How transnational corporations support the war against Ukraine for profit in Russia

Carlsberg and Danone, two worldwide corporations that decided to leave Russia, failed to sell their Russian assets. They were subsequently nationalized.

However, other companies, loyal to Putin’s regime, are developing businesses in Russia and still making money in Ukraine. According to data from the Kyiv School of Economics (KSE), as of July 16th there have been 3,333 companies and organizations identified from 92 countries and 58 branches that continue work on the Russian market. Only 255 of them have left the aggressor state. Another 35,8% of companies already announced their exodus from the Russian market or halted their operations, but 41% remain present in the country.

Companies that wanted to leave Russia were given strict conditions, the Financial Times learned. Any sale of the asset must take place at a discount of at least 50% from the market value, and 10% of the sale had to be given to the Russian budget.

"Novaya Gazeta Evropa" calculated that after the war, Russian businessmen received $38.5 billion in assets of Western companies for nothing. Since Russia’s full-scale invasion, more than 100 new owners of large assets have appeared in Ukraine.

BusinessCensor conducted an investigation into what happens to those who rejected the terrorist state’s conditions.

How the Russian government selectively nationalizes the assets of transnational corporations

In March 2022, Carlsberg Group, a Danish industrial brewery that includes the Russian Beer company "Baltika" condemned Russia’s invasion of Ukraine and decided to fully stop all operations in the aggressor state.

The company was ready to record losses from such a decision, which were previously estimated at $1.4 billion, and to leave the Russian Federation. At eight factories, the "Baltika Brewing Company" produced products under 55 brands, including such as "Baltika", Tuborg, Zatecky Gus, Holsten.

On June 23, 2023, Carlsberg Group reported that the contract for the sale of their Russian business was concluded.

But Carlsberg Group did not close the deal. On July 16, Russian President Putin signed a decree according to which the Russian assets of the Danish company Carlsberg and the French Danone were transferred to the management of Roisman. This is factually nationalization.

As a result, 100% of Baltika was transferred to Roisman, including 98.56% owned by the Swedish legal entity Carlsberg, 0.09% by the German legal entity Carlsberg and 1.35% by Hoppy Union LLC.

Also, 100% of Danone's Russian business came under the control of the Russian Federation. On July 18, the nephew of the head of Chechnya, Ramzan Kadyrov, vice-premier, minister of agriculture of Chechnya, Yakub Zakriev, was appointed the general director of Danone Russia.

The 32-year-old nephew of the head of the Chechen Republic Kadyrov has managed almost two dozen factories with an income of a couple of hundred billion rubles.

On the same day, a new manager of "Baltika" was appointed. The post of president was taken by Russian businessman Taimuraz Bolloev, who had already headed the brewing company in the period from 1991 to 2004 - before it was acquired by the Carlsberg Group.

Bolloev has interests in various markets, but all of them are related to state orders: his company BTC Group sews uniforms to the order of the Ministry of Defense and the Russian Guard, and also manages the state corporation Olimpstroy, which built facilities for the Sochi Olympics.

According to the Financial Times, Bolloev is close to Putin's friend, billionaire Yuriy Kovalchuk, who expressed interest in Baltika. It was Kovalchuk who pushed Putin to a full-scale war against Ukraine, pointing to the "weakness of the West."

At the same time, Carlsberg notes that it has not received official information from the Russian authorities about the transfer of Baltika.

"With the signing of the decree of the President of Russia dated July 16, 2023, the Carlsberg Group no longer retains control over the management or operational activities of the Baltika Brewing Company. Thus, the change of management of the Baltika Brewing Company was carried out without the knowledge and approval of the Carlsberg Group," the statement said.

How foreign companies can remain active in the aggressor state

The Yale Leadership Institute monitors the exit of foreigners. The director of the institute, Jeffrey Sonnenfeld, together with a team of experts, monitor new statements from companies and update the list in a format as close to real time as possible (last updated on July 18, 2023 - ed.).

Initially, it was a simple list of companies that "left" or "remained", now it consists of five categories, which are rated on a letter scale from A to F according to the complete exit from the Russian Federation: A - companies that have completely stopped cooperation with Russia or are completely leaving the country, F - companies that continue to do business in the Russian Federation as usual.

