Britain’s fag-makers are not typically the go-to place for a lesson on corporate ethics. So here’s a puzzler: how come British American Tobacco and Imperial Brands have announced plans to cut all ties with Russia, while the likes of Unilever and Reckitt are merely shrinking operations there?
Imps, which employs 1,000 people in Russia, has just “begun negotiations with a local third party” over the transfer of its “assets and operations” in the country: the ones making West gaspers from its Volograd factory. It follows the lead of BAT, admittedly after a screeching U-turn. Having initially said it would be staying in Russia, BAT declared on Friday that it would be making a similar “rapid” transfer of the business. Like Imps, it’ll continue to pay its 2,500 local workers until a deal is done. As the Lucky Strike and Dunhill maker put it: “Upon completion, BAT will no longer have a presence in Russia.”
True, their exits may prove messy. But the intention is clear. Contrast Unilever, home apparently of “the highest standards of corporate behaviour”. Yes, as chief executive Alan Jope has said, Unilever has “suspended all imports and exports of our products into and out of Russia”, stopped advertising and capex spend and pledged to make no profit in the country. But the employer of 3,000 local people is still banging on about “serving Russian citizens with essential products like soap and soup”, with its factories churning out Domestos, Dove and Wall’s ice cream — sold under the local brand Inmarko.
Reckitt, whose purpose is “to protect, heal and nurture”, has taken a similar stance. Its boss Laxman Narasimhan says the company, which employs 1,300 workers in the country, continues to meet “the needs of ordinary Russians who rely on our basic hygiene and health products”, spanning Clearasil, Dettol and Durex. Consumer goods rivals Nestlé and Procter & Gamble have equally half-baked positions. Nestlé, with 7,000 people in Russia, is doing its “utmost to ensure a reliable supply of safe and essential food products for the local people”.
Yes, these companies are not paying tobacco duties to Putin. And they say their “priority” is to protect local staff. New Russian laws broadly give multinationals three options: continue to operate; transfer ownership; or close operations. The last could imperil local managers — Russia says it would constitute a criminal bankruptcy, leaving bosses open to prosecution. There are other issues, too. Factories will wind down anyway, as sanctions make it harder to source raw materials, so why provoke Putin into action against local workers? There’s also a risk of intellectual property theft, while companies need time to disentangle computer systems in Russia from the rest of their corporate network.
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Even so, staying put sends the wrong message. Taxes from western companies fund Putin’s assault on Ukraine, even if on nothing like the scale of buying Russian oil and gas. And while it’s tough on ordinary Russians, many of whom bravely oppose the war, the absence of favourite brands is one way of driving home Putin’s pariah status. No, the Russian people won’t revolt over the disappearance of Domestos. But the wholesale exit of western brands will encourage them to question what they’re being told by Putin’s propaganda machine. Besides, if even Big Tobacco gets it, what’s so different about Unilever and Reckitt?
Taking a gamble
If only Allwyn could live up to its name. Alllose would be a more accurate moniker for any National Lottery operator, always allowing for the odd freak whose balls come up trumps. Still, at least it’s a new name to reckon with, now Allwyn’s finally ended Camelot’s monopoly on the big draw.
It’s overdue. Camelot has been running the lottery since its 1994 launch. And while it’s raised more than £45 billion for 660,000 good causes, it’s also made a packet: 1 per cent of sales retained as profit, a decent sum on last year’s £8.37 billion revenues. It’s the sort of predictable earnings stream that saw Ontario Teachers’ Pension Plan buy the business for £389 million in 2010 — a move that doesn’t look quite so clever now. Plus earnings that delivered regular director bonuses, including a ridiculous farewell £6 million to Dame Dianne Thompson, who left Camelot in 2014 but has since been receiving her final long-term incentive plan in £800,000 annual instalments.
Still, picking Allwyn is not without its risks. The outfit, known until recently as Sazka, is owned by Czech billionaire Karel Komarek — a fellow whose past exploits include signing a joint venture in 2013 with the Kremlin’s Gazprom to build a gas storage facility in Moravia. The Gambling Commission insists that none of the bidders were “impacted by sanctions related to the conflict in Ukraine”. But you hope it’s accurately got Komarek’s number.
Cleverly, Allwyn distanced itself from him, peopling its management and advisory board with the likes of Sir Keith Mills, an architect of the London 2012 Olympics, and ex-Sainsbury’s boss Justin King. Still, Camelot hasn’t given up yet. It says it’ll review the verdict “before deciding on our next steps”. Its lawyers will be particularly alive to any hint of a commission balls-up.
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Mission statement
Rousing stuff from Astarta, a Ukrainian agri-group listed in Warsaw spanning sugar, milk and soya beans. Having secured extra financing for the “spring planting” season, its latest update underlines a commitment to “maintaining food security and rebuilding the national economy”. The sign-off? Well, not your typical corporate speak: “We believe in the army of Ukraine! We believe in Ukraine! We believe in our Victory!”
