APPENDIX 10
Memorandum submitted by Cadbury Schweppes
Plc
Thank you for your recent enquiry regarding
our observations on the role and policies of the FCO in relation
to the Russian Federation. I am happy to provide a response based
on colleagues who are either concerned with the development of
our Russian chocolate confectionery factory at Chudova near St
Petersburg, or are now involved with the business and its operations
in that area.
In discussing our experiences, we have reviewed
a number of issues in which the Committee will be interested,
notably:
— level and effectiveness of diplomatic
representation;
— awareness of commercial potential;
— support for British business;
— foreign policy aspects of economic,
financial and technical relations.
Our discussions have not covered some of the
broader political, social and economic issues indicated in the
enquiry brief.
In evaluating the levels of interest and support
we have received from Embassy staff in Moscow and St Petersburg,
I would describe the picture as being somewhat mixed. Certainly
relationships have been good, particularly in St Petersburg, closer
to our Chudova operation and perhaps therefore of more immediate
interest, but contacts have been somewhat infrequent, and officials
have not always appeared to be accessible to us. Whilst the Embassy
staff have appeared eager to attract new UK business into the
country, and into the area, there has appeared to be less concern
in continuing those relationships on an ongoing basis, at a time
when some of the real difficulties may emerge. Certainly we would
contrast our perceptions with those of, for example, the Dutch
and South African diplomatic services, who appear to take much
more of a proactive role in going out to meet and consult with
business on a regular basis. Sometimes the impression is that
the political agenda weighs more heavily than the priorities of
the UK officials than do issues of business and economic support
to organisations such as ours.
Talking to colleagues who were involved in the
early development of our Russian business, it seems clear that
much more support would have been welcomed from the commercial
and other Embassy staff during the period between 1994 and 1997
when we were making the original investment and building the factory.
In summary, it would seem that there was little in the way of
information or help in the early stages of discussions with the
regional authorities and it was our local consultants, rather
than the Embassy, who were able to provide us with contacts and
data. One particular issue my colleagues recall was concerned
with the efforts we were making to obtain the benefit of lower
import duty which is apparently enshrined in a Presidential decree
(decree 73) which would have allowed us as a major investor to
obtain lower duty rates on imported goods. Despite many contacts,
we received little support in helping us to obtain such relief
which we believe others had obtained.
In seeking to develop the right networks we
were keen to join an economic committee, chaired by the then Prime
Minister (Chernomydin), made up of Russian officials and foreign
investors. For whatever reason, we were constantly declined a
place on the committee even though smaller investors than ourselves
were able to take part. Embassy staff appeared unable to assist
in the arranging of various meetings with federal officials, and
again when dialogue did finally take place, it was as a result
of introductions made by our consultants.
I trust that the above comments do not appear
too negative and it may be that we were unaware of some of the
efforts being made on our behalf. Ours is of course a particular
perspective, and we do look to work constructively with Embassy
staff in both the capital and the regions as our business continues
to develop in this important market during the years to come.
I trust our comments will be of some value to the Committee, and
will look forward to hearing more of their findings.
D. Neil Makin
External Affairs Director
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