(MOSCOW) – The Kremlin has placed the Russian operations of Swiss food giant Nestlé under temporary administrative control, according to a decree signed by Russian dictator Vladimir Putin on Thursday.
The decree hands management of Nestlé’s Russian businesses to a little-known domestic firm, Lev Management. This includes six factories producing infant formula, pet food and coffee. While Nestlé retains legal ownership of the assets, Lev Management will now run them.
The long-term implications of this move remain unclear, though similar temporary administrations in the past have served as a prelude to the outright confiscation or forced sale of Western-owned businesses. The Kremlin has not yet provided a specific reason for targeting Nestlé.
Under Russian law, the state can move against companies from countries it deems hostile. Switzerland, despite its neutral status, has imposed sanctions on Russia since the full-scale invasion of Ukraine, a stance that may have prompted the action. Nestlé is believed to be the first Swiss company targeted in this manner.
Other theories suggest the Kremlin may need funds for its war in Ukraine. Taking control of such companies and potentially selling them off later could raise money for the war effort and ensure loyalty among Russian oligarchs, as previous seized assets have been handed to Kremlin loyalists at discounted prices.
Nestlé has stated it will take all measures to protect its rights in Russia, though it is unclear what form this will take. There is no mention of legal action or lobbying efforts, and the effectiveness of such measures is uncertain. The company has not conceded ownership of the businesses.
Nestlé’s presence in Russia includes six factories employing around 7,000 people. The company has consistently said it would remain in Russia because it provides essential products, such as food, rather than luxury goods. Russia was estimated to account for around 2 percent of Nestlé’s global sales in 2021, the last time figures were provided.
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