According to researchers, the F list includes 222 companies. For example, the Chinese marketplace Alibaba has not left Russia, and clothing brands - the Italian Benetton and Diesel and the American Guess - continue their activities. The American Patreon service, which Ukrainians actively use to collect donations, is also on the list. Raiffeisen Bank International from Austria and the Swiss tableware brand Zepter are also present.

Turkish Anadolu Efes also remained among the employees. In 2018, together with the Belgian Anheuser-Busch InBev, it formed the beer concern AB InBev Efes, which continues to work successfully in Russia and pay taxes to its budget.

Currently, the headquarters of AB InBev Efes is located in Moscow. The combined company's network includes 11 breweries and three malt complexes in Russia, which employ more than 7,000 workers.

The brand portfolio includes global brands Bud, Corona Extra and Stella Artois, international Hoegaarden, Leffe, Beck's, Lowenbrau, Franziskaner, Spaten and local brands, etc. According to the Belgian-Turkish concern's own estimates, its share in the Russian beer market is 30%, and in terms of share it ranks first in the Russian Federation.

The concern did not just stay in Russia, but reports on further fruitful cooperation. According to the earnings report for the first quarter of 2023, Turkey's Anadolu Efes launched new products in Russia, including an energy drink and non-alcoholic beer.

Also, Russia's largest brewing company AB InBev Efes decided to localize the production of imported brands Spaten, Franziskaner, Leffe Blonde and Brune.

The company went gradually towards localization. In the first year of Russia's full-scale invasion of Ukraine, AB InBev Efes continued to implement its ESG strategy. Thanks to the development of its own agricultural program, the volume of purchases of barley from Russian agricultural enterprises increased by 15%.

Moreover, the manufacturer plans to expand to Belarus. The Belgian-Turkish concern AB InBev Efes will produce beer for the Belarusian consumer this summer.

Another beer producer - Heineken - remained in Russia. Heineken United Breweries LLC owns seven breweries in the Russian Federation: in St. Petersburg, Nizhny Novgorod, Novosibirsk, Sterlitamak, Yekaterinburg, Irkutsk and Khabarovsk.

Although the CEO of the company, Dolph van den Brink, blamed the delay in leaving Russia on the local bureaucracy, at the moment Heineken continues to work on the economy of the terrorist country.

Can Ukrainians impact the situation?

Many international companies that refuse to leave the Russian Federation, which actually finance the war, are also present in Ukraine.

For example, the already mentioned AB InBev Efes owns three factories in Kharkiv, Chernihiv and Mykolaiv. In addition to international brands, they also produce local brands "Chernigivske", "Rogan", "Yantar", "Zhygulivske", cider and kvass.

Unlike the Russian factories, the Ukrainian ones were closed on February 24, 2022. Then they gradually resumed work.

At the same time, Heineken does not have its own production facility in Ukraine, but beer under its TM company is brewed under a license at the facilities of the First Private Brewery.

Nationalized in the Russian Federation, Carlsberg Group, due to attempts to exit its market, has three factories in Ukraine in Zaporizhzhia, Lviv and Kyiv.

Despite the different decisions regarding the attitude to the war of the Russian Federation against Ukraine, the brewers' products are present in Ukrainian stores under the same conditions.

In 2014-15, supermarkets marked products produced by Russian companies on their shelves. Therefore, the final consumer could deliberately boycott and not buy goods from the aggressor country. At present, no one labels the goods of international companies that have not left Russia and, in fact, sponsor the war and at the same time work in Ukraine.

Therefore, can we expect AB InBev Efes, the French supermarket chain Auchan, and the German Metro to leave the Russian Federation?

Or the British-Dutch company Unilever? The company said it would comply with Russian conscription legislation if its employees in the Russian Federation were drafted into the army.

For refusing to leave the Russian Federation, the National Agency for the Prevention of Corruption (NACP) included Unilever, the Hungarian OPT, the Mondelez International Corporation, and others on their list of international sponsors of the war.

Thousands of international companies at one time expanded into the Russian market.

After February 24, 2022, global corporations are divided in their decisions. The first - continue to earn in the Russian Federation, the second, despite losses and confiscation, decided to leave.