Key Results of the Online Meeting on Tax and Credit Risks Associated with Bad-Faith Counterparties

SUM held an online meeting of professors and invited speakers on the topic of Tax and Credit Risks Associated with Bad-Faith Counterparties. The event was moderated by the director of SUM’s Institute of Economics and Finance, Doctor of Economics Galina Sorokina.

The discussion was based on a report by Andrey Zakharov, Director for Development of the SPARK Project at Interfax. In his report, Zakharov addresses issues of economic security and difficulties validating counterparties and assessing their creditworthiness and reliability. The speaker’s report was backed up by real examples of bad-faith counterparties and the typical changes in financial and economic activity that precede bad-faith behaviour. These can be monitored through information available in open sources, serving as a tell-tale sign of bad faith for their partner organisations. Zakharov also suggested that the asymmetry of the information available on the market renders classical forms of financial analysis insufficient and ineffective in assessing the reliability of counterparties.

Nikolay Kuznetsov (Director of the Research Institute of Management of Digital Economy Transformation, Doctor of Economics, PhD in Technical Sciences) supported the points made by Zakharov, noting that the assessment of counterparties by companies and credit organisations is a fundamental requirement of due diligence. He explained how his practical, consulting, and scientific activities have necessitated the development of new models for assessing the reliability and financial stability of companies based on indicators other than financial ones.

Tatyana Mazurina (Chair of the Banking and Entrepreneurship Department, PhD in Economics) acted as Zakharov’s opponent in the debate. She gave examples of cases in the banking sector that support the need for classical financial analysis in assessing the financial stability of organisations, but also noted that the data from classical financial statements is insufficient for a full analysis.

The speakers concluded that external turbulence has transformed approaches to the assessment of the financial stability of organisations. The study of external signs of bad-faith behaviour in counterparties is the responsibility of practical organisations and the scientific community alike.

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