Winter Olympics 2014 puts Russia’s corruption — and incompetence —on world stage

Winter Olympics 2014 puts Russia’s corruption — and incompetence —on world stage

Diane Francis | February 7, 2014 | Last Updated: Feb 7 1:33 PM ET
In 1787, Czarina Catherine II went to Ukraine and Crimea to inspect her new acquisitions. They had been devastated by war, but when she arrived, her trusted military leader Grigori Potemkin ordered the construction of fake villages to impress the Empress and her allies.

Some historians dispute the story, but “Potemkin Village” is a phrase that lives on to describe anything built that’s intended to deceive others into thinking that a situation is better than it really is.

The Potemkin metaphor certainly applies to the Sochi Olympic Winter Games that began Friday. An unprecedented $50 billion has been spent by Russian President Vladimir Putin to showcase his country’s proficiency, soft power and importance. But the reality is otherwise.

This is the Village that oil prices built and, instead of impressing the world, Sochi is a public relations train wreck. Terrorist threats are so serious that 300,000 tickets can’t be given away and has required the deployment of 50,000 military and police to protect 6,000 athletes from 85 countries.

There are also warnings about mafia and espionage efforts to hack into the cellphones and computers of the attendees and officials.

Unfortunately, the world’s media keeps no secrets anyway. They arrived this week and immediately began tweeting about toilets that don’t flush, tap water that’s orange and the widespread poisoning of stray dogs.

The lead-up to the Games has been dogged by riots and shootings in Ukraine as protesters once again try to derail plans by its President to become a Russian satellite by joining Putin’s customs union.

The Games are becoming a high-profile reminder that doing business in Russia is impossible due to its inadequate and untrained workforce and its corrupt businesses and public officials.

Putin’s big goal, to rebrand Russia as important and a place to do business won’t succeed

This week International Olympic Committee (IOC) official, Gian Franco Kasper, was quoted in newspapers as saying that as much as one-third of the $50 billion has been siphoned off by corruption. One has to wonder where the IOC has been during this carry-on, particularly because corruption equals shoddy, possibly, dangerous workmanship.

Worse yet, a former deputy prime minister in Russia, Boris Nemtsov, said that between $20 billion and $30 billion was spent on “embezzlement and kick backs.”

All this exposes Russia for what it is, a developing nation with oil and attitude.

Even though the country resembles these remarks, it’s hard not to feel sorry for the athletes who’ve put their lives into achieving berths on their respective teams. Hopefully, the negatives won’t affect their enthusiasm, efforts and safety.

Also, to be fair, this is not the first Olympics marred by terrorism or corruption. And perversely holding a spotlight on Putin has breathed new life into protests over Russia’s anti-gay laws and Ukraine’s resistance fighters.

It’s also provided an opportunity for China to cozy up to Russia and its resources. Chinese President Xi Jinping will attend and will be the most important world leader there.

The White House, smarting from espionage whistleblower Edward Snowden’s asylum in Moscow, said the President wouldn’t attend, then named three gay athletes to attend opening and closing ceremonies, a shot against Russia’s anti-gay laws. The snub annoyed the International Olympics Committee leading Canadian member Dick Pound to comment: “This is how the United States of America, the world’s most important, influential nation, handles this issue? In an Olympic context, at a time when you’re thinking about bidding for the Olympic Games?”

Prime Minister Stephen Harper isn’t attending (because he never does unless the Games are in Canada, said a spokesman), nor is German President Joachim Gauck, French President Francois Hollande and British Prime Minister David Cameron. These three normally never miss a photo op but are upset that Ukraine was co-opted by Putin to withdraw from negotiations to join the European Union.

But politics and Putin aside, the broadcasts should be stellar. The setting is not counterfeit and much of the infrastructure impressive.

And Canada should do well. The hottest tickets in Sochi remain the medal playoffs in women’s and men’s hockey where Canada has a good shot at the podium wearing gold medals again.

But Russia’s no slouch on skates and has invested heavily in its athletes. This is why most punters expect a Canada-Russia final in men’s hockey.

Canadian Press predicted 30 medals for Canada, a record number, based on performances in international competitions by Team Canada members in recent years. Vancouver’s Winter Games cost $7 billion and yielded a record 26 medals and 14 Golds, making Canada the top winner.

Russia will be left with many medals, no doubt, but Russia’s extravagant Olympic Park may end up, like Beijing’s and Athen’s facilities, abandoned and a testimony to questionable urban and fiscal planning. At least, however, there will be roads, tunnels and ski hills left behind that may one day become a tourist destination.

However, Putin’s big goal, to rebrand Russia as important and a place to do business won’t succeed. After the closing ceremonies on Feb. 23, it will just be business as usual.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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