Business Maverick

Business Maverick

Corporate Exodus From Russia Becoming a Rout

The domes of Saint Basil's Cathedral in Moscow, Russia, on Tuesday, Feb. 15, 2022. Russia announced the start of a pullback of some forces after drills that raised U.S. and European alarm about a possible military assault on Ukraine. Photographer: Andrey Rudakov/Bloomberg

Netflix, TikTok, Samsung and credit card operators have joined the lengthening list of businesses cutting ties with Russia or reviewing their operations in the country as repetitional and financial risks mount.

International sanctions, the closure of airspace and transports links due to the war, and the financial restrictions on SWIFT and capital controls have made it difficult if not impossible for many companies to supply parts, make payments and deliver goods to and from Russia. Added to that, the potential international consumer backlash against any company perceived as helping Vladimir Putin’s regime means that the exodus of corporations from Russia has become a stampede.

The rout reverses three decades of investment there by foreign businesses after the Soviet Union broke apart in 1991, especially in energy. Here are some of the biggest companies that have begun to unravel their connections:

Oil and Gas

Russia’s largest foreign investor, BP Plc, led the way with its surprise announcement on Feb. 27 that it would exit its 20% stake in state-controlled Rosneft, a move that could result in a $25 billion write-off and cut the company’s global oil and gas production by a third.

Shell Plc followed, citing Russia’s “senseless act of military aggression.” The company said it would end partnerships with state-controlled Gazprom, including the Sakhalin-II liquefied natural gas facility and its involvement in the Nord Stream 2 pipeline project, which Germany blocked last week. Both projects are worth about $3 billion. Exxon Mobil Corp. said it would “discontinue” its Sakhalin-1 operations.

Equinor ASA, Norway’s state-owned energy giant, said it will start withdrawing from its joint ventures in Russia, worth about $1.2 billion. In parallel, Norway’s sovereign wealth fund, the world’s largest, said it’s freezing Russian assets worth about $2.8 billion and will come up with a plan to exit by March 15.


Visa Inc. and Mastercard Inc. said on Saturday they are suspending operations in Russia. In separate statements that arrived within minutes of each other, Visa cited “Russia’s unprovoked invasion of Ukraine, and the unacceptable events that we have witnessed,” while Mastercard referred to the “unprecedented nature of the current conflict and the uncertain economic environment.”

Ukrainian President Volodymyr Zelenskiy had called on the companies to halt all business in Russia during a video call with U.S. lawmakers. Each gets about 4% of its net revenue from business linked to Russia. American Express followed on Sunday.

Some critics argue that the steps aren’t enough. While the companies said any transactions initiated with their cards issued in Russia will no longer work outside the country and cards issued outside of Russia won’t work at Russian merchants or ATMs, consumers inside Russia who have a locally issued card can still pay for goods and services there.


In the space of a week, most of the world’s biggest carmakers including General Motors Co., Ford Motor Co., Volkswagen AG, and Toyota Motor Corp. announced they would halt shipments to Russia or idle plants in the country. Truckmakers Volvo AB and Daimler Truck Holding AG also halted business activities there.

The automaker with the most to lose, Renault SA, has remained quiet.

The French company’s majority control of AvtoVaz, the Soviet-era maker of Ladas, and reliance on Russia for about 12% of its revenue have unnerved investors and Renault has lost more than a third of its market value in two weeks. “Renault has promised to abide by sanctions,” Gabriel Attal, the French government spokesman, said Thursday on France Info radio.

Consumer Goods

Levi Strauss & Co.. whose jeans were a coveted black-market item in the Soviet Union, is suspending commercial operations in Russia, where it gets about 2% of its sales. The “enormous disruption occurring in the region” has made it “untenable” to conduct business as normal, the company said Monday. “Any business considerations are clearly secondary to the human suffering experienced by so many.”

Samsung Electronics Co., the leading smartphone seller in Russia with more than 30% of the market, suspended exports to the country of all its products. Samsung said it will donate $6 million to humanitarian efforts in the region, including $1 million in consumer electronics products.

