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Russia: Entrepreneur's Murder Sends Warning Signals To Investors

St. Petersburg, 27 November 1996 (RFE/RL) -- The recent murder of American entrepreneur Paul Tatum in Moscow has resonated among the foreign business community in St. Petersburg, exposing as false the sense of security among expatriates in Russia's second city.

The November 3 killing is unlikely to cause an exodus among businesses already operating here. The most visible result, many foreigners say, will be to depress potential investment in St. Petersburg and Russia as a whole.

Jeff Jung, the director of one Western company based in St Petersburg, told an RFE/RL correspondent that the initial reaction to Tatum's murder was shock that such a high-profile expatriate could be murdered. He said it drove the point home that to believe foreign businesses live under a security blanket is "completely naive." Tatum "could be any of us", he said.

He added, however, that for entrepreneurs already working in Russia's murky business environment, the murder will have little effect. The real damage will be that it will deter potential investors, thus helping to delay Russia's economic rejuvenation and also dimming prospects of funds for foreign companies already operating there.

Tax consultant James Beatty, who has been working in St. Petersburg since 1994, agreed with Jung's analysis. But he said Tatum had neglected the first rule among foreigners, namely "never hold a minority share in a joint-venture with a Russian partner."

Tatum was involved in a bitter and long-standing dispute with Moscow authorities over the Radison-Slovyanskaya Hotel, of which his company Americom, owned 40 percent.

For other entrepreneurs in St. Petersburg, the problem is more an issue of corruption among state officials, not organized crime as such. Christian Corbois, the director of a courier service that serves much of St. Petersburg's expatriate community, said that the biggest effect of the killing is that "it will scare people away from fighting the fight," with corrupt officials.

"It should drive the point home that the nature of organized crime has changed in Russia," he said. "People in the West don't understand this. The problem is not the Mafia, it is corrupt officials."

Many companies see a partnership with government organs as a positive thing in the beginning because it opens doors and cuts red tape, Corbois said. "This is a mistake because in the end it can come back to haunt you," he added.

All agree that the biggest effect of the Tatum murder is that it will deter new investment in Russia.

"I was planning to open a Web page and to aggressively seek out clients in the West who are not yet here but might be so inclined," Beatty said. "Now I am delaying those plans."