So Russia is now facing the prospect of recession as the prolonged geopolitical standoff with the West over Ukraine hits the emerging economy hard. With the European Union and the United States considering deeper sanctions against Moscow and the country suffering heavy capital outflow in the first quarter, Vladimir Putin is facing the most severe political and economic crises of his time in the Kremlin.
Russia's annexation of Crimea is turning into a costly boondoggle. The Kremlin has already earmarked nearly $7 billion in economic aid for the peninsula this year, funds that will be spent on everything from infrastructure to beefed-up pensions for local residents. Even when balanced against anticipated gains from Crimea's energy resources and savings on naval basing arrangements, among other factors, that's a cost Russia's sluggish economy can ill afford.
But if the Crimean land grab is affecting Russia, Vladimir Putin is pushing on regardless with the BBC reporting he has plans to create a gambling zone in Crimea, now that the Kremlin has declared the Ukrainian territory part of Russia opening the way for a gambling led recovery. By law casinos are restricted to four special areas in Russia, all a long way from Moscow. Now Crimea will become the fifth area, under Mr Putin's plan.
The big news of the day is that the trial of Formula One boss Bernie Ecclestone on bribery charges has finally begun. Ecclestone is accused of giving a $45 million bribe to a German banker to secure the sale of a stake in the F1 business to a company he favoured. Mr Ecclestone admits paying Gerhard Gribkowsky, who is serving a jail sentence for receiving the payment, but has denied any wrongdoing. He continues to run the F1 business on a day-to-day basis despite the charges.
There has been speculation that Ecclestone could reach a financial settlement with the authorities in Munich rather than risk a prison term of up to ten years if convicted. However, that would entail accepting that he was guilty of bribing a disgraced German banker. And that would force him to walk away from the sport over which he has ruled for four decades.
Paul Weaver at The Guardian says this could have rattle Formula One to its foundations. There are a number of important people in the paddock who feel that Ecclestone is well past his sell-by date but the same people are also fearful of the post-Ecclestone era, which will arrive soon enough, whatever happens in Munich. The fact is that Ecclestone, a brilliant deal-maker who carries most of the information in his entrepreneurial head, is a hard act to follow.
Yesterday I did a post explaining how Korea's financial regulator has launched an investigation into Cheonghaejin Marine, the operator of the ill-fated Korean ferry and its owner over possible illegal foreign exchange transactions. Tax authorities are also looking into possible tax evasion by Yoo Byung-eun, the boat's owner.
Now The Guardian reports that police have now raided the home of Yoo Byung-eun. The finances of the Yoo family's Chonghaejin Marine Co have come into the spotlight after it emerged that Yoo spent four years in jail for fraud during the early 1990s.
The Korea Times reports that the country's Financial Supervisory Service (FSS) is looking into currency transactions by Chonghaejin Marine and Yoo's family members. "We are examining a wide range of business activities by the shipping firm, its affiliates and the owner family," an FSS official said. "We hope this probe will shed light on their suspicious foreign currency transactions and how the Yoo family has accumulated wealth. We are tracing their overseas assets, valued at hundreds of millions of won." The National Tax Service is moving to launch a tax audit into Yoo's firms. The Korea Customs Service is also examining overseas transactions by Chonghaejin Marine. "We are collaborating with tax and customs officials as well as the prosecution to find evidence," the FSS official said. "We can't say yet whether we have secured any clues suggesting their involvement in irregularities. This probe may continue for weeks." The shipping firm is virtually a successor to Semo Marine, a cruise operator that went bankrupt in 1997. Yoo was the chairman of the bankrupt firm.
Of course, that raises the obvious question: if the company was that dodgy, why were they allowed to operate in the first place?