Grey2White Initiative

20160523_094104

(Article Reprinted by Popular Demand)

Hypothesis:

Given Ukraine’s current economic and geopolitical situation, one of the most beneficial  steps the US government, business and NGO community can take, is to encourage significant external and internal direct investment into the country’s economy.

Although the US Government has had some success in attracting and supporting American direct investment into Ukraine, those investment amounts are far from sufficient. US investors new to the Ukrainian market are wary of the country’s reputation for corruption, difficulty in doing business, threats from Russia and lack of financing options.

A second and much more viable economic development option, would be to support and enable direct investment by the successful Ukrainian business people who have amassed sufficient capital and are much more comfortable and adept in investing in their home market.

One problem with pursuing that option are high Western standards, which often preclude US government development agencies and public US investors from working with this potential class of investors.  This is due to the fact that for the last twenty-five years, practically all business people in Ukraine had to operate under a certain set of conditions widely considered “grey” and in many cases “black” in the West.

Some of these “grey” conditions are lack of financial transparency, inadequate corporate governance, use of yellow press, use of cash, as well as offshore accounts to conduct operations, bribery and use of adverse political influence.

In their attempts to succeed, some folks in Ukraine went beyond previously acceptable business norms and crossed the proverbial line even further by engaging in criminal “black” behavior – graft, extortion, corruption, tender rigging and illicit drug trade.

To date, these grey conditions have presented significant challenges for the IFIs, development agencies and regulated financial US investors. Yet, it is vital to recognize the necessity to find an acceptable solution that allows Ukraine’s economy to reap significant benefits from the anticipated increase in direct investment and low-cost, long-term financing.

It is also very important to understand that the proposed Grey2White (G2W) initiative aims to broaden and scale up very important development and capacity building work already undertaken over the last quarter century by IFIs, such as IFC and EBRD, USAID; development agencies such as OPIC and USTDA and financial investment communities. Those initial efforts, although quite effective, focused on a relatively small sample of Ukrainian companies and were undertaken during a different stage of the country’s development.

Initiative

The G2W initiative will only work with those companies and individuals, who will be able to create meaningful economic impact in Ukraine, after undergoing the conversion process.  G2W will not in any way target those convicted of the “black” behavior, as their reputation gap is un-bridgeable within the scope of the project.

Thus the question becomes, is it possible for US stakeholders to create an environment and a broad platform from which so-called “grey” Ukrainian businessmen seeking to utilize US financing, equipment, services and franchises, as part of their major investment programs, become “bankable” under Western standards? If the answer is “Yes.”This type of conversion will provide hundreds of millions, if not billions of dollars in direct economic benefit and enhanced geopolitical security to Ukraine and the US.

If the answer is “No,” these businessmen will either be forced to forgo the planned capital investments, or seek alliances with other grey, or black global actors in countries like Russia, China, Brazil, Iran, etc.

It is the fundamental belief by the creators of the proposed initiative that given a concerted effort by the US and Ukrainian stakeholders to develop and implement realistic procedures to increase corporate transparency, introduce financial standards, address any existing reputation issues head-on and provide reputable outside management and board oversight, it is possible within short to medium time-frames to bring these so called “grey” businessmen and their respective projects up to elevated western standards, mitigate investment and reputation risks and affect substantial economic growth in Ukraine.

Thus we hereby propose the following:

Select three-four financially viable projects sponsored  the “grey” Ukrainian actors and use them as a pilot to develop, refine and implement an effective conversion strategy to bring that project up to acceptable Western standards.

From the government side, we propose to involve the US Commercial Service, USTR, US Embassy, Ukrainian Embassy, Cabinet of Ministers of UA, members of the US Congress focused on UA issues, OPIC, regional Governors and local administrations in Ukraine, IFC, USTDA and the US EXIM Bank (when that Agency resumes its activities in Ukraine).

Among the NGO stakeholders we would like to see US-Ukraine Business Council (USBC), AMCHAM, Transparency International, Freedom House, Atlantic Council and US Ukraine Foundation. Additionally, reputable international law firms, audit firms, press, appropriate private individuals, corporate off-takers, financial market regulators, as well as relevant providers of US goods and services should be involved.

The framework of the proposed initiative shall be as follows:

  • Initial Sponsor/Project assessment and preliminary due diligence
  • Project selection and stakeholder awareness and involvement
  • Project G2W Team building (attys., directors, advisers, auditors, suppliers, investors etc.)
  • Full due diligence and implementation plan for the Western financial, FCPA and governance standards
  • Investor cultivation and underwriting of the financing package
  • Project development and implementation
  • Monitoring and compliance

To kick off the proposed initiative, we propose an intensive education and awareness-building campaign designed to simultaneously involve all the stakeholders.

