Russian equipment destroyed during the genocide in Bucha, Ukraine in 2022. (Photo: Mvs.gov.ua)
More than 2,100 Western corporations, including well-known brands like Pepsi-Cola, L’Oreal cosmetics and Phillip Morris, are still doing business in Russia, despite its brutal Ukraine invasion.
In the latest round of sanctions in March, President Biden announced 500 new restrictions on Russia, affecting the country’s war machine, including export restrictions on 100 firms or individuals.
Western companies began pulling out of Russia shortly after President Vladimir Putin ordered the Ukraine invasion in February 2022.
But 2,190 U.S. and European corporations are still doing business there, according to a tally by the KSE Institute, one of the biggest think tanks in Ukraine.
In 2022 alone, more than 300 U.S. businesses paid $751 million only in profit tax to Russia’s increasingly militarized budget,” according to Fortune magazine.
“Leaving the Russian market will certainly entail some financial losses for many companies. However, the scale of those losses is incomparable with the imminent losses due to a possible global war or a change in the world order, which the Russian government pursues.,” the Institute writes on its website.
“The people of Ukraine are calling on companies to stop all business with Russia to avert a future global catastrophe.”
Major brands, such as McDonald’s and European oil giant BP led the way after the invasion. French automaker Renault sold its factories for the symbolic sum of one ruble, according to The New York Times.
To date, 387 companies have left and 1,215 have significantly scaled back operations, or are in the process of leaving.
Other companies are taking half steps to ward off criticism and calls for boycotts.
Pharmaceutical giant Pfizer stopped investing in Russia but still sells a limited range of drugs and products. Whether they’re being diverted to the military is unknown. But Pfizer says it is donating profits to Ukraine, according to The Times.
Carlsberg, one of the world’s third-largest brewers, says it’s having trouble finding a buyer for its Russian breweries. But it’s seeking “buyback clauses” that would let the company reacquire the properties at the end of the war.
At the beginning of the invasion, the Institute began a project, named “SelfSanctions,” to collect data on Western corporations in Russia. Many of these corporations were directly or indirectly involved in the war effort.
A succession of sanctions have been imposed on Russia going back to the Obama administration in 2014. But without the cooperation of Western corporations, those sanctions are being undermined.
At the very least, these companies are contributing to the Russian war effort by paying taxes and providing jobs.
Under a new Russian law, corporations in the Russian Federation are also forced to participate in mobilization activities, contribute to the recruitment of employees into the army and finance their military equipment.
In 2022, Russian prosecutors also warned that existing companies could see their assets seized, and top executives critical of the government could face arrest, The Wall Street Journal reported.
As part of its project, the Institute has reached out to corporations to find out why the continue doing business during the invasion. The responses varied widely, and several refused to comment.
Some of their answers may shock you.
U.S. tobacco giant Phillip Morris International is still operating at full capacity in Russia, despite efforts to sell its assets there, the company claims.
PM Chief Executive Jacek Olczak told The Financial Times the tobacco group, which sells Marlboro cigarettes among other brands, had been approached by at least three “serious” potential buyers but “the talks have stalled because nobody knows how I can make it work.”
Olczak said he would “very likely” request a buyback clause if Philip Morris does sell its Russian assets, according to The FT.
In the meantime, the company has stopped selling a number of its cigarette products, reduced manufacturing activity and suspended marketing activities at its three plants, employing around 3,400 People.
Nonetheless, Ukraine’s National Agency on Corruption Prevention (NACP) considers Philip Morris an international sponsor of the war.
Pepsi Co, the giant American food and beverage company, is still operating in Russia after pledging to leave the country in Sept. 2022. It has six soft drink bottling plants and a Frito Lay plant, which produces 40,000 tons of Lay’s, Cheetos and Xpycteam chips per year.
Pepsico Holdings, the parent company, currently has 21 branches in different regions of Russia and one representative office in Belarus. They also have 80 Russian patents, most of which were extended recently till 2033, according to the KSE.
