The Russian government has significantly increased the pace of domestic asset seizures in 2024, targeting companies in strategic sectors like grain trading, transportation, and warehousing. Recent court rulings have transferred ownership of major assets, including a leading grain trader, Moscow’s Domodedovo Airport, and a network of strategic warehouses, to the state. This trend raises concerns for businesses with foreign connections operating within Russia.
Foreign companies have faced the risk of asset seizure since the onset of the Ukraine conflict in February 2022. However, under the guise of strategic stability and national security, Moscow has broadened its scope to include domestic assets. Court documents and sources reveal that grains trading house Rodnie Polya, Domodedovo Airport, and all 16 warehouses owned by Raven Russia, the country’s largest warehouse operator, were placed under state management on January 31st. The General Prosecutor’s office has not responded to requests for comment on these cases.
Legal experts suggest a potential surge in cases based on foreign ownership, particularly in strategic economic sectors. The evolving landscape signifies a shift in the operational environment for businesses with non-Russian ties. “This signals a warning to owners with dual citizenship, especially from ‘unfriendly’ countries,” commented Artem Zhavoronkov, a partner at Russian law firm Nordic Star. “The choice is clear: renounce foreign citizenship or risk losing your business in Russia.” The Kremlin typically designates countries that have imposed sanctions on Russia due to the Ukraine conflict as “unfriendly.”
Domodedovo Airport, one of the assets recently seized by the Russian government.
Rodnie Polya, which commanded 14% of Russia’s grain exports just a year ago, has experienced a significant decline in market share. Owner Petr Khodykin recently relinquished his St Kitts and Nevis passport and UAE residency permit in an attempt to retain control of his business, according to a source close to the company. However, this effort appears to have been unsuccessful. Russian tax filings indicate that Rodnie Polya’s assets were transferred to Rosimushchestvo, the federal property management agency, on February 5th. Rodnie Polya stated that its legal team is exploring various defense strategies, including an appeal to the constitutional court. The company emphasized that Khodykin is seeking a fair trial and aims to highlight the distinction between his case and instances where the General Prosecutor’s actions genuinely protect state interests and security.
Grain silos, symbolic of the strategic importance of the grain industry in Russia.
This wave of asset seizures represents a broader trend. Prosecutor General Igor Krasnov reported in March 2024 that over 1 trillion roubles ($10.34 billion) worth of strategic enterprises and assets, deemed vital for Russia’s economic and defense development, were transferred to state ownership through court rulings in 2023. These actions underscore the increasing challenges and uncertainties faced by businesses with foreign connections operating within the Russian market. The escalating focus on domestic asset seizures raises significant questions about the future investment climate and the security of property rights in Russia. The implications of these developments are likely to be felt across various sectors and could have long-term consequences for the Russian economy.
