May 18, 2022

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Russia considers nationalizing foreign companies that fled the invasion of Ukraine

Russia considers nationalizing foreign companies that fled the invasion of Ukraine

Japanese clothing store Uniqlo also joined the list with the announcement It will be closed temporarily its Russian stores, prompting shoppers to queue up for what may be their last chance for months to purchase the company’s merchandise. Long queues have also formed at Ikea, McDonald’s and other companies leaving in recent days as Russians become concerned about losing access to Western consumer goods.

During a meeting with government officials Thursday, Putin said Russia must act “decisively” towards departing companies. He said Russia should “introduce external management and then transfer these companies to those who want to work,” backing a legislative proposal made by his political party.

Putin’s party, United Russia, said in a statement this week that the proposal would allow the government to seek a court order to impose external management on factories, shops and other facilities left by departing companies “to prevent bankruptcy and preserve jobs.”

The party’s statement said the external management will continue for three months, after which the government will put the companies up for auction.

The party said companies would be able to halt the process if they restart their businesses within five days of the court order, or sell their assets in a way that preserves business and jobs.

The two companies cited several reasons for fleeing, including anger over the Ukrainian invasion and difficulties processing payments and importing supplies into Russia due to Western sanctions.

Uniqlo said it faces “operational challenges” in Russia and opposes “all forms of aggression that violate human rights and threaten the peaceful existence of individuals.”

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Goldman Sachs said it is “in the process of winding down its business in Russia in compliance with regulatory and licensing requirements.”

Kevin Ozan, the company’s chief financial officer, said in a call with analysts earlier this week that McDonald’s will continue to pay its 62,000 Russian employees and make rental payments at its locations in the country. He estimated that those payments and other costs associated with closing businesses there would be $50 million per month.

Douglas Macmillan contributed reporting.