Chechen leader’s “dear” nephew became head of seized Danone subsidiary in Russia

MOSCOW, July 19 (Reuters) – A nephew of Chechen leader Ramzan Kadyrov has been appointed as the new head of Russia’s Danone subsidiary ( DANO.PA ) after the Kremlin ordered the state to take temporary control of the French yogurt maker’s Russian operations .

Since Russia invaded Ukraine in 2022, many Western companies have fled Russia and some assets have been placed under state management, with close allies of President Vladimir Putin given day-to-day control.

According to a decree signed by Putin on Sunday, the state had taken control of Danone’s Russian subsidiary along with a brewery owned by beer company Carlsberg ( CARLb.CO ).

Yakub Zakriev, 32, a deputy prime minister of Chechnya and the republic’s agriculture minister, took the position of general director of Danone Russia on Tuesday, Interfax’s SPARK database of company disclosure documents in Russia showed.

The appointment was confirmed by Akhmed Dudayev, Chechnya’s Minister of National Policy, Foreign Relations and Information.

“Electing him as general manager of Danone Russia shows that representatives of the team of the Chechen president and Hero of Russia Ramzan Akhmatovich Kadyrov are talented and successful leaders,” Dudayev said on his Telegram messaging app.

“He has a huge experience of working in the most responsible positions,” Dudayev said.

There was no comment from Zakriev. Danone declined to comment.

Kadyrov, a close ally of Putin, has referred to Zakriev in social media as his “dear nephew”. Zakriev is the son of Zulai, one of Kadyrov’s older sisters, and studied economics at Moscow State University.

The appointment is another indicator of the scale of the transfer of assets going on in Russia since the invasion of Ukraine. It also indicates the influence of Kadyrov, the son of former Chechen president Akhmad Kadyrov who was assassinated in a bombing in Grozny in 2004.

Many investors say that a new generation of tycoons is being created in Russia. Loyalty to the Kremlin is rewarded with effective control over assets that accumulate significant cash flow and have great growth potential.

TRANSFER OF ASSETS

Russia says it has been forced to act to ensure operations continue at key businesses whose Western owners have declared they are quitting. But it can be difficult for investors to regain control of their assets.

“It can be difficult to wrest control from newly appointed new management, especially as we see in these cases, where those appointed are well-connected and powerful local players,” said Chris Weafer, managing director of Macro-Advisory Ltd.

“We will undoubtedly see more of these actions. But there should be, at least for now, no threat to Western companies that have either said they intend to stay in Russia or have not specifically said they want to exit. “

For Danone, the appointment of Kadyrov’s nephew marks the end of a 30-year Russian experiment. Paris-based Danone opened a dairy shop near Red Square a year after the fall of the Soviet Union in 1991.

As the chaos of the 1990s calmed down, Russia and the former Soviet Union were perceived as a large potential market.

Danone sought alliances with large local players in the boom years, eventually gaining at least a fifth of Russia’s dairy market until the war intervened.

Danone said in October it would relinquish control of its dairy food business in Russia, which could have led to a write-down of up to 1 billion euros ($1.12 billion).

A source familiar with the matter said that Danone was closely monitoring the situation in Russia, focusing on the safety of its 7,500 employees across 13 factories. Danone is considering legal options following the Russian seizure of its assets, the source added.

PUTIN ALLIES

The invasion of Ukraine prompted the US and its allies to impose tough sanctions on Russia and its business elite, steps Putin cast as a declaration of economic war.

Putin has said that Russia does not need the West, will depend on its own vast resources and pivots to China and other powers.

His allies Yuri and Mikhail Kovalchuk have signaled their interest in Carlsberg’s Baltika subsidiary, which is based in St. Petersburg, the Financial Times reported on Tuesday.

Taimuraz Bolloev, who led Baltika from 1991 to 2004, was named president, Baltika said.

Carlsberg said the implications of the development were unclear, saying it no longer retained control over Baltika’s management or operations following the presidential decree.

“The change in the management of Baltika Breweries has consequently been made without the knowledge or approval of the Carlsberg Group,” it said.

Reporting by Guy Faulconbridge in Moscow, Alexander Marrow in London, Dominique Vidalon in Paris, Lidia Kelly in Melbourne and Shubhendu Deshmukh in Bengaluru; Editing by Stephen Coates and Angus MacSwan

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