In brief

• Russian units of Western and Japanese firms placed under temporary state-appointed management are sending billions of rubles to the army, Bloomberg reports.
• Most of the money goes to the Kremlin-backed People's Front, which buys drones, vehicles and communications gear for troops.
• The reported donations total about 7.1 billion rubles, roughly $86.6 million, while parent companies say they lost oversight of their Russian units.

Money flows to the People's Front

Bloomberg reports that Russian units of foreign firms, transferred to temporary management by decree of Vladimir Putin, are sending large sums to support the army fighting in Ukraine. Most of the money goes to the People's Front, a Kremlin-backed organization. Its campaign "Everything for Victory!" uses the funds to buy drones, vehicles, communications equipment and electronic warfare systems for Russian troops (Иностранные компании, перешедшие под временное управление в России, перечисляют миллиарды на войну с Украиной — Bloomberg – Novaya Gazeta Europe) (Захваченные Россией иностранные компании перечисляют миллиарды рублей на войну против Украины — Bloomberg – The Insider).

How the mechanism works

In 2023 Putin signed a decree creating a temporary external management regime. It allows the state to take control of local assets of foreign companies while formal ownership stays with the parent firm. The tool was introduced as a response to the seizure of Russian assets in European countries. Since then, managers appointed by the authorities have replaced the previous leadership at several subsidiaries (Bloomberg: иностранные компании, переданные в России во временное управление, жертвуют миллиарды рублей на войну – Meduza).

Amounts reported

According to Bloomberg's tally, the figures reported so far include:

• AkzoNobel (paints), Russian unit: about 2 billion rubles
• DKC (electrical equipment), Russian unit: 1 billion rubles
• Can-Pack (packaging), Russian unit: 1.5 billion rubles (Seized Western Businesses Donate $86M to Russian War Effort – The Moscow Times)
• AB InBev Efes (brewing), Russian joint venture: 1 billion rubles
• Metro (wholesale), Russian unit: 1 billion rubles (Иностранные компании, переданные под временное управление, передают миллиарды рублей на нужды ... – echofm.online)
• Rockwool (insulation), former Russian unit: 600 million rubles

Taken together, the sums reported by Bloomberg come to about 7.1 billion rubles, or roughly $86.6 million.

Parent companies say they lost control

AkzoNobel told Bloomberg that it had lost all visibility into its Russian operations and learned of the donations from the media. AB InBev Efes and DKC Europe did not comment to Bloomberg. Several of these assets are run by managers linked to businessman Timur Amirov, who has taken control of several of these assets.

Context

The payments are small against state spending on the war, which is expected to exceed 17 trillion rubles this year, according to Bloomberg. For the managers of the Russian units, however, the donations are a way to show loyalty to the authorities.