Russia says it could seize assets left behind by Western companies

By Judy J. Beasley Last updated May 22, 2022

Dozens of American, European and Japanese companies from almost every sector of the economy have abandoned joint ventures, factories, stores and offices in the past two weeks in response to the Russian invasion of Ukraine and the resulting penalties.

The sanctions have hit most of Russia’s financial sector, including its central bank, trashed the Russian currency and are likely to trigger a sovereign debt default and a deep recession. And there may be more to come: US Treasury Secretary Janet Yellen said on Thursday that the Russian economy would be “devastated” due to existing Western sanctions, “but we continue to consider other measures that we can to take”.

President Vladimir Putin had promised an answer. Speaking at a meeting with government officials on Thursday, he backed a plan to introduce “external management” of foreign companies leaving Russia.

“We must act decisively with those [companies] who are going to shut down their production,” Putin said according to a video posted by the Kremlin and shown on state media. “It is necessary, then… to introduce external management and then transfer these companies to those who want to work,” he added.

Russian Prime Minister Mikhail Mishustin said earlier the legislation had been drafted.

“If the foreign owners close the business unreasonably, then in such cases the government proposes to introduce external administration. According to the decision of the owner, it will determine the future fate of the business,” Mishustin said, according to the Kremlin.

“The essential task will be to preserve (…) the activities of organizations and jobs. Most companies announce a temporary suspension while maintaining jobs and wages, and we will closely monitor this situation,” he said. he adds.

The corporate exodus includes iconic consumer and tech brands such as McDonald’s (MCD), Coca Cola (COKE) and Apple (AAPL)as well as major oil groups such as BP (BP) and Shell (RDSA). They were joined Thursday by Goldman Sachs (GS), the first major bank since the start of the war to declare that it was ceasing its activities in the country entirely. Other banks will likely follow, leaving behind billions of unpaid debts.

Russia’s consumer rights organization has compiled a list of companies that have decided to leave and could be nationalized, according to a report by Russian newspaper Izvestiya later quoted by state news agency TASS.

The document reportedly sent to the Russian government and the attorney general’s office includes 59 companies, including volkswagen (VLKAF)Apple, IKEA, Microsoft (MSFT), IBM (IBM)Shell, McDonald’s, Porsche, Toyota (MT), H&M (HNNMY) and can be updated with more brands, Izvestiya said.

Earlier Thursday, the Russian government released a list of goods and equipment previously imported from Russia that companies would be prohibited from transferring out of the country.

According to a statement posted on the government’s website, the list includes more than 200 items, including “technological, telecommunications, medical equipment, vehicles, agricultural machinery, electrical equipment” as well as “wagons and locomotives, containers, turbines, metal and stone”. processing machines, monitors, projectors, consoles and panels.”

These restrictions will remain in effect until the end of 2022.

— CNN’s Chris Liakos contributed to this article