Red tape and bribes greet small business in Russia

By Conor Sweeney

MOSCOW (Reuters) - Every morning staff at fashion jewellery chain Diva line up to bring their Australian boss about 500 documents to sign, as he swims against a tide of bureaucracy and corruption in modern Russia.

In two years, entrepreneur Peter Bohn has opened 36 small stores in shopping centres across Russia selling inexpensive jewellery to fashion-conscious young Russian women.

The problem is, the original schedule to hit 200 stores had to be put back, and Bohn currently estimates the start-up costs for the chain will top $4 million (2 million pounds), against an initial estimate of about $1.5 to $2 million.

"I've got a signing period from 10 to 10.30 am per day and every one in the office knows it," Bohn told Reuters. "On one extreme it could be ridiculously mundane paperwork, on the other hand, I could be signing my life away."

The walls of his outlets are covered in display cabinets of bangles, hair slides, chunky necklaces, and fake diamond rings that cost a fraction of the real thing. Bohn's eye is on the oil-fuelled boom which is gradually turning a section of Russia's 142 million population into a middle class with disposable incomes.

Standing in his way is an incessant series of headaches. In one recent incident, a shipment was impounded because a single document was missing.

Customs froze the delivery and charged rental fees and fines that, three months later, left Diva with a bill five times higher than the cargo's value.

"There was no flexibility at all," said Bohn, shaking his head, still frustrated by the episode. "And all because we missed out on one little document."