After the initial buy-in into the initiative is secured, work will begin on developing the pilot projects.

During the pilot project phase, the G2W pilot project team will be seeking to achieve specific and tangible goals:

  • Fully assess the existing reputation risks, possible political influence issues, suitability for OPIC/IFC financing and Political Risk Insurance for the US project participants
  • Prepare a legal due diligence report by a world-class law firm
  • Recruit highly reputable and competent outside board members to the Project’s Board
  • Design a comprehensive PR/IR strategy to inform stakeholders of the project and its ongoing developments
  • Design and implement transparent financial audit, reporting and management accountability standards
  • Develop ways to tangibly measure economic effect of the pilot project
  • Continue to promote the initiative and seek to move it from the pilot project phase to full-blown implementation.

(to be continued)

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IS YOUR BUSINESS FLUENT IN FOREIGN? – Release of my new book

…”Essential reading for any U.S business looking to expand into foreign markets.
Informative and entertaining – personal insight and experiences make this a must-read if (and you should be) expanding into new territories…”
Industry Today Magazine. 


 

Today is a very special day for me.  After 23 months in the making, my book Fluent in Foreign Business  has finally been released.  In today’s post I would like to talk about the factors that led me to write this book and the benefits that I hope will accrue to its readers.  I’ll also discuss the role played by the Princeton Council on World Affairs in producing this book and the entire business educational program that is aimed at those wishing to grow or start a business abroad or simply learn more about international business.

What is the book about?  Fluent In Foreign Business is a candid account of my personal stories gathered during more than two plus decades of doing business overseas, with proven business concepts, risk management techniques and practical guidance.  It covers a number of questions that will benefit any reader wishing to consider developing or growing their international business. The book will help readers avoid costly mistakes and save them valuable time and money.  Furthermore, it puts the reader on the path of self-discovery and introspection  and will help them understand how committed they really are in their quest.  Students and those simply exploring the path of international business will find a number of stories that illustrate the dangers and the hardships, along with personal and professional rewards. Those already exporting to one country will learn how to evaluate and grow their operations into different markets.

Some of the questions answered in this book are:

•Why do I want to take my business abroad?

• Am I ready?

• Who will help?

• How do I pay for it all?

• They WILL be asking me to pay bribes; what should I do?

• What pitfalls await me?

•What happens when the proverbial s!&* hits the fan?

In writing this book, there were three things I wanted to avoid – a technical textbook product, reader intimidation and boredom.  Instead, I have tried to paint intensely practical and candid pictures of what it takes to do business abroad, what tools are needed, what support mechanisms are available, what dangers lurk and finally, what rewards await those who decide to go on the adventure.

To help reduce the intimidation factor, I introduced an avatar named Global Felix™. Every chapter includes a situational illustration of Felix, making it friendlier and more accessible to the reader. Those of you who regularly read this weekly blog, or publications such as “Industry Today,” “Industry Week,” “Business Finance,” “The NY Enterprise Report” and the Wharton Magazine blog have had a chance to read excerpted chapters from the book over the past six months.

Why did I decide to write this book? I truly believe that in today’s world, international business must be a component of every business (sans little mom and pop local enterprises). Regardless of whether it is export, direct investment or import, having an international strategy is key to long-term survival.

I also believe that to succeed in doing business abroad, a special state of mind is required along with proper coaching, deep cultural understanding, a superb information network and a sober risk/reward assessment framework. This state of mind can be achieved through education, information and empowerment of business owners, managers and entrepreneurs. Thus, along with my like-minded colleagues, we have undertaken a quest to enable as many people as possible to succeed in international business.

I also wrote this book to share my personal experiences and those of some of my colleagues. I believe these experiences serve as valid illustrations of what one can expect when doing business abroad. I have been fortunate to do business in more than 30-countries and I’ve encountered a wide variety of cultural and business situations, which I hope will benefit the reader.

Despite the fact that the U.S. has consistently been one of the largest global exporters, a vast majority of American businesses remain focused only on domestic business. Such a myopic vision makes them susceptible to economic downturns like the one we are now experiencing, and it precludes them from taking part in the breathtaking growth of some of the world’s emerging markets.  It also insulates them and undermines our country’s long-term competitive position.

