Business 10 March 2022, 5:27pm

Putin backs expropriating foreign firms exiting Russia

Portfolio

Russian President Vladimir Putin today said that he supports taking over the assets of foreign companies that are pulling out of the Russian market, Politico reported. In the wake of the attack of Ukraine, hundreds of companies have already chosen to sever ties with Moscow, suspend investments and operations, so Putin will have quite a few items on this expropration menu to choose from.

Vegetáriánus csirkepótlós rántott izékkel kísérletezik a KFC

Putin said that “we should act decisively” against companies that choose to close their operations in Russia.

It is necessary then, as the prime minister suggested, to introduce external management and then transfer these enterprises to those who want to work,

Putin said, according to Russian state-controlled news agency RIA Novosti.

Russia's economy ministry argues that the nationalisation of these companies would be necessary to save jobs and prevent bankruptcies.

Putin added that “the rights of those foreign investors and colleagues who remain in Russia and work in Russia must be reliably protected. And I ask the government not to lose sight of this.”

This announcement comes as a flurry of Western businesses are halting their operations in the country. IKEA and Apple are on the so-called counter-sanctions blacklist of around 60 companies that Russia’s prosecutor general and the government are looking to nationalize, the head of Russia’s consumer organization Oleg Pavlov told Russian news outlet Izvestiya today.

"Law enforcement agencies, the Ministry of Industry and Trade, and Rospotrebnadzor will also be involved in the work on this list, each within its competence. Of course, the list is open. As soon as there are companies that declare to leave without providing guarantees to Russian consumers, they will be entered there. Accordingly, administrative, criminal and judicial procedures will be applied to them," he explained.

"Getting on the anti-sanction black list means the following risks for the offending company and its management:

seizure of accounts and assets,
introduction of external management, and
nationalization of property," said Pavlov

"Also, the management of these companies can be held criminally liable for deliberate bankruptcy and fraud on a particularly large scale," he explained.

White House Press Secretary Jen Psaki said on Wednesday:

If they were to take those actions, I’m certain there would be steps we would take, but nothing has happened at this point in time.

She then asked the press for time to talk to the economic team and "see if there’s anything more we can predict for you."

On Wednesday, Russia's Ministry of Economic Development proposed that companies that leave the Russian market and are at least 25% foreign-owned would be placed under external administration. As the ministry pointed out, the government plans to save jobs in foreign companies that have announced they are ceasing operations in the country.

The owner would be given the opportunity, within five working days before the appointment of external administration, to declare to the court their intentions to resume the activities, or to transfer their share in trust management, or to sell it. If these measures are not taken into account, an external administration will be introduced in the organisation.

Yum! Brands, the parent company of KFC, has announced plans to suspend the operations of company-owned restaurants in Russia.

As reported by Reuters, the company is suspending the operations of 70 restaurants in the country.

It is also finalising an agreement to suspend all Pizza Hut restaurant operations in Russia.

Yum! Brands said in a statement: “This action builds on our decision to suspend all investment and restaurant development in Russia and redirect all profits from operations in Russia to humanitarian efforts.

Yum! Brands operates 1,000 KFC restaurants and 50 Pizza Hut outlets in Russia.

A string of major Western enterprises pulling out of Russia over its invasion of Ukraine. Some of America's most iconic brands have announced they were suspending their operation in Russia, including McDonald's, Coca-Cola, PepsiCo, and Starbucks.

Netherlands-based Heineken and UK-based Unilever are both putting a stop to investing, buying or selling products, and French train maker Alstom is suspending all deliveries and future businessess investments in Russia.

Previously, Putin said that eventually Russia will be better off with Western companies pulling out.