MOSCOW — For nearly two weeks, following a Kremlin meeting between President Vladimir Putin and Russia’s leading businessmen, much was made of a so-called “privatization amnesty” offered by the president. Transcripts of that meeting show that the one relevant sentence from Putin’s speech was vastly exaggerated and serially misinterpreted by analysts working for Moscow brokerages and the world’s news hacks.

The Russian market has been desperate for some good news ever since its precipitous fall after the arrest of Yukos owner and CEO Mikhail Khodorkovsky. He is likely to be sentenced within the next six weeks, and Russian prosecutors have asked for 10 years’ imprisonment on fraud, forgery and tax-evasion charges.

No individual or business has been charged with wrongful privatization in Russia.

Individuals have been charged with criminal intent, fraud, forgery, theft, pyramid schemes, money laundering and tax evasion -- but not for privatization itself.

A de-fact privatization amnesty has been in place, and Putin offered in his speech to look into the possibility of reducing the statute of limitations from 10 to three years.

Millions of Russians privatized their dwellings while employees and unions took control of property and factories in voucher privatizations and subsequent auctions and sell-offs.

Limiting the period in which prosecutors can review privatizations will deprive many legitimate owners of their rights to property that was taken by corrupt bureaucrats and criminals and close the doors on any legal recourse. Weighed against the potential of securing the owners against frivolous cases from corrupt officials attempting property grabs, a time limitation is probably a welcome step. Establishment of independent judicial commissions to look into all privatization would have been advisable, but a lot of water has flown under the bridge since home, voucher and loans-for-shares privations took place, and it is perhaps best to let the sleeping dogs of ’90s lie.

The statute, if limited, will be especially significant in cases where strategic natural resources that had been managed by Soviet ministries were privatized in scandalous loans-for shares schemes in which treasury money was recycled as loans through private banks of businessmen with corrupt links to government. Yukos re-nationalization has shown that there is enough wrongdoing within these companies to use tax claims and other criminal charges to reassert national ownership without revisiting the privatization itself.

Oligarchs also enjoyed de-facto immunity under the protection of the government of Prime Minister Mikhail Kasyanov. They ignored repeated warnings from Putin to ensure they were in compliance of current laws if they were to hold on to what they acquired through violation of previous laws. For four years, Kasyanov ensured that the Russian government continued to service the oligarchs who cashed out of their holdings and transferred their assets beyond the reach of Russian law.

The market has been understandably jittery about prospects of re-nationalization. On the other hand, the Kremlin’s firm assertion of control over Gazprom sent the market into dizzying heights. It is obvious that analysts are manipulating market sentiment in one direction – but investors are inclined to go in another.

If the Kremlin were a company with listed stock and Eliot Spitzer were the prosecutor general of Russia, almost all analysts working for Russian investment banks would be facing criminal charges. Overstating the potential of a stock, making up news to kick the bull, deliberate misinterpretations and misstatements of facts are all serious crimes in the U.S., and prosecutors have shown they are willing to go after the bankers and analysts who zigzag the thin line of vested interests.

However, unlike in the U.S., corporate reports, projections of earnings, impact of economic data are hardly the driving force in Russia. The Russian market is resigned to corporate corruption, questionable accounting and auditing practices, indulgent auditors and inside traders. The single most important driving factor in the Russia stock market over the past two years has been the Kremlin’s actions and threat of action against oligarchs.

Moscow brokerages that call themselves investment banks have been hard hit by increased risk perception of the market toward oligarchs, and since most listed Russian companies are oligarch-controlled, bank analysts have attempted to lower the risk perception to lift the market in which they have been trapped since the precipitous falls of a year ago.

The aim of analysts is to show that Putin is a weak president and that the oligarchs could yet take power Ukraine-Kyrgyz style. In endorsing the Orange Revolution, brokerage Renaissance Capital -- which held the first investment conference in Kiev after change of government -- seemed to be writing its own wish list for Russia: a revolution that could pull down the Russian government. Meanwhile, investment bank analysts are hoping that Putin is weakened enough to make concessions to oligarchs and stop investigations into tolling, transfer pricing and other tax-evasion schemes employed by them. It’s wishful thinking. It is no more than an attempt to deceive the market into believing that oligarch equity and debt are more secure than they are because Putin is weaker than he is.

