B4Ukraine response to Pernod Ricard’s statement regarding continued operations in Russia
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Shortly after the beginning of the full-scale invasion of Ukraine, Pernod Ricard announced that it would suspend its exports to Russia. However, the company has since reneged on its promise and resumed some exports to Russia. Yesterday, after significant backlash, the company published a statement, utterly condemning the invasion of Ukraine, but justifying its continued operations in Russia.

We agree that the situation in Russia is complex. There are various legal, regulatory, and ethical complexities that have only increased since the start of the war. These cannot be dismissed, but they can and must be addressed and worked through.

With the 2014 annexation of Crimea, 9 years ago, Russia commenced its hostilities against Ukraine and is now in its 15th month of the full-scale invasion of Ukraine. Companies have had a good deal of time to think about and work through these dilemmas. Many have decided to do the right thing and leave the country.

In light of this information, we would like to pose the following questions to Pernod Ricard:

1) We understand and agree that Pernod Ricard has obligations towards its employees. These are laid out under the United Nations Guiding Principles on Business and Human Rights and in the wider international human rights legal and regulatory framework. Can Pernod Ricard clarify how it has used this framework to minimise the risks and impacts to its employees? How has the company applied heightened human rights due diligence to its operations in Russia?

2) In its statement, Pernod Ricard notes a risk to its employees caused by the Russian legal framework that criminalises intentional bankruptcy. Intentional bankruptcy, also known as premeditated bankruptcy (преднамеренное банкротство), is a crime in Russian legislation that can result in fines and deprivation of liberty. Under the Russian Criminal Code, intentional bankruptcy is defined as the deliberate actions of a company’s management or shareholders to bring about the company’s insolvency or bankruptcy through illegal means, such as the concealment of assets, the misappropriation of funds, or the submission of false financial statements. If a person is found guilty of intentional bankruptcy, they can face severe penalties, including imprisonment for up to seven years and fines of up to 5 million rubles. In addition, the court may order the seizure of the individual’s property or assets, or they may be barred from holding certain positions in business or government in the future.It’s worth noting that the prosecution must prove that the individual acted intentionally and that their actions led to the company’s insolvency or bankruptcy. In addition, the prosecution must show that the individual had a motive for committing the crime, such as personal financial gain or revenge against business partners. Between 2009 and 2022, courts in Russia handed down between 15 and 34 sentences each year under Article 196 of the Criminal Code for intentional bankruptcy. Official statistics for 2023 have not yet been released.

A recent joint publication by the Kyiv School of Economic and Yale University states with regards to the risk to employees: “To date, there have been no reports of any employees of foreign companies who have been imprisoned. There are no detention centres that are large enough to hold tens of millions of detained employees of global multinational companies. Their arrest and detention would only trigger mass societal unrest.” Does Pernod Ricard have any indication or evidence that this legislation might affect its employees? Further, has Pernod Ricard considered the implications and wider complexities of its continued operations in Russia and considered a conflict-specific approach when deciding to continue operations?

3) The safety of employees is and should be a considerable point of concern and obligations for companies. But in light of the specific context of the illegal war on Ukraine, there are other options for the safeguarding of employees that can and have been used by other international companies in Russia. Many companies have offered relocation packages, or contractual clauses which condition the continued employment and safety of employees remaining in Russia. For example, if Pernod Ricard had decided to sell its Russian business it could have included contractual clauses to ensure the continued safety of its employees, as previously exemplified by the actions of the French Publicis Groupe who employed 1200 people in the country. Has Pernod Ricard considered any of these or other options before deciding to resume shipments to Russia?

4) Further considering the safety and wellbeing of its employees, Pernod Ricard is surely aware that Russian law now requires any company operating in the country to help conscript employees to the Russian army and provide resources where required. We would like to ask Pernod Ricard whether it has received any such requests, and if so, how has the company responded to them? What is Pernod Ricard doing to safeguard its employees from mobilisation? Have any of your employees been mobilised and, if so, what was Pernod Ricard’s role in the process?

5) Other companies have faced these challenges and still committed to, and exited, Russia. Pernod has scaled back its activities, but nevertheless has decided to stay in the country, even after over one year after the start of the war, over 72,000 reported war crimes later, over 22,000 Ukrainian civilians killed or injured, and with the head of the Russian state indicted by the ICC for alleged war crimes. Considering these developments and the rising number of reported human rights abuses and war crimes, has Pernod Ricard considered fully exiting Russia so as not to be even indirectly or remotely associated with these crimes?

6) Taxes paid by companies who stay in Russia indirectly contribute to the war. How much tax has Pernod Ricard paid in 2022 and 2023?

7) Can Pernod Ricard clarify how its exports to Russia vary between 2021, 2022 and 2023 - both overall and by alcoholic product? In particular, Whisky, Gin and Vodka. Can Pernod clarify how it has assessed what volume of imports in 2023 is acceptable when balanced against minimising imports and avoidance of intentional bankruptcy?

8) Another point raised by Pernod Ricard is the ‘grey market’ over which the company claims to not have any control. What internal mechanisms and policies has the company developed to exercise enhanced due diligence of your supply chains, intermediaries, and customers, to prevent or minimise the import of its products to Russia via parallel routes?

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