By Guy Faulconbridge
MOSCOW (Reuters) -A nephew of Chechen leader Ramzan Kadyrov has been appointed the new head of Russia’s Danone subsidiary after the Kremlin ordered the state to take temporary control of the French yoghurt maker’s business in Russia.
Since Russia invaded Ukraine in 2022, many Western companies have fled Russia and some assets have been put under state management, with close allies of President Vladimir Putin gaining day-to-day control.
According to a decree signed by Putin on Sunday, the state had taken control of Danone’s Russian subsidiary along with a brewer owned by beer company Carlsberg.
Yakub Zakriev, 32, a deputy prime minister of Chechnya and the republic’s agriculture minister, took the post of general director of Danone Russia on Tuesday, Interfax’s SPARK database of company disclosure documents in Russia showed.
The appointment was confirmed by Akhmed Dudayev, Chechnya’s minister for national policy, foreign relations and information.
“Choosing him as general director of Danone Russia shows that representatives of the team of Chechen President and Hero of Russia Ramzan Akhmatovich Kadyrov are talented and successful managers,” Dudayev said on his Telegram messaging app.
“He has a huge experience of working in the most responsible positions,” Dudayev said.
There was no comment from Zakriev. Danone declined to comment.
Kadyrov, a close ally of Putin, has referred on social media to Zakriev as his “dear nephew”. Zakriev is the son of Zulai, one of Kadyrov’s elder sisters, and studied economics at Moscow State University.
The appointment is another indicator of the scope of the transfer of assets underway in Russia since the invasion of Ukraine. It also indicates the clout of Kadyrov, the son of former Chechen President Akhmad Kadyrov who was assassinated in a 2004 bombing in Grozny.
Many investors say a new generation of tycoons is being created in Russia. Loyalty to the Kremlin is rewarded with effective control over assets that garner significant cash-flow and have major growth potential.
ASSET TRANSFER
Russia says it has been forced to act to ensure that operations continue at important businesses whose Western owners have declared they are exiting. But it may be difficult for investors to regain control of the assets.
“It may be difficult to wrest back control from the newly appointed new management, especially as we see in these cases, where the people appointed are well connected and powerful local players,” said Chris Weafer, chief executive of Macro-Advisory Ltd.
“We will undoubtedly see more of these actions. But there should, at least for now, be no threat to western companies which either have said they intend to stay in Russia or have specifically not said they are looking to exit.”
For Danone, the appointment of Kadyrov’s nephew marks the end of a 30-year Russian experiment. Paris-based Danone opened a dairy store near Red Square a year after the 1991 fall of the Soviet Union.
As the chaos of the 1990s calmed, Russia and the former Soviet Union was perceived as a major potential market.
Danone sought alliances with big local players during the boom years, eventually gaining at least a fifth of Russia’s dairy market until war intervened.
Danone said in October it would relinquish control of its dairy food business in Russia, which could have led to a write-off of up to 1 billion euros ($1.12 billion).
A source familiar with the matter said Danone was closely following the situation in Russia, with a focus on the safety of its 7,500 staff spread across 13 factories. Danone is reviewing legal options after the Russian seizure of its assets, the source added.
PUTIN ALLIES
The invasion of Ukraine prompted the United States and its allies to impose severe sanctions on Russia and its business elite, steps Putin casts as a declaration of economic war.
Putin has said Russia does not need the West, will depend on its own vast resources and is pivoting to China and other powers.
His allies Yuri and Mikhail Kovalchuk have signalled their interest in Carlsberg’s Baltika subsidiary, which is based in St Petersburg, the Financial Times reported on Tuesday.
Taimuraz Bolloev, who ran Baltika from 1991 to 2004, was appointed its president, Baltika said.
Carlsberg said the implications of the development were unclear, saying it no longer retained control of Baltika’s management or operations following the presidential decree.
“The change to the management of Baltika Breweries has consequently been made without the knowledge or approval by Carlsberg Group,” it said.
Danish foreign minister Lars Lokke Rasmussen said it was “annoying” when companies like Carlsberg, “who were acting responsibly by winding down their business in Russia,” were being hampered.
“When Russia steps in and takes over Carlsberg’s Russian business, it’s a sign that companies can’t count on Russia either,” Lokke told the Danish broadcasting corporation DR.
(Reporting by Guy Faulconbridge in Moscow, Alexander Marrow in London, Dominique Vidalon in Paris, Lidia Kelly in Melbourne and Shubhendu Deshmukh in Bengaluru, additional reporting by Louise Rasmussen in Copenhagen; Editing by Stephen Coates and Angus MacSwan)
