Russian President Vladimir Putin attends an awarding ceremony for Russian team members who won medals at the Winter Paraltmpic games on March 17, 2014 in Sochi, Russia.
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Putin ordered Danone and Carlsberg seized after Kremlin-friendly businessmen expressed interest, per the FT.
A Chechen leader and a businessman close to Putin have taken over the companies’ assets in Russia.
Observers say there’s a “redistribution” of wealth in Russia to those friendly to Putin’s regime.
Kremlin-friendly business people and oligarchs may be reaping the spoils from Russia’s seizures of Western assets.
Russian President Vladimir Putin passed an order to seize Western food and beverage giants Danone and Carlsberg’s local operations after business people close to his regime expressed interest in the assets, the Financial Times reported on Tuesday, citing unnamed people close to the Kremlin’s decision.
Moscow has appointed Yakub Zakriev — Chechnya’s agriculture minister and a nephew of Chechen leader Ramzan Kadyrov — as the new head of Danone, Vedomosti, a Russian business news outlet reported on Tuesday.
The regime installed Taimuraz Bolloev, a businessman, as head of Carlsberg’s subsidiary in Russia, per the news outlet. The FT described Bolloev as “a longtime friend of Putin.”
Russia seizing the local operations of Danone and Carlsberg was not the first time the country took control of Western firms. In April, Moscow took control of the subsidiaries of Germany’s Uniper and Finland’s Fortum.
Managers from Rosneft, a state energy company headed by Putin ally Igor Sechin, took over both energy companies.
Analysts told the FT they expect more foreign assets to be parceled out to Putin loyalists.
“It’s a new redistribution of wealth” to the president’s circle, said a Russian oligarch who has known Putin for decades, per the FT.
Russia’s takeover of Western companies comes amid a corporate exodus from the country over the Ukraine war, with many firms writing down assets and selling their subsidiaries.
Independent Russian newspaper Novaya Gazeta reported on Thursday, Russian businessmen bought the assets of 110 Western companies “that have fully or partially left Russia” at bargain-bin prices.
Russia has been making it increasingly difficult for foreign firms to exit the country. In December 2022, the country started forcing corporate sellers to dispose of assets at a 50% discount.
Russia also imposed several other charges on exiting companies, on top of lengthy administrative processes, Insider previously reported.
Given the corporate exits from Russia, authorities can acquire these abandoned assets at a massive discount and redistribute them, political analyst Ekaterina Kurbangaleeva wrote on the Carnegie Endowment for International Peace website on Friday.
“The middle layer of Russia’s social structure will be shaped by the redistribution of assets among those well-off Russians forced to focus on the domestic market by international sanctions,” Kurbangaleeva wrote.
“In return for their loyalty, they will receive high-quality assets at a significant discount, which may turn them into a pillar of the regime and a source of patriotic optimism and even radicalism,” she added.
And this redistribution of assets could create “a new class of crony capitalists or oligarchs,” Hassan Malik, a senior sovereign analyst at Boston-based investment management consultancy Loomis Sayles, told Insider in March 2022.
Danone said in a Sunday statement it was “preparing to take all necessary measures to protect its rights as shareholder.” On the same day, Carlsberg said the seizing was “unexpected” and that the company is assessing “the legal and operational consequences of this development.”
The Kremlin did not immediately respond to a request for comment from Insider.