  • Priority Action II: Identify incentives for business to engage in collective action to counter corruption in specific high-risk industries, such as the Russian Energy Compliance Alliance
  • Priority Action III: Develop a framework for business and civil society to apply social network tools to protect whistleblowers and facilitate collective anti-corruption action in specific industries

The CSPP is being implemented by the Eurasia Foundation (USA) in partnership with the New Eurasia Foundation (Russia). For further reference on the goals of the CSPP and the Working Group on Anti-Corruption and Open Government, please see the CSPP web site.

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September 2012 TNK-BP Announces Important Step to Enforce Compliance

On September 15, 2012, the oil and gas company TNK-BP publicly announced that it was ending a contract with a long-standing supplier of services. According to the announcement, TNK-BP decided to end the contract based on concerns that the supplier was not complying with TNK-BP anti-corruption policies, standards and procedures. At a Moscow forum hosted by TNK-BP for suppliers on September 15, the company’s Executive Director German Khan stated: “We’re building robust long-term relationships with our contractors on the basis of best international practice and strongly recommend that our partners comply unconditionally with TNK-BP’s business ethics standards. This is a vital requirement for the development of our mutually beneficial collaboration, and for the companies themselves it’s a guarantee of the sustained growth and prosperity of their business.”

This step by TNK-BP sets an important precedent in improving compliance in the Russian oil and gas industry for other companies to follow.

For further reference, please see TNK-BP’s press release on its "Supplier and Contractor Forum". For press coverage of TNK-BP’s announcement, please see the following article in Vedomosti.