Russian security forces come up with new ideological grounds for seizing assets

Russia’s nationalization wave — which accelerated following the invasion of Ukraine — continues apace. Canned food magnate Leonid Smirnov is the latest to have fallen out of favor, but what makes this case different are allegations of military sabotage.

• Leonid Smirnov was born in the USSR but emigrated to the USA in the 1970s and went on to study marketing at Columbia. In 1990 he returned to Russia and founded Glavprodukt via the Universal Beverage Company. “Smirnov cleverly exploits the fond memories that poor Russians have of Soviet-era food products. The company’s very name, writ large on every can, is associated with the abbreviations of that era. Advertizing is stylized as agit-prop and commercials recall shortages, with shop assistants promising to hide canned goods under the counter for their friends. Glavprodukt’s information partner is the Trud newspaper, largely read by pensioners,” Forbes Russia wroteabout the businessman in the mid 2000s.
• Over time the company, which was spending millions each year on marketing, became a leading player in the Russian canned food market: it now accounts for about 10% of stewed meat, 7% of condensed milk and 3% of tinned fish. 
• In late 2024, a decree issued by President Vladimir Putin placed Glavprodukt’s assets under temporary state control. Now the authorities want to nationalize the lot, according to a lawsuit filed by the general prosecutor’s office. In essence, it alleges that Smirnov, “out of a sense of revenge” started to sabotage the work of the company’s new administrators, including by disrupting food supplies to the front and urging employees not to cooperate or provide information to state officials. 
• Prosecutors also allege that the company sought to move its profit abroad, trying to skirt Russia’s counter-sanctions. According to the Prosecutor General, this represents joining “the illegal actions of U.S. state organs aimed at handing Russia a strategic defeat.” Therefore, “the only way to protect state interests and stop the illegal actions of the defendants” is to seize Smirnov’s assets. 
• Smirnov, who has American citizenship, described the cash transfers as normal dividend payments, on which all required taxes were paid. Moreover, the relevant Russian authorities knew about the transactions, he said. As for obstructing state management, his instructions to staff were connected to the behavior of a few state consultants allegedly working for a company which was seeking to take over Glavprodukt.
• Smirnov is hoping the rapprochement between Moscow and Washington will help him out in the conflict, or at least secure compensation. He said he believes that at a time of thawing Trans-Atlantic relations, all issues with his company “should be resolved not through law enforcement and the courts, but on a different political plane.” Even if his assets are nationalized, the ex-owner could still get compensation via an agreement, as happened with Danone, which was handed to the family of Chechen leader Ramzan Kadyrov.

Why the world should care

Russian security forces continue to come up with ideological grounds for seizing assets. Charges of aiding “the aggressive policy of western states” also cropped up in the lawsuit seeking the nationalization of Moscow’s Domodedovo airport — but claims over sabotaging logistics supplies to the front are new.