The recent seizure of the Russian subsidiaries belonging to Danone and Carlsberg’s Baltika by the Kremlin highlights Russia’s blatant disregard for shareholder and investor rights, as well as property rights. These steps underscore the oppressive nature of the Russian regime and should serve as a warning to companies’ continued operations in the country.
At first glance, the Russian government’s objective in seizing assets was to intimidate these foreign companies and deter them from leaving the Russian market. Carlsberg and Danone - market leaders in their respective industries - were in the process of withdrawing from Russia when their local subsidiaries were seized and put under “temporary management” by the Russian state. This is not an isolated incident, but an indication of a systemic disregard for the rule of law - given similar scenarios applied to Fortum, Uniper, Exxon Mobil, and Shell.
A close look reveals that both Danone and Carlsberg have landed in the hands of Putin’s loyalists Yakub Zakriev, Chechnya’s agriculture minister and nephew of Putin’s ally Ramzan Kadyrov, and Taimuraz Bolloev, a longtime friend of the president and a close ally of the Kovalchuk brothers also allied with Putin.
The Danone-Carlsberg case of asset redistribution amongst Putin’s cronies - considered against the backdrop of expanding retaliatory measures taken by the Russian state - clearly demonstrates that no foreign company’s assets are safe in an increasingly hostile and chaotic environment.
The Russian leadership is once again highlighting that anything is possible in the lawless Russian business climate, where any foreign company is a target - regardless of its industry, size and willingness to exit the Russian market.
B4Ukraine Coalition recognizes the precarious nature of the current business environment in Russia and material risks faced by the remaining companies. At the same time, we call attention to the lack of foresight and risk management on behalf of the western companies’ leadership and risk management functions since 2014, following Russia’s illegal annexation of Crimea.
After over 500 days of Russa’s full-scale invasion and over 95,000 of reported war crimes, it is now imperative to stop business dealings with and in Russia.
While asset seizures are a threat, the dangers of remaining complicit in human rights abuses, the potential legal and financial liabilities, and the reputational damage far outweigh the loss of assets. In the event of asset seizures, affected companies can consider writing off their assets and pursuing international legal remedy.
Governments and international bodies can facilitate a swift and responsible exit for these companies. Therefore, B4Ukraine calls on the US, EU, other G7 and Swiss governments to issue business advisories to warn of the heightened risks of continued business operations in the aggressor state that shows no respect for human or property rights.