For the most part, however, it is lawlessness, rather than creative evasion of laws, that is pervasive throughout emerging markets. In many lands, motorists ignore traffic signals, police officers moonlight as kidnappers, business men rarely pay taxes, and nobody trusts the courts. This situation creates an ideal environment for corruption and extortion. Two thousand years ago, the Chinese philosopher Lao Tze said that "the ideal government is one whose existence you cannot even feel." Business people, however, need government because even though invisible, it is still powerful. This is especially true in most emerging markets where government officials often have unlimited powers but limited accountability. As a result, distortion and extortion can become a way of life for many private businesses. To take just one example, the mistress of a Vietnamese tax official made an unsuccessful foray into the cosmetics industry. Unable to sell her products to the market, she unloaded the lipsticks and creams on the companies whose tax returns her lover audited. Fearful of an unfavorable review, most companies happily bought her products. She made a handsome profit, and the tax returns were approved.

Government officials are not alone in harassing global bargain hunters. Joint-venture partners and the managers of overseas companies often view investors from developed countries as cash cows to be milked rather than vice versa. Many newly privatized firms simply do not care about their shareholders' welfare. In such situations, outside investors often become victims of sweetheart deals between company management and the managers' relatives or corrupt government officials. It is not unusual to have company assets sold to the managers' relatives, or to other firms controlled by management, at discount prices. Although such a sale is tantamount to stealing from the shareholders, it is extremely costly and difficult for shareholders to take any legal action to protect their interests. "Under Communism it used to be a sport to steal from the state," said Professor Rudolf Andorka of Budapest University about the practices of some managers in formerly Communist countries. Now, even though the companies belong to shareholders, the managers' hands are still sticky.

Shareholder activists should be aware that it may not be easy to throw out incompetent and crooked managers. While most managers in emerging markets do not have access to anti-takeover lawyers, they have plenty of poison pills for investors to swallow. In Russia, for example, "hostile" shareholders may find that their names have mysteriously disappeared from the company's stockholder record book, completely wiping out their investment and their right to vote.

And while nature abhors a vacuum, enterprising criminals thrive in areas where law enforcement is lax or nonexistent. Thus, organized crime has rushed in to control many business operations in the underground economies in Colombia, Mexico, the Philippines, Russia, Taiwan, Thailand, and many other emerging markets. Global investors often find themselves unknowingly doing business with gangsters. This is true even for some emerged markets, such as Japan. For example, The New York Times reported that the seven largest Japanese real estate lenders had bad loans totaling U.S.$77 billion in 1996, with as many as 70 percent of the bad loans related to Yakuza, an organization of Japanese gangsters. During the Japanese real estate bubble in the 1980s, Yakuza had borrowed billions of dollars and then defaulted on the loans when the market crashed.

Some bankers attempted to collect the interest payments or foreclose on the properties, but they quickly found such strategies to be quite dangerous. Two bankers were shot to death and many others were the targets of death threats and Molotov cocktails. Wisely, perhaps, some banks chose not to collect their money. Some delinquent real estate owners even hired Yakuza members to stay in their buildings to prevent banks from foreclosing on the properties.

For the most part, guns are not a major threat to those traveling throughout the world in search of investment riches. Bribery and its handmaiden, corruption, are. Though no strangers to business in developed countries, these two activities are often endemic to economic commerce in emerging markets. It can, and sometimes is, argued that bribery is a naturally accepted cultural component of many societies. Traditional Chinese religion offers a case in point.

The Kitchen God, acting as the representative of all the Gods in Heaven, was said to arrive at every family's kitchen on the first day of the lunar New Year. He kept an eye on the family throughout the year and then left at year's end to report to Heaven on their behavior. With a good report, the family would be rewarded with propitious fortune next year. Otherwise, they would be punished with bad luck. Eager to get a good report card on the evening of the Kitchen God's departure, many Chinese families believed that they could bribe him with a ritualistic dinner of sweet dishes and fruits and pray that he would say "sweet things about them" in Heaven. Not surprisingly, those families who were particularly sinful during the year would offer the most lavish dinners.

In Russia, a venture capitalist named Kharshan eschewed good fortune from the Kitchen God by buying not only dinner but also the Moscow hotel that served the meal. The hotel, The Cosmos, was, and remains to this day, a foreign exchange spigot. With 1,800 rooms, it is Russia's largest hotel for foreign tourists and generates US$10 million in profits per year. In the United States, such earnings would easily put the hotel value over $100 million.

Paul Klebnikov, a reporter for Forbes magazine, described how "the right connections and a strong dose of guile" helped Kharshan get the deal of the century.