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‘Digging In’: Koch Bros., also Oilfield & Agribusiness Giants Remaining in Russia (Halliburton, Baker Hughes, Schlumberger, Cargill, Archer Daniels Midland, Bayer)
[LATimes] The “hall of shame,” as Yale business professor Jeffrey Sonnenfeld and his colleague Steven Tian have labeled the roster of corporate responses to Russia’s invasion of Ukraine they’re maintaining, includes 24 companies that are “digging in, defying demands for exit or reduction of activities.”The list also includes 80 companies that are scaling back some but not all activities or deferring new investments. Among the consumer companies identified as “digging in” are the fast-food chain Subway; Reebok; Bacardi (maker of its eponymous rum, Dewar’s Scotch and Grey Goose vodka, among other brands); the electronics companies LG and Asus; and Natura, owner of Avon cosmetics. Some of those firms and others that have scaled back operations have asserted that they’re remaining in place to avoid harming their innocent Russian employees. That’s the argument made by Dave Robertson, president and chief operating officer of Koch Industries, which is known for its support of far-right politicians in the U.S. Robertson said that the Koch subsidiary Guardian Industries employs 600 workers at two glass factories in Russia, which will continue to operate. “We will not walk away from our employees there or hand over these manufacturing facilities to the Russian government so it can operate and benefit from them,” he said Wednesday in a statement. “Doing so would only put our employees there at greater risk and do more harm than good.” Others say business models that involve licensing or franchise agreements preclude them from promptly or fully shutting down. That’s the story told by Subway, which says it has about 450 restaurants in Russia, “all independently owned and operated by local franchisees,” Subway says. “We don’t directly control these independent franchisees and their restaurants, and have limited insight into their day-to-day operations.” The change in the political atmosphere in Russia under Putin seems to have caught Western corporate managements by surprise. That shouldn’t have happened. It was always clear that Russia’s post-Soviet economic and political landscape was unstable at best. Mikhail Gorbachev’s perestroika, or restructuring, yielded to financial lawlessness and the rise of a privileged class of oligarchs resembling organized crime capos. Corporate managements didn’t know how to react when Putin’s behavior began to inject even worse instability into the Russian environment. “Putin had his pouts and tantrums, but they thought they could just glide through them, that they wouldn’t be a serious threat,” Sonnenfeld says. “The spirit of perestroika was wildly optimistic,” he says. “These brands — Levi Strauss and Pepsi and McDonald’s — thought they were representing Western values and a spirit of freedom and global harmony. They were blind to the signals because of perestroika ideology and the religion of the free market.” The harvest has been a sudden rush to the exits that could mean the loss of billions of dollars in long-term investments. The most notable companies identified by Sonnenfeld as “digging in” are three major oil-field services firms, all based in Houston: Halliburton, Baker Hughes and Schlumberger. Russia’s oil and gas industry isn’t currently subject to the full panoply of international sanctions, but it’s dependent on those firms for drilling and production. The U.S. has banned imports of Russian petroleum products and forbidden U.S. companies to make new investments in the Russian industry; the European Union has also banned new capital investments. Of the three, only Halliburton has commented publicly about the sanctions. The comments came during a meeting with securities analysts on Jan. 20, when Chief Executive Jeffrey Allen Miller was asked whether the prospect of sanctions would affect “the trajectory of the business in Russia.” Miller replied, “These are things we’ve seen and done before. Always unfortunate in so many ways for so many people. But from a business perspective, we’ve managed these sorts of things up and down for, I hate to say, nearly 100 years. So these are the kinds of things that we would manage through.” Posted by: Chusoger Thrusosh4089 2022-03-22 |
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