06/26/2012 01:34 am ET Updated Aug 25, 2012

Can Russia Achieve Corporate Governance?

A few days after the Russian National Council on Corporate Governance gathered at the end of May in Moscow to hold its Third International Conference, dozens of demonstrators were arrested for challenging Russia's new president, Vladimir Putin, who had just signed a new anti-protest law.

It is a paradox and an achievement that Vladimir Potanin and Andrei Bougrov, President and Senior Managing Director of Interros Company, managed to gather over 500 participants. They listened to a roster of prominent speakers, among them former U.S. Senator Chris Dodd (the keynote speaker), assembled with the assistance of APCO worldwide, a Washington-headquartered public-affairs and strategic-communication firm. Academics, professionals, executives, and representatives of multinational institutions spent two days discussing the quest for global corporate governance.

Among the issues addressed, the most delicate one was the situation of state-owned enterprises. By definition, their purpose is different from private companies, and their governance includes motivations that go beyond independent shareholders' interests. While acknowledging that difference, participants were inclined to consider that governments that were using public savings were also held to governance standards that respect the interests of all shareholders. Failing to do so would create mistrust and suspicion amongst global investors.

While global standards have now been firmly established by the OECD for private companies, the undertaking to establish similar standards for state-owned enterprises is a work in progress.

However, we need to go beyond the rules: Why is the implementation and execution of those principles still lagging behind legislators and academic intentions? We have seen companies disappear, brands destroyed, and reputations shattered. Why are governments, boards, and managements still resorting to maneuvers that have a smaller probability of succeeding?

Why Are Companies and Governments Afraid of Transparency?

The reality is that we are afraid of transparency. We still feel uncomfortable with it and have to ask ourselves why. Without a clear understanding of the fundamental uneasiness of governments and corporations, we cannot expect to implement a credible execution problem. The reasons for that fear include direct financial advantage, information retention, lack of financial education, power, and many others.

As I was reflecting on those debates in which I took an active part, I could not forget similar debates in the U.S., Europe, China, and India in which I participated in various capacities over the last decade. It would be unfair to single out Russian companies, many of which sincerely aim to reach such standards. Stock exchanges could also enhance that effort.

Political and Corporate Governance Are Intertwined

Russia's credibility in corporate governance cannot be dissociated from the political governance of the country, where the last few years saw more repression of liberties and less transparency. Some high-level officials in Russia are genuinely convinced that corporate governance is in the best interest of the country. They need global support, and this conference was a way to express it publicly.

In the end, Russia will have to decide the path for its progress in that matter. This path leads directly to the Kremlin: Whether he likes it or not, Vladimir Putin cannot remain deaf to the growing voice of those who want the country to reform itself. It is as much his challenge as it is a corporate challenge.