In reality, Russian owners run a minimal risk of losing their property because of revalidation of privatization. They are deliberately misstating the issue. The issue has not been private ownership or legality of process of privatization itself – the issue has been tax evasion, fraud and money laundering.

In reality, the market should be told to expect more retro tax bills. So far, tax authorities have charged corporations – ranging from oil, tobacco and telecom companies – with tax bills for 2001. There is every reason to believe, and presidential aide Igor Shuvalov has stated in unequivocal terms, that more tax claims are coming and that government will enforce them. Bank analysts who should have forewarned the market about large holes in accounts prepared by listed companies and focused on accounting, transfer pricing, tax minimization and corporate governance risks have instead concentrated their writing efforts on analyzing Putin and his intentions.

Imprisonment of oligarchs is not necessarily bad news. On the other hand, there is plenty of good news in what Putin has said and done and continues to do. He is intent on protection of business from bureaucracy, creation of fair market, support for entrepreneurs, limiting the powers of officials, limiting the monopolies and oligarchs and so forth. The list of economic areas where the state will continue to play a role has been shrinking and is now limited to strategically important sectors. Putin’s record is of a fiscal conservative who has resisted all calls to dip into national reserves and systematically worked toward creating a better business climate.

Lowering of corporate taxes, introduction of flat tax rate for individuals, lowering of social tax burdens, introduction of fiscal responsibility, end of subsidies and monetization of benefits to pensioners, creation of tax-free zones for hi-tech industry and protecting national strategic resources from looting by handful of oligarchs are all good news for the market. Investors have instead been hoodwinked into believing that prosecuting criminals is bad for them and letting them run amuck is good.

Putin does not have to give concessions to criminals to prove he is a pro-business president. There is no doubt that coercion from liberal elements within his cabinet, incompetence of his economic and finance officials, corruption within the state apparatus, pressure from Western governments, sabotage by oligarchs, terrorist campaigns and mass murder of civilians, relentless criticism from much of foreign media and looming threat of a power grab have weakened Putin.

While his abilities to respond to such threats might be limited because of shortage of administrative resources and honest civil servants – Putin is hardly retreating, let alone surrendering. There are no signs yet that Putin is giving into pressure groups that would want the oligarchs to have a free run in the country once again.

Investors should seek signs of strength, consistency and uncompromising continuity in Russian political leadership after a decade of chaos and criminality. Investor confidence should be derived from the fact that there is rule of law in the land and it favors entrepreneur and business over bureaucracy. That oligarchs, unlike in 1998, will not be able to manipulate national policy. The confidence in Russia should come from belief that rogues will be prosecuted and economic criminals will be punished. Admissions from the head of state that corruption is a national disease are to be seen as a refreshing new approach toward real issues and willingness of the presidency to deal with them.

Investors should take heart that Putin has not given any assurance of a blanket amnesty to all economic criminals. If he had done so, there would be no safety for Western investors and lenders from the oligarchs whose competing business interests will control the government as they did for eight years during Boris Yeltsin’s reign. Putin deserves a vote of confidence for protecting investors from oligarchs who have been weakened under his presidency. A return to Yeltsin-era criminality and the control of Russian financial institutions by oligarchs is the worst-case scenario for investors. Putin may have a stiff demeanor and a business like style contrasting with showmanship of many western leaders but that should only go to underline the substantive nature of his reforms. His communication skills and staffers are without glamour but they only understate his own record and achievements. Putin may have lost the battle of media relations but he has not given up on Russia and its true potential.

The promise of a free market is delivered through sound economic policies, withdrawal of government from spheres of economic activity and in its rigid stand and unflinching ability to take on high crime. Investors now have a clear choice – to bet on the corporate criminals and their friends in financial press – or on a president who favors stability and creation of a civilized market place where enforcers do enforcement so that investors can invest and profit without worrying about enforcers working for businessmen fixing the market to rip off the investors.