The corporate retreat from Russia is going to be messy10 Mar 2022 06:55
It turns out deciding to quit Russia was the easy part.
Two weeks after Russia invaded Ukraine, a corporate consensus has emerged. From BP to Unilever, international companies are clearing out of Russia. But it’s one thing to say you’re going to leave and another thing to do it.
There are different types of challenges. It was straightforward enough for luxury goods groups to go, straightforward enough too for BP to see its relationship with Rosneft could not continue. But others have had to carefully balance obligations to employees and Russian consumers caught in the middle.
Ownership of Russian businesses is one problem. There are those who have chosen to simply shut up shop. Consultancy Accenture axed all its 2,300 staff in the country last week, with “generous” severance packages. Others have the option to hive off businesses or units. The Big Four accountants are separating local operations from their global machines: what was PwC or EY Russia can carry on under a new name. There will be practical difficulties — there are issues of shared services, insurance, IT and referrals — but they were already locally owned partnerships with most profits kept locally.
Trickier is the situation for those who’ve said they’re going to sell, but either can’t, or shouldn’t yet. BP and Shell both won plaudits for their decisions to “exit” equity stakes in Russia, BP with Rosneft and Shell in its partnerships with Gazprom. But there are few palatable buyers available, even if Russia permitted a sale.
For BP at least, sitting on the stake may not be the worst thing to do. It has very few people in the country and wasn’t entitled to Russian oil as part of its 19.75 per cent Rosneft ownership interest. Investors are more or less prepared for it to write off the asset. It is tougher for Shell to deal with the Sakhalin-2 project, where it has a 27.5 per cent stake, and people on the ground. It cannot just turn off the switch and go while it waits for a suitable buyer to emerge.
Companies that operate under franchise agreements also have to face up to a situation they cannot control. There are 48 Marks and Spencer stores in Russia, for example, which M&S cannot close. They are operated by a Turkish franchisee. M&S has stopped supplies, but can’t stop the franchisee selling what they have.
https://publicnewstime.com/news/economy/the-corporate-retreat-from-russia-is-going-to-be-messy/
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