Strong-arming foreign investors who made the fatal mistake of not leaving Russia immediately after the 2022 invasion of Ukraine has become a lucrative business for Vladimir Putin’s entourage (“Moscow backs $322mn sale of Carlsberg’s Russian assets”, Report, December 4)
The tactics used remind me of the corporate raids of the 1990s and 2000s, only that Russian state institutions took over the mob’s role. Falling out of windows, being hauled off to jail, and being subjected to trumped-up charges has become the norm. In some cases, local Russian management is taken hostage by law enforcement and the judiciary to motivate multinational companies to agree a fire sale to a Kremlin-chosen beneficiary. To add insult to injury, Russia levies an additional “exit tax”.
The Carlsberg case is different because the Danish investor relied on law firms with a record of representing the Russian state and its entities.
Walking away with a few cents on the dollar after a year of crying theft and declaring war does not comfort shareholders. That Carlsberg’s C-suite now publicly tries to sell this as the “best achievable outcome” demonstrates an extraordinary lack of resilience and vision on how to weigh and defend against political risk.
All too often, public companies are controlled by institutional shareholders, some of whom — so it seems — do not care or do not know any better. But even they are accountable to smaller investors who should ask questions about fiduciary duty, the obvious lack of supervision, and a potential conflict of interest.
The Kremlin has learnt its lesson: the foreign investors who stayed behind are weak, and taking them on has no legal repercussions.
Investment arbitration costs would be a fraction of what some investors so willingly have thrown away, except that it was not their money.
Franz J Sedelmayer
Spotsylvania, VA, US