The company has not cut back production on any products, but in a transparent public relations move, it rebranded Pepsi and other soft drinks to lower the company’s profile.
Since April, it has also suspended capital investments and all advertising and promotional activities in Russia, but the move hasn’t hurt its bottom line.
Pepsi reported first-quarter net income attributable to the company of $2.04 billion, or $1.48 per share, up from $1.93 billion, or $1.40 per share, a year earlier.
PepsiCo has banned any mention of the war in Ukraine in its advertising, even in Ukraine, the Ukrainian Council of Shopping Centers (UCSC) reported in January.
PepsiCo has also been added to list of international sponsors of the war and international groups have called for a boycott.
Mars, the U.S. maker of candy, pet food and other products, initially pledged to scale back Russian operations and announced the suspension of production last year. But its factories are still operating, according to KSE.
Oddly, the Prosecutor’s Office of the Moscow Region is investigating the Mars company for allegedly financing the Ukrainian Armed Forces. At the same time, the NACP has included Mars on its list of international sponsors of the war.
The company released a statement that it has “suspended new investments in Russia and will not import or export our products in or out of Russia. Our social media and advertising activity in Russia and Belarus will remain suspended.”
Procter & Gamble, another U.S. multinational consumer goods corporation, pledged to suspend all media, advertising, and promotional activity in Russia, but is still producing a range of personal health/consumer health goods, including brands like Pampers, Ariel, Always, Venus, Gillette, Herbal Essences, Head & Shoulders, Pantene and Olay.
The company is one of the largest foreign investors in the Russian economy and set up operations in 1991, following the fall of the Soviet Union. It’s also earned a spot on NACP’s list of international sponsors of the war.
As of March, the Coca-Cola Company has stopped placing orders for concentrate in Russia and ceased investments in the market. It stopped all production and sales of Coca-Cola brands, and renamed its Russian subsidiary Multon Partners LLC.
But Swiss-based Coca-Cola HBC, one of 300 bottlers worldwide that are part of The Coca-Cola Company system, continues to operate in Russia. Coca-Cola owns 21 percent of the company.
Multon Partners LLC, is the Russian division of Coca-Cola HBC. It reported profits of 10.25 billion roubles (a little over $111 million) in 2023 — more than four times 2022’s profit of 2.3 billion roubles, according to the company’s financial statements.
Multon will focus on the production and sale of local brands “Dobry”, Rich and “My Family”, according to the company. Raw materials will be locally sourced, and The Coca-Cola Company will not supply concentrates for beverages.
Westinghouse, a U.S. manufacturer, continues to operate in Russia and reported that 5,3% of revenue, or about $500 million, is derived from Russian operations. Among other things, Westinghouse is supplying nuclear fuel for Russian-designed reactors in Slovakia, a Russian ally in the war.
The company is also among the U.S’s largest electronics makers, with substantial contracts with U.S. defense industries, as well as interests in power generation and manufacturing.
The company is not above playing both sides of the fence. In 2022, Westinghouse signed an agreement to supply fuel to all of Ukraine’s atomic power stations in an effort to end the country’s reliance on Russian supplies.
ChampionX, a U.S. company specializing in chemistry programs and services, drilling technology, artificial lift solutions and automation technologies has yet to scale back or end its Russian operations, according to the Chief Executive Leadership Institute, at the Yale School of Management.
The Ivy League group has been active in tracking U.S. corporate activity in Russia. Based on an extensive data analysis, it found that “business retreats and sanctions are catastrophically crippling the Russian economy.”
“Russia has lost companies representing about 40% of its GDP, reversing nearly all of three decades’ worth of foreign investment and buttressing unprecedented simultaneous capital and population flight in a mass exodus of Russia’s economic base,” the group reported.
“Defeatist headlines arguing that Russia’s economy has bounced back are simply not factual – the facts are that, by any metric and on any level, the Russian economy is reeling, and now is not the time to step on the brakes.”
