RUSSIA PLACES WESTERN COMPANIES UNDER TEMPORARY CONTROL AMID UKRAINE TENSIONS

Russian authorities have taken control of the local operations of Swiss food giant Nestlé and three French companies in the latest move against Western businesses operating in the country. The affected firms include French retailer Auchan, the former Leroy Merlin home-improvement chain now known as Lemana Pro, and logistics company FM Logistic. The action followed a decree signed by Russian President Vladimir Putin transferring the companies’ Russian subsidiaries to a firm known as L.E.V. Management.

The decree covers 16 Russian businesses linked to the affected Western groups and places their management under temporary control. The Kremlin defended the move as a response to countries it considers unfriendly because of their support for Ukraine and sanctions imposed on Moscow following Russia’s invasion of the country. Kremlin spokesman Dmitry Peskov said the nationalities of the companies and the actions of their governments were among the factors considered in the decision.

The transfer has raised questions about the future ownership of the businesses because temporary administration in Russia has previously been followed by forced sales or transfers to local buyers. L.E.V. Management, the company placed in charge of the businesses, was established recently and has little publicly known business history. Investigative reports have also linked its leadership to a Russian Interior Ministry general, although that information has not been independently confirmed.

Nestlé said it was assessing the situation and considering its available options while stressing its commitment to protecting its rights and ensuring business continuity for its stakeholders and employees. The Swiss company has around 7,000 employees and six factories in Russia, although it has already suspended most non-essential sales, imports, exports, advertising and capital investment in the country. Analysts estimate that Russia now accounts for just over one per cent of Nestlé’s global sales, down from about two per cent before the war.

Auchan, which operates more than 240 stores in Russia and employs over 33,000 people, said its Russian subsidiary had requested clarification from authorities regarding the decree. Lemana Pro also said its operations were continuing while it sought further information, while FM Logistic had not immediately issued a public comment. The latest action follows earlier Russian takeovers involving Western companies such as Danone and Carlsberg and comes as tensions between Moscow and Western governments remain high over the continuing war in Ukraine.