Coca-Cola, KFC and others not allowed to withdraw from Russia

Russian authorities have tightened the reins on Western companies in Moscow and threatened those hoping to withdraw from the country with arrests and asset seizures.

Several companies – including Coca-Cola, McDonald’s, Procter & Gamble, IBM and Yum Brands, the parent company of KFC and Pizza Hut – have been targeted.

Russia’s ‘nationalisation’

Western companies under threat

As per a source close to the investigation, Russian prosecutors contacted business owners – either via a phone call, a letter or an in-person visit.

Western business officials in Moscow who criticised the Russian government now face the possibility of arrest or seizure of assets, including intellectual property.

Speaking in a video link with members of his government, Putin said the Kremlin could find “legally viable ways” to seize international firms.

As reported by the Wall Street Journal, the source said: “The warnings have prompted at least one of the targeted companies to limit communications between its Russian business and the rest of the company”.

This was done out of concern as emails or text messages among colleagues may be intercepted, some of the people familiar with the matter said.

Putin to ‘auction off’ foreign business

Putin said he would remove Western officials from foreign companies and “introduce external management and transfer these enterprises to those who actually want to work”.

“There are enough legal and market instruments for this”, Putin added.

In what has been described as Russia’s “first step to nationalisation”, Russian courts will be able to appoint external administrators for foreign companies which are at least 25% foreign-owned.

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Sanctions

This follows after Russia was hit by sanctions from Western governments, which also prompted many western companies to cease operations and withdraw from the country.

After the Russian Ruble dropped in value against the Dollar, Russian President Vladimir Putin made it harder for businesses – and money – to leave the country’s borders.

A few Western Brands such as Apple and Victoria’s Secrets closed their operations during the early days of Russia’s invasion of Ukraine.

Many others followed suit and the seven-storey Evropeisky (‘European’) Mall – Moscow hub of global consumer economy with atriums named after cities; Paris, Rome, etc – have gone quiet.

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