13 ms·

Can you sell the Russian business without violating the sanctions?

jnorthrop 4y ago
I'm not sure who downvoted you. It is a good question. McDonald's and other consumer goods type companies are not sanctioned, so the company can sell its assets. For that matter they could continue to operate as normal in Russia if they choose.
- boole1854 4y ago
  I'm not sure they really could easily continue to operate as normal. Their business units in Russia get paid by consumers in rubles, but due to the financial sanctions, they can no longer convert rubles to US dollars [1]. From the point of view of their non-Russian shareholders, this effectively means all that money is inaccessible. This would result in complications in reporting the revenue on their income statement. Plausibly (I am not an expert), this would mean they can't even recognize the revenue at all. At minimum, it becomes an open question whether or not the revenue will ever benefit the corporation or if it will be 'trapped' perpetually. [1] This is my understanding. If someone knows better, please post. One source that goes into some detail about the current situation is: https://www.washingtonpost.com/business/energy/how-war-and-sanctions-make-the-ruble-harder-to-trade/2022/04/11/8d267832-b9a9-11ec-a92d-c763de818c21_story.html https://www.washingtonpost.com/business/energy/how-war-and-s...
  - chupasaurus 4y ago
    You're right, currently you can't get your revenue outside unless you're down to use a scheme involving exchange for trades inside Russia, move them outside and turn back to money. I've diagonally read the article linked and it depicts everything correctly.
    - selimthegrim 4y ago
      Diagonally?
      - yznovyak 4y ago
        "To read diagonally" is a Russian idiom meaning "to skim-read".
      - ilammy 4y ago
        In Russian "to read diagonally" means "to skim" in English. Like, you don't read left to right, top to bottom, but straight from one corner to the other.
        kergonath 4y ago
        In French as well, FWIW.
        number6 4y ago
        French is now in bed with russian? Mont dioaux ;)
        chupasaurus 4y ago
        In 19th century, almost every Russian either spoke French fluently, was a priest or couldn't read.
        sorokod 4y ago
        Tolstoy’s “War and Peace” is about 2% French (~40 pages), the language of the Russian aristocracy at the time
        kergonath 4y ago
        France and Russia have been frenemies for a couple of centuries now :)
    - yardstick 4y ago
      Finally a use for Bitcoin?
      - chupasaurus 4y ago
        Only if there is someone who'd like to sell in rubles.
  - KptMarchewa 4y ago
    Not sanctions, but Russian regulation. From your link: >The Bank of Russia more than doubled the benchmark interest rate to 20%, a 19-year high, on Feb. 28 and also imposed capital controls, including a ban on foreigners’ selling of securities. Nabiullina said decisions to suspend some regulatory requirements amounted to a capital boost for banks equivalent to 900 billion rubles ($8.7 billion). Putin banned all Russian residents from transferring foreign currency abroad, hardening capital controls.
    - lotusmars 4y ago
      Interest rate is already back to 14%[1]. Russian economy recovered super fast. Ruble is already stronger than before war (around 64 RUB for USD). Basically sanctions are a joke made for Biden to shout once before American public attention shifts to Amber Heard trial or some other spectacle of the day. [1] https://www.reuters.com/business/finance/russian-central-bank-lowers-key-rate-14-flags-more-cuts-2022-04-29/ https://www.reuters.com/business/finance/russian-central-ban...
      - TAKEMYMONEY 4y ago
        If you read your article you'll learn they are cutting the interest rate back because of sanctions (to mitigate the effects), and inflation is still soaring. 20% is not sustainable, analysts have seen this coming as Russia tries to avoid a recession, in fact the drop by 300 bps was larger than predicted.
