Russia capital flight not as bad as thought-study

Capital has been steadily bleeding out of Russia and President Vladimir Putin has vowed to fight the flight as well as the use of offshore tax havens.

Central bank figures showed that net capital outflows nearly doubled in 2011, attributed by some observers to a lack of investment opportunities in the country and increased political uncertainty ahead of presidential elections in 2012.

A study by accountancy firm Ernst & Young and Russia's state-backed private equity fund, the Russian Direct Investment Fund, said on Monday that it is a myth that the capital flight figures are a valid indicator of the country's health.

The figures are more of an accounting indicator as they reflect flows within the current account balance such as Russian companies buying foreign entities, and aircraft used by Russian companies but registered abroad, the study said.

Other factors that the official figures take into account are debt repayments, reinvestment of earnings and dividend payouts to foreign investors, the study said.

There is no relationship between the investment climate and the central bank figures, said the study, and it is instead more about global factors.

The study said a more accurate figure for capital flight in 2011 would be $32.3 billion.

The latest Reuters poll showed 2012 net capital outflow may total $71 billion for the year as a whole.

Next year's figures may be impacted by Rosneft's $55 billion acquisition of TNK-BP, which is owned by an investment vehicle registered in the British Virgin Islands.

Putin has blessed the deal, though he has said he had mixed feelings about the takeover of a large private company by a state one and suggested the government's hand was forced by a need to end the chronic conflict between BP and the tycoons. (Reporting by Megan Davies; Editing by Douglas Busvine)