Before the announcement, Mykhailo Fedorov, who serves as Ukraine’s vice prime minister and oversees digital operations, posted a letter on his Twitter account to Samsung vice chairman Han Jong-hee, urging the Korean tech giant to temporarily cease supplying services and products to Russia. “We need your support — in 2022, modern technology is perhaps the best answer to the tanks, multiple rocket launchers and missiles targeting residential neighborhoods, kindergartens, and hospitals,” he wrote.

Microsoft on Friday condemned Russia’s “unjustified, unprovoked and unlawful invasion” of Ukraine and said it’s suspending all new sales of products and services in Russia. Apple Inc. has halted sales of iPhones and started limiting Apple Pay services and other popular products in Russia, and removed the RT News and Sputnik News applications from App Stores outside the country. HP Inc., the largest supplier of PCs to Russia, has stopped exports to the country as has Intel Corp.

Nike Inc. is one of several consumer goods companies that have cited logistical problems as a reason for suspending sales in Russia. Spanish fashion retailer Inditex SA, which has 502 stores in Russia including 86 Zara outlets, is also temporarily closing all its shops in Russia and halting online sales, saying it “cannot guarantee the continuity of operations and trading conditions.”

Other companies have so far taken limited steps to halt business. Danone SA’s General Secretary Laurent Sacchi said the world’s largest yogurt maker would suspend investment in Russia, but will continue to sell dairy and baby food.

Danone Chief Executive Officer Antoine de Saint-Affrique was among CEOs and chairmen of some of France’s biggest companies who met with Emmanuel Macron on Friday, according to Le Figaro. The French president urged them not to leave Russia hastily, and in any case not without consulting the government, the newspaper reported.


Netflix Inc. is shutting its operations in Russia and said no new customers will be able to sign up, though it’s unclear what will happen with existing accounts.

Netflix has fewer than one million customers in Russia and has been operating in the country through a partnership with National Media Group. The streaming giant said previously it won’t be carrying required Russian news channels on its local-language service in the country and has paused all projects and acquisitions from Russia, including four programs in production.

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Hollywood studios including Walt Disney Co., Paramount Pictures, Sony Corp., and AT&T Inc.’s WarnerMedia and Comcast Corp.’s Universal Pictures have also halted or postponed the release of movies in Russia.

Meanwhile other platforms, including TikTok, are suspending or closing services because of Russia’s new “fake news” law aimed at silencing dissent and limiting information about the invasion of Ukraine.

“We have no choice but to suspend livestreaming and new content to our video service while we review the safety implications of this law,” TikTok announced in a series of tweets. “The safety of our employees and our users remain our highest priority.”

The company, owned by China-based ByteDance Ltd., said its in-app messaging service would not be affected.

On Friday, the Russian government said it was blocking access to Meta Platform Inc.’s Facebook as part of the crackdown. Hours after the announcement, Meta said it would pause all advertising in the nation and would stop selling ads to Russian businesses.

Law and Accounting

The big four auditors, EY, PricewaterhouseCoopers LLP, KPMG LLP and Deloitte all said they are pulling out of Russia.

“We will separate our practice in Russia and Belarus from the global network of member firms,” Deloitte’s global Chief Executive Officer Punit Renjen said on Monday.

EY, PwC and KPMG announced similar measures to separate their Russian businesses. EY said it will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world. Between them, the four have more than 15,000 staff in Russia and Belarus.

Baker McKenzie said last week it was reviewing its operations in Russia and will sever ties with several Russian clients in order to comply with sanctions. The Chicago-headquartered firm’s clients include Russia’s finance ministry and VTB, Russia’s second largest bank.

London-based Linklaters said in a statement it was “reviewing all of the firm’s Russia-related work.”

Last week, McKinsey & Co.’s global managing partner Bob Sternfels condemned the invasion and said the firm won’t do business with any government entity in Russia. The consultancy’s most senior executive in Ukraine called on companies to go further, and begin shutting “offices and outlets” there. On Thursday, McKinsey said it won’t undertake new client work in Russia and will halt all client service in the country after its remaining engagements conclude, though its office will remain open to support staff.