Enter the Princeton Council on World Affairs ( www.princetoncouncil.org ), a non-profit organization whose mission is to Educate, Inform and Empower its members, helping them succeed in their international business and economic development efforts. It is a young organization, which is part of the 90-year old foreign affairs monolith – World Affairs Councils of America.  Led by a diverse and experienced group of Trustees and a very competent international Advisory Board, the Princeton Council has been an effective tool for its U.S. members who wish to enter various foreign markets and participate in complex multidisciplinary business opportunities. Over the last six months, the Princeton Council’s leadership has witnessed a very strong increase in cross-member activities where members and prospective members seek assistance within the Council’s membership roster to take advantage of opportunities in markets such as China, Africa, South America, Bangladesh, Jamaica and countries of Central Asia. Many foreign companies seeking to enter the U.S. markets have turned to the Princeton Council for guidance. Providing its members unparalleled access to government officials, corporate and civic leaders in multiple markets, along with numerous other education, business development advisory and cost-saving benefits, the Princeton Council has rapidly emerged as one of the most effective platforms for international business expansion, economic development and education.

Fluent In Foreign Business is the first book to be published by the Princeton Council on World Affairs. It is part of the Fluent In Foreign Academy™  – a collection of webinars and seminars dealing with topics on foreign expansion (“Fluent In Foreign™” workshops levels I-III), financing (“Fluent In OPIC™” and “Fluent In EXIM™”), “Foreign Corrupt Practices Act “(called, what else – “Fluent In FCPA™”) and project development (“Fluent In USTDA™”).  The Council is an open non-partisan foreign affairs organization that has four types of memberships available –  Student (free with .edu email), Individual, Professional and Corporate. (for more info or to join visit http://www.princetoncouncil.org/members/receive-membership-benefits.html )

On June 30th, July 7th and July 21st between 5 and 8pm, the Council will host three “Is Your Business Fluent In Foreign?” receptions in New York, Washington D.C. and Princeton, N.J., respectively. These receptions will feature important speakers from Ambassadors and U.S. Government officials to international corporate practitioners and industry leading lawyers and journalists. The presentations will offer high-level networking opportunities, surprise performances and the chance to learn about how to grow their business through exports, insure against political risks, participate in international infrastructure projects and contribute to international economic development.  Please Save the Dates and watch your email for upcoming announcements and for your personal invitation.

For the remainder of May and the entire month of June, the Princeton Council is having its annual Membership Drive. All those who purchase Fluent In Foreign Business, either on Amazon.com  http://tinyurl.com/3gf4oeq or through the Princeton Council website (www.princetoncouncil.org) between May 21st and July 1st, will receive a 90-day complimentary corporate membership, a $625 value and a 20% discount on all corporate training and advisory offerings for the duration of the membership. As part of the birthday celebration, the Council is upgrading its Websiste to be unveiled June 1st.

Princeton Council members can enjoy exclusive access to diplomatic hotel rates at some of the leading hotel chains throughout the U.S. and in many foreign countries, with discounts up to 40% off the regular rates. Members also enjoy weekly geopolitical  intelligence briefings from Stratfor, access to exclusive international business opportunities and industry alliances, deeply discounted publication subscriptions including “Foreign Affairs” magazine, reduced rates on language training and translation courses, as well as Berlitz’ proprietary Cultural Navigator ® system.

Additional benefits, of course, include  proprietary educational offerings from the Fluent In Foreign Academy™,  member only business &  foreign affairs networking events as well as  high-level market entry access and advisory services.  Every book purchased through the Princeton Council during the membership drive will be autographed by me. As a way of giving back, I will be donating 20% of the proceeds of every purchase via the Council to the U.S. Tornado Disaster Relief Fund to help the victims of the tornadoes in our Southern states.  To arrange for corporate purchases or any service issues please contact kgigineishvili@princetoncouncil.org .

My colleagues at the Princeton Council on World Affairs and I are deeply committed to international economic development and foreign affairs issues.  We will continue to  do all we can to help facilitate economic development and seek out international business opportunities for our members.  I hope you enjoy the book and I welcome your comments, reviews and suggestions.  Also, I look forward to meeting all of you at the upcoming Princeton Council events and during my promotional book tour.

For event sponsorship information, conference or corporate function speaking engagements, to arrange a private book signing or advisory assignment, please contact Bambe Levine or David Reich at 212 490-6500.  I can be reached  at agordin@broadstreetcap.com or agordin@princetoncouncil.org .

http://www.amazon.com/FLUENT-FOREIGN-Business-Company-Expanding/dp/1462862780/ref=sr_1_5?s=books&ie=UTF8&qid=1305859807&sr=1-5l .

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