A spokesperson for the Russian Ministry of Foreign Affairs, Maria Zakharova, dismissed comments by Jacob Arup-Andersen, the chief executive of Carlsberg, describing the Baltika transfer to the Federal Property Management Agency as a theft of business in Russia. The denunciation was framed as a response to Carlsberg’s decision to reduce its footprint in Russia and the broader concern about profits earned within the country shrinking due to policy moves.
Zakharova suggested that Carlsberg may be trying to shield its own strategy from scrutiny, implying that the company intends to pull out of the Russian market and erode the value of domestic partners. She urged Carlsberg to review the decrees issued by the President of Russia, noting that property in Russia could be moved to external management if entities from Russia are restricted from enjoying rights in other countries. The assertion underscored the government stance that such measures are lawful and targeted at foreign entities that treat Russia as a hostile market.
The Foreign Ministry’s representative clarified that Baltika was never nationalized; it was placed under temporary external management by the Federal Property Management Agency. He added that Carlsberg has capable legal counsel who can explain the situation to the company’s leadership, and he dismissed Arup-Andersen’s remarks as inconsistent with the role of a global chief executive.
What happened to Baltika?
After Russia’s military operation in Ukraine began in March 2022, Carlsberg announced its withdrawal from the Russian market. In June 2023, the company disclosed a plan to sell Baltika.
On July 16, President Vladimir Putin directed that Carlsberg’s assets come under external management. The move preserved ownership rights for the concern but removed the ability to make strategic decisions, at least in the near term. A sales agreement did not proceed, and Baltika’s management was restructured with Taimuraz Bolloev, who had led the company from 1991 to 2004, taking the helm again. Carlsberg’s leadership condemned the government actions as theft and refused to sign any agreement that would legitimize asset transfer to the external manager.
Additionally, Carlsberg terminated license agreements related to international brands, depriving Baltika of the right to produce and market certain products. The company could liquidate its remaining stock until April 1, 2024. Finance officials explained that the external management mechanism responds to sanctions and is applied in exceptional cases when obligations are unmet or laws are violated.
Threat of prosecution
In early November, reports emerged that the Danish parent sought compensation for damages arising from the Baltika transfer. Company executives viewed Russia’s actions as a violation of international law, while the Russian Ministry of Finance stated that there were no legal grounds for compensation. The concern then issued formal notices of disagreement under three international treaties and suggested negotiations as a path to resolution. If the matter remained unresolved within six months, it warned of potential recourse to international courts.
New compensation rules
Russia announced new compensation rules for foreign companies with rights in large, economically important firms. The policy, announced in early November, suspended the rights of foreign holders when authorities suspend ownership or control due to regulatory actions. The rule excludes cases like Baltika, where ownership remained with Carlsberg while management moved to an external administrator by presidential decree. Under the regulation, foreign companies whose rights are restricted may seek compensation from a designated economically important organization. If approved, compensation would reflect the market value of the foreign-held shares. Economically important organizations are those deemed essential to Russia’s economic sovereignty and security. Eligibility could require meeting at least one criterion such as employing more than four thousand people, asset value above 150 billion rubles, annual revenue above 75 billion rubles, or annual tax contributions of at least 10 billion rubles. These thresholds ensure that compensation targets entities most critical to the national economy.