Rising Criticism

Even as more companies sever ties with Russia, criticism is rising of banks and corporations that are perceived as profiting from the war or not doing enough to punish Putin’s invasion.

U.S. Senator Elizabeth Warren, a vocal critic of Wall Street, said some banks are “undermining” sanctions by snapping up Russian corporate bonds and suggesting clients buy the nations’ assets on the cheap.

In a statement released late Friday, Warren called out market makers JPMorgan Chase & Co. and Goldman Sachs Group Inc. following a Bloomberg report that the two banks had been purchasing beaten-down bonds. Banks routinely scoop up debt because clients ask them to, or because they expect to find ready buyers.

JPMorgan analysts also published a note recommending that investors boost holdings of Russian-linked debt to take advantage of a “recovery play” stemming from the selloff that accompanied the country’s invasion of Ukraine.

“Giant Wall Street banks like JPMorgan and Goldman Sachs never miss out on an opportunity to get richer even if it means capitalizing on Russia’s invasion of Ukraine and undermining sanctions placed on Russian businesses,” said Warren, a Massachusetts Democrat.

Representatives for Goldman Sachs and JPMorgan declined to comment on the Bloomberg report that they had been buying up Russian bonds.

The founder of Fast Retailing, which owns fashion giant Uniqlo, said the company wouldn’t be withdrawing from Russia, according to the Nikkei. “Clothes are essential items in daily life,” Tadashi Yanai, Fast Retailing’s chairman and CEO, reportedly said. “Russians have a right to live as well.”

Representatives for Fast Retailing in Tokyo didn’t respond to inquiries from Bloomberg News. The company operated 50 stores in Russia, as of Feb. 28. Fast said on March 4 that it would donate $10 million and 200,000 items of clothing to the United Nations High Commissioner for Refugees to support those fleeing Ukraine.


Comments - Please in order to comment.

  • virginia crawford says:

    Ordinary people will suffer the most – and they have no way to dislodge Putin. All these companies were happy to make a profit while the opposition were harassed and locked up, reporters assassinated. So it seems more of a PR exercise. Oil traders and arms manufacturers are happy as profits rocket. And so hard to believe that provoking Putin wouldn’t have predictable consequences.

    • Sydney Kaye says:

      The apologists’ “provoking Putin” waffle is the most absurd excuse of all. Do you provoke the criminals by locking your door and barring your windows. Does that justify their breaking in, killing the occupants and destroying the house.

      • Jean-Paul Kloppers says:

        Without commenting on whether this is right or not, it’s not clear to me how the provocation argument can so easily be dismissed. The analogy you provide supports your view but, by construction, contains no provocation. The question of provocation to consider is this: Can the expansion of a military alliance historically hostile to your country and within your sphere of influence and indeed up to your border reasonably be called a provocation? To answer in the affirmative is not necessarily to be an apologist for Russia. The Ukraine invasion if not predictable was, rightly or wrongly, made more likely by expansion of NATO.

        • Jacques Stoop says:

          This is such a bs argument because
          1. Russia asked to be part of NATO in the early 2000s so clearly didn’t think they were hostile back then. They ditched after they did not want to wait in the queue like other smaller nations.
          2. NATO would have no problems with Russia if they hadn’t acted like bullies in the years since: ie invading Georgia, Crimea and Donbass.

          Its quite clear that Russia has been doing the provocation. Frankly you’re grasping at straws.

  • Joe Trainor Trainor says:

    I think you mean “reputational risks”. Not “repetitional risks” 🙂

  • Skrik Wakker says:

    Maybe it’s too early at this stage but in the event that Ukraine secures a truce or even a victory, ( Russia committed 190k troops vs 250k army plus 200k “territorials” + now millions of pissed off citizens), what war damages will the Ukraine & the world on their behalf extract from Russia in the future? I look forward to a DM article on prospects at a later date.

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