      - KptMarchewa 4y ago
        >Ruble is already stronger than before war This is completely irrelevant if you can't sell it for USD.
        lotusmars 4y ago
        Where do you get this? You can buy USD officially at most banks. Tinkoff for example sells it for 67, which is once again even lower than before war.
- leros 4y ago
  It sounds like Russia might get declared a terrorist state soon. I assume that changes things.
  - castorp 4y ago
    > It sounds like Russia might get declared a terrorist state soon. Lithuania has apparently already done that.
  - moistly 4y ago
    As it should be. https://www.dailymail.co.uk/news/article-10797707/Russian-brags-using-FSB-torture-method-slicing-open-Ukrainians-fingers-toes-penis.html https://www.dailymail.co.uk/news/article-10797707/Russian-br...
throwaway290 4y ago
IANAL but Russia is legal to do business with with exception of certain corporate entities and individuals. There's a deny-list, not an allow-list. Unfortunately, since the latest war the deny-list has grown substantially (making it a bit difficult to ensure you aren't accidentally servicing someone involved with a sanctioned entity), combined with political pressure this prompted some businesses to go an extra mile and cease operations in Russia completely.
- mc32 4y ago
  Russia has uniformed soldiers in there conducting war -illegally, if wars are other than illegal, or at least not sanctioned by the UN and also committing war crimes. But I don’t think it’s terrorism. Terrorism usually has a few criteria: not a regular army, and typically don’t use heavy military equipment but rely on guerrilla tactics and aim to terrorize because they are incapable of taking over a territory —because of a lack in numbers for control. They would also qualify if they “export” terror by training, providing comfort and logistics to terrors groups. Maybe the latter applies more than the former. Though a few other countries could easily be labeled as such too.
  - trasz 4y ago
    According to Russia it’s a “SVO”, not a war. Which means they are not soldiers. Ukraine keeps treating them in a humane way, but technically they could be just shot on sight. Russia wouldn’t care anyway, they don’t even bother to pick up corpses.
  - maxlamb 4y ago
    There’s plenty of evidence though that the Russian army is seeking to terrorize civilians, including bombing hospitals / schools and leaving mines and booby trapping homes of civilians, specifically because they are having trouble taking over the territory. It would be weird to me that a military unit can do what terrorists do and not be labeled that way just because they are officially part of an army and have modern equipment. That’s not something a “normal” army does to protect its territory. https://ctmirror.org/2022/05/16/designate-russia-a-state-sponsor-of-terrorism/ https://ctmirror.org/2022/05/16/designate-russia-a-state-spo...
sega_sai 4y ago
I think the problem is that they may not be allowed to bring the money outside Russia, as there are now capital controls on foreign currency. That's why there a few foreign factories, like Renault who seemed to have "sold" them for like 1 ruble.
- Aissen 4y ago
  For context, Renault sold its majority stake in AvtoVAZ (Lada, 45k employees) today for 1 ruble to the Russian government, with the option to buy-back for the next 6 years: https://www.lemonde.fr/en/economy/article/2022/05/16/french-carmaker-renault-sells-russian-assets-to-moscow_5983662_19.html https://www.lemonde.fr/en/economy/article/2022/05/16/french-...
bell-cot 4y ago
Legally? I'm sure there are a fair number of ways. For those who don't recall when Pepsi (as in "Pepsi Cola") had the 6th largest navy in the world: https://www.warhistoryonline.com/instant-articles/pepsi-once-had-the-6th-largest-navy-in-the-world.html https://www.warhistoryonline.com/instant-articles/pepsi-once... But if you're running a huge consumer-brand corporation in the social media age, with the great majority of your sales in places where Russia's recent actions are very unpopular, then "could we legally continue...?" is not basis for your decision.
