Russia Seeks to Seize Assets Left Behind by Foreign Companies Leaving

Russia’s Economic Development Ministry prepared draft legislation that would potentially allow the Kremlin to nationalize the assets of foreign-owned businesses that leave the country, Russia’s Interfax News Agency reported Thursday.

The bill would “allow the state corporation VEB.RF and the Deposit Insurance Agency (DIA) to quickly take control of such companies, and then ‘repack’ the business into a new organization and sell it at public auction. If there are no applicants, then the state will act as a buyer,” according to Interfax.

“VEB.RF” refers to Vnesheconombank, which is a Russian state-owned development corporation.

Russia’s Economic Development Ministry drafted the legislation in response to a mass exodus of foreign businesses from Russia since February 24, when Moscow launched its latest military operation in Ukraine. United Russia, the nation’s ruling party, described the bill as “the first step towards the nationalization of the property of foreign organizations leaving the Russian market,” according to the U.S. government-owned website currenttime.tv.

“United Russia added in a statement on the Telegram messaging app that the [Russian] commission on lawmaking activity had supported a bill allowing for firms more than 25% owned by foreigners from ‘unfriendly states’ to be put into external administration,” Reuters relayed on March 10.

Russia’s Economic Development Ministry has already sent the Russian government and the Russian Prosecutor-General’s Office a list of 59 foreign companies that may be nationalized after they “announced the termination of work in Russia [in recent days] without providing guarantees to consumers,” the Russian newspaper Izvestia reported on March 10.

This list includes “Volkswagen, Apple, IKEA, Microsoft, IBM, Shell, McDonald’s, Porsche, H&M and others,” according to Izvestia.

In addition to Shell, the foreign energy firms Exxon Mobile and BP (formerly British Petroleum) also announced plans to halt business in Russia in response to its latest invasion of Ukraine as of Thursday. The New York Times on March 10 published an extensive list of companies that have announced business curbs in Russia since February 24, writing:

Shell will exit its joint ventures with Gazprom, the Russian natural gas giant.

BP will sell its nearly 20 percent stake in Rosneft, the Russian state-controlled oil company.

Exxon Mobil will end its involvement in a large oil and natural gas project.

A number of financial firms likewise announced various pullouts from the Russian market as of March 10. The New York Times detailed the development, writing:

American Express, Mastercard and Visa cards issued by Russian banks will not work in other countries, and cards issued elsewhere will not work for purchases in Russia.

Goldman Sachs “is winding down its business in Russia in compliance with regulatory and licensing requirements.” It was the first big American bank to exit the country.

The Big Four accounting firms — Deloitte, EY, KPMG and PwC — are pulling out of the country. … Western Union will suspend its operations in Russia and Belarus.

Russia’s latest war with Ukraine began on February 24 just 72 hours after Moscow announced it would formally recognize the independence of two Russian-backed separatist states in eastern Ukraine’s Donbass region.