Yet, U.S. companies continue to prop up the Putin regime.
Cloudflare, the well-known Internet cloud computing company continues sales and services in Russia unabated since the invasion.
Guess, the U.S. retailing and clothing company, has actually expanded its footprint in Russia since the invasion.
In May a year ago, the clothing manufacturer and retailer reportedly bought back its 30% share from local partner Vyacheslav Shikulov for $8.5 million.
It consolidated 100% of its Russian business after the deal was approved by the US Treasury Department. Experts described the deal as “unusual” for the fashion market in the sanctioned country.
In April, Guess announced plans for a new flagship store in Moscow’s Europeisky Mall.
Patreon, a U.S. company that provides business tools for content creators to run a subscription service and sells digital products, refused to scale back or leave Russia following the invasion.
The company was co-founded in May 2013 by developer Sam Yam and musician Jack Conte.
Align Technology, an orthodontics and dental device company, continues to maintain its full Russia operations. The public company, based in San Jose, Calif, is traded on the Nasdaq.
Fleetcor, which recently rebranded to Corpay, provides business payments and spend management to control expense-related purchasing and payment processes.
The Atlanta, Ga., company is conducting “business as usual,” according to Yale, and it’s technical solutions would clearly aid Russia’s management of the war.
IQVIA, formerly Quintiles and IMS Health, Inc., is a Fortune 500 and S&P 500 multinational company providing health information technology and clinical research. The company has $15.4 billion in annual revenue, 86,000 employees and is actively hiring in Russia, according to Yale group.
Iridium, a global satellite communications company, provides access to voice and data services anywhere on Earth. It’s also conducting business as usual in Russia, providing what could be important support to Putin’s war effort.
Nordson Corporation, based in Ohio, continues full operations in Russia, even though its products — it designs and manufactures dispensing equipment for consumer and industrial adhesives, sealants and coatings — would benefit Putin’s invasion.
Mondelēz International, a U.S. food and beverage company, initially announced it would scale back Russian operations, but it has significantly increased revenue in Russia from $1.016 billion in 2021 to $1.463 billion in 2022. The NACP lists it among international war sponsors.
The publicly traded company is based outside Washington, D.C. in Manassas, VA. Its international operations are headquartered in Chicago. It is one of the world’s largest producers of snacks and food products and has three factories in Russia.
Like many companies, Netcracker Technology, promised to shut down its Russian operations following the Ukraine invasion. But it continues full operations there.
The company is a wholly owned subsidiary of NEC Corporation, and specializes in telecom software. It has eight branches in Russia, including two in Moscow.
The company, which initially developed its products in Russia, made news earlier this year.
Oleksandr Snidalov, a former Nutcracker employee, published a post on Facebook where he suggested that the company may have been involved in the Russian interception of German officers’ conversations about the destruction of the Crimean bridge with Taurus missiles.
NEC Corporation is a Japanese multinational information technology and electronics corporation.
Titan International, based in Quincy, Ill., makes Titan and Goodyear brand tires and undercarriage products for a wide variety of off-the-road equipment.
The company says it has scaled back operations in line with sanctions, but its majority-owned Voltyre-Prom tire factory near Volgograd, continues to make tires for trucks and industrial equipment critical to Russia’s war effort.
Dozens of other U.S. corporations also continue full scale operations in Russia, many involved in products crucial to its invasion. The include well known brands like Sun Chemical, Zimmer Biomet, a publicly traded medical device company, Tenneco Inc., a manufacturer of automotive components, Allied Chemical and Apple TV., which continues to allow Russian propaganda on its network.
Putin has repeatedly stated that Russia is at war with the West, including the United. States.
All of the U.S. companies are working against the interests of the United States and should face fines or stringent sanctions on the operations for aiding Russia’s war effort, which is tantamount to treason.
Not all of the U.S. companies doing business in Russia could be named here. For a complete list, click here, or here.
Are you working for one of them? Let your employer know you object to their continuing operations in Russia.