- jhbadger 4y ago
  I used to love that story (about Pepsi's navy), but it actually doesn't seem to be true, unfortunately. There was a deal in place, but it never happened thanks to the 1991 breakup of the USSR. And even if it had, the small number of ships involved wouldn't even be close to the 6th largest fleet. https://melmagazine.com/en-us/story/did-pepsi-have-one-of-the-worlds-largest-navies-no-but-the-truth-is-mind-boggling https://melmagazine.com/en-us/story/did-pepsi-have-one-of-th...
rabite 4y ago
They won't be able to sell them at all. Putin has already said that any companies that leave Russian markets as a result of the current conflict will have all their assets nationalized. This is what happened to McDonalds in the Donbass -- they're still operating and called "DonMaks". The experience is extremely similar to a normal McDonalds. The only thing that is obviously different is the fries. https://www.instagram.com/p/BLkrs5FBkct/ https://www.instagram.com/p/BLkrs5FBkct/ https://www.instagram.com/p/BSQzA_dhatu/ https://www.instagram.com/p/BSQzA_dhatu/ https://i.insider.com/58dd477677bb70f13a8b4c89?width=1190 https://i.insider.com/58dd477677bb70f13a8b4c89?width=1190
- antifa 4y ago
  What about the fries is different?
  - rabite 4y ago
    They're just normal fries, made fresh from potatoes. McDonalds fries are a result of a process of many steps.
lotusmars 4y ago
Russian social media are full of winking posts hinting that McDonald's will sell operations to a Russian company which it will still profit from "behind the scenes" (via offshore proxy or some other indirect way). They also hint that this will pave the way for other Western companies currently in limbo: split ownership between controllable proxy and Russian owner. And at the same time shout in Bloomberg how much you condemn Russian invasion to pacify Western public. Can anyone confirm if it's possible? I hope it's Russian desinformation again, but I fear it's possible looking at how "well" Western "sanctions" work (Moscow feels great, ruble is much stronger than even pre-war).
- A4ET8a8uTh0 4y ago
  Can't confirm and anyone who can, will not. Sanctions evasion is something OFAC frowns upon and comes down on rather heavily. Just few weeks ago banks that were 'offering options' to customers were smacked down[1]: "The US Department of the Treasury in a statement said it put sanctions on Russian commercial bank Transkapitalbank, whose representatives it said serve several banks in Asia, including in China, and the Middle East, and have suggested options to evade international sanctions." So.. yeah. It is possible ( even with total embargo it can happen as NK has shown ), but it comes with risk. If it will be done, it will be done very quietly with as few people knowing as possible. [1]https://www.aljazeera.com/economy/2022/4/20/new-us-sanctions-hit-russian-bank-oligarchs-crypto-miner https://www.aljazeera.com/economy/2022/4/20/new-us-sanctions...
- ogurechny 4y ago
  It's just one of the possibilities. It's not like corporations aren't full of “government relations” staff whose job is inventing creative names for bribing officials, and creative methods of doing so. Especially in “interesting” countries where it's easy to have an excuse that “everyone does that”. There is technology that can be important for military industry; no doubt it is going to be tightly controlled. There are people who decided it was unacceptable to work in Russia; it was their choice. However, these corporations are not people, nor they are important in the arms race. If we skip the fact that Central Bank severed everyone's ability to do business to control the money flow out of the country, corporations that left Russia made statements about leaving it for the media picture. And flashy media picture is once again really important to hide the elephant in the room — what really powers Russian economy, and how. It's not McDonalds.

