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The government approved on Thursday the sell-off of an estimated $29 billion in state assets over three years in what promises to be the country’s biggest privatization since the controversial loans-for-shares auctions in the mid-1990s. But investors beware. Russia’s legal system, including its protection of property, remains weak, as illustrated by a case unfolding at our company, Prosperity Capital Management. It involves the nonpayment of hundreds of millions of dollars by an entity controlled by a member of the Federation Council.

Prosperity Capital Management, or PCM, has endured blatant legal abuses in its dealings with TGK-2 — one of the generation...