Putin seeks to confiscate assets of companies that have left Russia

Vladimir Putin declared that Russia would find “legal solutions” to confiscate assets held in the country by international groups that have decided to suspend their operations in Russia because of Moscow’s decision to invade Ukraine.

A long list of Western brands, including McDonald’s and Ikea, suspended or stopped their operations in Russia after the United States and several European countries imposed economic sanctions on Moscow.

Speaking by video to his government on Monday, the Russian president declared that “with regard to those who are planning to close their production facilities, we must act decisively… We must not in any way allow them to harm local Russian suppliers.”

“It is necessary… to introduce outside managers and then transfer the companies in question to those who really want to work,” Putin said. “There are enough legal and market instruments for this. There is no need for any arbitrary actions; we will find legal solutions to these issues.”

Putin has instructed the government to protect the right of foreign investors who choose to stay and work in Russia rather than leaving the country.

Several well-known Russian figures have been pushing for nationalizations since Western sanctions began.

“Is there any reason why all these Pizza Huts and Ikeas and stuff like that haven’t been nationalized yet?” Margarita Simonyan, editor of Russia Today newspaper, wrote in a Telegram message Tuesday. “Their quick service shops, warehouses and cafes are on our land and our people work in them – where’s the problem then?”

The newspaper Izvestia reported this Thursday (10) that an agency had sent the government a list of about 60 foreign companies that could be nationalized, for having “suspended their work without providing guarantees to clients”. The newspaper said accounts and assets could be confiscated.

Several Western companies that have suspended operations do not actually produce goods in Russia. This means that if their assets located in Russia were confiscated, companies would not be able to continue to operate as before.

Few foreign companies that have industrial operations in Russian territory announced the suspension of these operations or that they would leave the country.

Several companies that announced the suspension of their activities announced that they would continue to pay their employees, for now. If they exit the Russian market altogether, it could cause considerable unemployment.

“We continue to hope that the number of people losing their jobs will not reach the millions, and stay below that,” Kremlin spokesman Dmitry Peskov said on Wednesday. “There are companies leaving, in fact. And the government is dealing with it.”

According to the RIA news agency, the Russian Ministry of Economy announced on Wednesday that companies in which foreign ownership is at least 25% and that suspend their operations in Russia could have a new management team imposed by the state.

The move, the ministry added, would target any companies that have left Russia since Feb. 24, when Putin ordered his tanks to cross the Ukrainian border.

Outside managers would keep the companies afloat, prepare a register of obligations to creditors and conduct an asset inventory, according to the RIA. The original owner would have a period of six months to either sell his interest in the company or resume business and apply in court to remove the external administrators.

Putin admitted the sanctions had had an impact on Russia, but said the economy would adapt over time. Sanctions would have been introduced anyway, he said, regardless of the war in Ukraine.

He added that Russia continued to fulfill its contractual obligations in terms of energy deliveries. Earlier this week, Alexander Novak, Russian assistant prime minister, warned that his country had the option to cut natural gas deliveries to Europe.

Translation by Paulo Migliacci