I'm not sure who downvoted you. It is a good question. McDonald's and other consumer goods type companies are not sanctioned, so the company can sell its assets. For that matter they could continue to operate as normal in Russia if they choose.

boole1854 4y ago
I'm not sure they really could easily continue to operate as normal. Their business units in Russia get paid by consumers in rubles, but due to the financial sanctions, they can no longer convert rubles to US dollars [1]. From the point of view of their non-Russian shareholders, this effectively means all that money is inaccessible. This would result in complications in reporting the revenue on their income statement. Plausibly (I am not an expert), this would mean they can't even recognize the revenue at all. At minimum, it becomes an open question whether or not the revenue will ever benefit the corporation or if it will be 'trapped' perpetually. [1] This is my understanding. If someone knows better, please post. One source that goes into some detail about the current situation is: https://www.washingtonpost.com/business/energy/how-war-and-sanctions-make-the-ruble-harder-to-trade/2022/04/11/8d267832-b9a9-11ec-a92d-c763de818c21_story.html https://www.washingtonpost.com/business/energy/how-war-and-s...
- chupasaurus 4y ago
  You're right, currently you can't get your revenue outside unless you're down to use a scheme involving exchange for trades inside Russia, move them outside and turn back to money. I've diagonally read the article linked and it depicts everything correctly.
  - selimthegrim 4y ago
    Diagonally?
    - yznovyak 4y ago
      "To read diagonally" is a Russian idiom meaning "to skim-read".
    - ilammy 4y ago
      In Russian "to read diagonally" means "to skim" in English. Like, you don't read left to right, top to bottom, but straight from one corner to the other.
      - kergonath 4y ago
        In French as well, FWIW.
        number6 4y ago
        French is now in bed with russian? Mont dioaux ;)
        chupasaurus 4y ago
        In 19th century, almost every Russian either spoke French fluently, was a priest or couldn't read.
        sorokod 4y ago
        Tolstoy’s “War and Peace” is about 2% French (~40 pages), the language of the Russian aristocracy at the time
        kergonath 4y ago
        France and Russia have been frenemies for a couple of centuries now :)
  - yardstick 4y ago
    Finally a use for Bitcoin?
    - chupasaurus 4y ago
      Only if there is someone who'd like to sell in rubles.
- KptMarchewa 4y ago
  Not sanctions, but Russian regulation. From your link: >The Bank of Russia more than doubled the benchmark interest rate to 20%, a 19-year high, on Feb. 28 and also imposed capital controls, including a ban on foreigners’ selling of securities. Nabiullina said decisions to suspend some regulatory requirements amounted to a capital boost for banks equivalent to 900 billion rubles ($8.7 billion). Putin banned all Russian residents from transferring foreign currency abroad, hardening capital controls.
  - lotusmars 4y ago
    Interest rate is already back to 14%[1]. Russian economy recovered super fast. Ruble is already stronger than before war (around 64 RUB for USD). Basically sanctions are a joke made for Biden to shout once before American public attention shifts to Amber Heard trial or some other spectacle of the day. [1] https://www.reuters.com/business/finance/russian-central-bank-lowers-key-rate-14-flags-more-cuts-2022-04-29/ https://www.reuters.com/business/finance/russian-central-ban...
    - TAKEMYMONEY 4y ago
      If you read your article you'll learn they are cutting the interest rate back because of sanctions (to mitigate the effects), and inflation is still soaring. 20% is not sustainable, analysts have seen this coming as Russia tries to avoid a recession, in fact the drop by 300 bps was larger than predicted.
    - KptMarchewa 4y ago
      >Ruble is already stronger than before war This is completely irrelevant if you can't sell it for USD.
      - lotusmars 4y ago
        Where do you get this? You can buy USD officially at most banks. Tinkoff for example sells it for 67, which is once again even lower than before war.
leros 4y ago
It sounds like Russia might get declared a terrorist state soon. I assume that changes things.
- castorp 4y ago
  > It sounds like Russia might get declared a terrorist state soon. Lithuania has apparently already done that.
- moistly 4y ago
  As it should be. https://www.dailymail.co.uk/news/article-10797707/Russian-brags-using-FSB-torture-method-slicing-open-Ukrainians-fingers-toes-penis.html https://www.dailymail.co.uk/news/article-10797707/Russian-br...

throwaway290 4y ago

IANAL but Russia is legal to do business with with exception of certain corporate entities and individuals. There's a deny-list, not an allow-list. Unfortunately, since the latest war the deny-list has grown substantially (making it a bit difficult to ensure you aren't accidentally servicing someone involved with a sanctioned entity), combined with political pressure this prompted some businesses to go an extra mile and cease operations in Russia completely.

mc32 4y ago
Russia has uniformed soldiers in there conducting war -illegally, if wars are other than illegal, or at least not sanctioned by the UN and also committing war crimes. But I don’t think it’s terrorism. Terrorism usually has a few criteria: not a regular army, and typically don’t use heavy military equipment but rely on guerrilla tactics and aim to terrorize because they are incapable of taking over a territory —because of a lack in numbers for control. They would also qualify if they “export” terror by training, providing comfort and logistics to terrors groups. Maybe the latter applies more than the former. Though a few other countries could easily be labeled as such too.
- trasz 4y ago
  According to Russia it’s a “SVO”, not a war. Which means they are not soldiers. Ukraine keeps treating them in a humane way, but technically they could be just shot on sight. Russia wouldn’t care anyway, they don’t even bother to pick up corpses.
- maxlamb 4y ago
  There’s plenty of evidence though that the Russian army is seeking to terrorize civilians, including bombing hospitals / schools and leaving mines and booby trapping homes of civilians, specifically because they are having trouble taking over the territory. It would be weird to me that a military unit can do what terrorists do and not be labeled that way just because they are officially part of an army and have modern equipment. That’s not something a “normal” army does to protect its territory. https://ctmirror.org/2022/05/16/designate-russia-a-state-sponsor-of-terrorism/ https://ctmirror.org/2022/05/16/designate-russia-a-state-spo...

sega_sai 4y ago

I think the problem is that they may not be allowed to bring the money outside Russia, as there are now capital controls on foreign currency. That's why there a few foreign factories, like Renault who seemed to have "sold" them for like 1 ruble.

