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Russian prosecutor arrests Western company and warns of confiscation of assets

Russian prosecutors have warned Russian Western companies, arresting leaders of companies that criticize the government, and seizing the assets of companies that have withdrawn, according to people familiar with the matter.

Russian President Vladimir Putin last week announced his support for a law that nationalizes the assets of foreign companies leaving their country in the invasion of Ukraine. The prosecutor’s warning was directed to companies in various sectors, including people close to us, such as technology, food, apparel, and banks. The problem said.

According to some people, the warning has caused at least one of the target companies to be concerned that emails and text messages between colleagues could be intercepted between the Russian business and other companies. Communication is now restricted.

Other companies have moved to move executives from Russia, others familiar with the matter said.

Coca-Cola, IBM, P & GPG spokesperson -1.19%

McDonald’s declined to comment. A Yum spokeswoman refused to comment beyond the company’s previous statement that it would suspend operations at KFC and Pizza Hut restaurants in Russia.

KFC is open on Saturdays at a Russian shopping center.


Photo:

Maksim Konstantinov / Zuma Press

The Russian embassy in Washington did not respond to requests for comment on Sunday.

Many companies have announced plans to suspend or reduce their operations in Russia following Mr Putin’s invasion of Ukraine and sanctions by the Western government.

Many companies, especially retailers and manufacturers, said the decision to shut down was temporary, some said it was needed due to the disruption of sanctions on the supply chain, and promised to leave forever. Some companies have done so.

Given the economic instability and the expectation that the situation will be unstable for some time, prosecutors said companies are evaluating their business in Russia differently, according to people who explained the issue. Despite the warning, many companies are not planning If the government tries to impose its own owners, it will be difficult for companies to smoothly transfer their businesses to Russia, people say. rice field.

According to Yale, the Russian public prosecutor’s office said on Friday that it would ensure that companies that said they would suspend or withdraw their businesses would comply with national labor laws. More than 350 foreign companies have said they will quit or temporarily suspend their jobs in Russia. Faculty of Business Administration.

Wall Street Banks such as Goldman Sachs Group Ltd,

Levi Strauss & Co, a consumer goods company such as Coke.Retailers such as, major tech companies such as Apple Ltd

Energy giants such as BPPLC and ExxonMobil Ltd

They said they would end Russia’s operations.

Putin last week approved a plan for senior members of his dominant United Russia party to nationalize the business of Western companies leaving the country. Such a move would help prevent unemployment and maintain Russia’s domestic capacity, Andrey Tarchak said. , Secretary of the General Council of the United Russian Party.

Washington warned against nationalization efforts.

“Russia’s tort decision to confiscate the assets of these companies will ultimately cause even more financial pain for Russia,” White House spokesman Jen Psaki tweeted.

Coca-Cola announced last week that it would suspend its business in Russia. Coke’s operations in Russia and Ukraine contributed approximately 1% to 2% of operating revenue and revenue in 2021. The company owned about 21% of the Coca-Cola HBC. AG

As of December 31, cola bottling and distribution partners in the region.

Restaurant owner Yum said last week that it had signed a deal with Pizza Hut franchisees to temporarily close 70 company-owned KFC locations and suspend operations at 50 locations. The company also said it has stopped all investment and restaurant development in Russia. ..

“We are focused on the safety of the people in the region and will continue to support the Ukrainian team while assessing how Yum Brands can have a positive impact on the region,” said a spokeswoman. increase.

IBM Chairman and CEO Arvind Krishna wrote in a blog post last week that the company has shut down all operations in Russia.

McDonald’s said last week it would temporarily close about 850 restaurants in the country and continue to pay 62,000 people employed in Russia. The company said it has not yet decided when to reopen its restaurant in Russia and will consider whether there are additional restaurants. Steps may be required.

According to McDonald’s, closing the restaurant is expected to cost the company an estimated $ 50 million a month in salaries, leasing, supply chain and other costs.

P & G,

PG -1.19%

Pampers diapers and crest toothpaste makers said they would stop spending on capital investment, advertising and promotion in Russia while selling only products focused on basic health, hygiene and personal care. .. The company said it employs 2,500 people in Russia.

Write to Jennifer Maloney (jennifer.maloney@wsj.com), Emily Glazer (emily.glazer@wsj.com), Heather Haddon (heather.haddon@wsj.com)

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