Russian President Vladimir Putin placed the country’s largest automotive dealer group, Rolf, under temporary state management today. Rolf is owned by a Cyprus-based firm and was founded by Russian businessman Sergei Petrov. The decision has been justified on grounds of “economic expediency,” but the company’s founder asserts that the move will be permanent and tarnishes Russia’s image as a safe destination for investors.
Just the latest example of private assets being confiscated by the Russian government, the move stands out as the first time a high-profile Russian business has had control wrestled away from it by the Kremlin. Prior to this, the seizures primarily targeted foreign-owned enterprises, many of which were involved in a U.S.-led embargo in response to the invasion of Ukraine.
Rolf, one of the pioneering car dealerships to emerge after the collapse of the Soviet Union, boasts a portfolio encompassing more than 30 car brands across 59 showrooms. According to Interfax, these locations collectively sold approximately 100,000 cars in 2022.
Read: Floundering Car Sales Point To Badly Deteriorating Russian Economy
“This is solely linked to economic expediency and compliance with the current legislation of the Russian Federation and taking into account the known international economic situation that is around us now,” a Kremlin spokesperson told Reuters. The government added that the temporary management change would have no impact on Rolf’s operations.
However, Petrov called the move a blow to Russia’s attractiveness as a place for foreign investment. He questioned whether businesses from Asia would risk buying stakes in the country’s assets if moves like these continued.
“Temporary (management) means permanent,” Petrov said. “We knew all this already. Bankers have already told us — you will be put under external management.”
Petrov has accused the Russian government of engaging in asset redistribution within the country. Notably, he has not been in favor with the Russian authorities. Currently residing in Austria, he was among a small group of businessmen who signed a letter condemning Putin in 2014, in response to the annexation of the Crimean Peninsula.
In 2019, Rolf was accused of buying shares at an inflated price and moving assets out of the country, a charge Petrov denies. An arrest warrant was issued for the businessman, and one of the dealer group’s senior managers was sentenced to eight and a half years in prison for allegedly participating in the deal.