Aissen 4y ago
For context, Renault sold its majority stake in AvtoVAZ (Lada, 45k employees) today for 1 ruble to the Russian government, with the option to buy-back for the next 6 years: https://www.lemonde.fr/en/economy/article/2022/05/16/french-carmaker-renault-sells-russian-assets-to-moscow_5983662_19.html https://www.lemonde.fr/en/economy/article/2022/05/16/french-...

bell-cot 4y ago

Legally? I'm sure there are a fair number of ways. For those who don't recall when Pepsi (as in "Pepsi Cola") had the 6th largest navy in the world: https://www.warhistoryonline.com/instant-articles/pepsi-once-had-the-6th-largest-navy-in-the-world.html https://www.warhistoryonline.com/instant-articles/pepsi-once... But if you're running a huge consumer-brand corporation in the social media age, with the great majority of your sales in places where Russia's recent actions are very unpopular, then "could we legally continue...?" is not basis for your decision.

jhbadger 4y ago
I used to love that story (about Pepsi's navy), but it actually doesn't seem to be true, unfortunately. There was a deal in place, but it never happened thanks to the 1991 breakup of the USSR. And even if it had, the small number of ships involved wouldn't even be close to the 6th largest fleet. https://melmagazine.com/en-us/story/did-pepsi-have-one-of-the-worlds-largest-navies-no-but-the-truth-is-mind-boggling https://melmagazine.com/en-us/story/did-pepsi-have-one-of-th...

rabite 4y ago

They won't be able to sell them at all. Putin has already said that any companies that leave Russian markets as a result of the current conflict will have all their assets nationalized. This is what happened to McDonalds in the Donbass -- they're still operating and called "DonMaks". The experience is extremely similar to a normal McDonalds. The only thing that is obviously different is the fries. https://www.instagram.com/p/BLkrs5FBkct/ https://www.instagram.com/p/BLkrs5FBkct/ https://www.instagram.com/p/BSQzA_dhatu/ https://www.instagram.com/p/BSQzA_dhatu/ https://i.insider.com/58dd477677bb70f13a8b4c89?width=1190 https://i.insider.com/58dd477677bb70f13a8b4c89?width=1190

antifa 4y ago
What about the fries is different?
- rabite 4y ago
  They're just normal fries, made fresh from potatoes. McDonalds fries are a result of a process of many steps.

lotusmars 4y ago

Russian social media are full of winking posts hinting that McDonald's will sell operations to a Russian company which it will still profit from "behind the scenes" (via offshore proxy or some other indirect way). They also hint that this will pave the way for other Western companies currently in limbo: split ownership between controllable proxy and Russian owner. And at the same time shout in Bloomberg how much you condemn Russian invasion to pacify Western public. Can anyone confirm if it's possible? I hope it's Russian desinformation again, but I fear it's possible looking at how "well" Western "sanctions" work (Moscow feels great, ruble is much stronger than even pre-war).

A4ET8a8uTh0 4y ago
Can't confirm and anyone who can, will not. Sanctions evasion is something OFAC frowns upon and comes down on rather heavily. Just few weeks ago banks that were 'offering options' to customers were smacked down[1]: "The US Department of the Treasury in a statement said it put sanctions on Russian commercial bank Transkapitalbank, whose representatives it said serve several banks in Asia, including in China, and the Middle East, and have suggested options to evade international sanctions." So.. yeah. It is possible ( even with total embargo it can happen as NK has shown ), but it comes with risk. If it will be done, it will be done very quietly with as few people knowing as possible. [1]https://www.aljazeera.com/economy/2022/4/20/new-us-sanctions-hit-russian-bank-oligarchs-crypto-miner https://www.aljazeera.com/economy/2022/4/20/new-us-sanctions...
ogurechny 4y ago
It's just one of the possibilities. It's not like corporations aren't full of “government relations” staff whose job is inventing creative names for bribing officials, and creative methods of doing so. Especially in “interesting” countries where it's easy to have an excuse that “everyone does that”. There is technology that can be important for military industry; no doubt it is going to be tightly controlled. There are people who decided it was unacceptable to work in Russia; it was their choice. However, these corporations are not people, nor they are important in the arms race. If we skip the fact that Central Bank severed everyone's ability to do business to control the money flow out of the country, corporations that left Russia made statements about leaving it for the media picture. And flashy media picture is once again really important to hide the elephant in the room — what really powers Russian economy, and how. It's not McDonalds.