THE BELL WEEKLY: Sabotage claims fuel nationalization drive

Hello! This week our main story is about how claims of military sabotage are fuelling the latest high-profile business nationalization. We also cover a sexual assault scandal involving popular rapper Oxxxymiron, and signs the Russian economy could be slowing down too fast.

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.

Renowned opposition rapper accused in grooming-and-assault scandal

Russia’s #MeToo movement resurfaced last week, after journalist Nastya Krasilnikov released an investigation into popular rapper Oxxxymiron, in which he was accused of grooming underage girls and sexually assaulting them once they had turned 16. For more than a decade, the performer has been not only a prominent figure in independent music, but also a voice for opposition-minded Russians. Now he has fallen silent, while more and more girls come forward with stories of being harassed and groomed by older men.

In a podcast investigation three girls accused Miron Fedorov (the rapper’s real name) of grooming them when they were under the age of 16 in incidents that took place in the late 2000s and early 2010s. 

• Oxxxymiron is one of the most famous contemporary Russian musicians. He has released three studio albums and three mixtapes which were well received by critics. After Russia’s invasion of Ukraine he spoke out against the war and gave several concerts in support of Ukraine. After that, Fedorov ran into difficulties with the Russian authorities: first they listed him as a “foreign agent” (a repressive status that the Kremlin uses to mute its critics), then he was charged with inciting separatism and placed on the wanted list. 
• The first woman, Vera Markovich, said that when she was 15 and Fedorov was 23 he became her legal guardian in Britain and started helping with her studies. She alleged that while she was 15, he first tried to persuade her to have sex with him, and then when she turned 16 he raped her, forcing himself on her after a party. Several years later, when they were both living in Russia, Markovich briefly worked as Oxxxymiron’s manager and had a relationship with him.
• The second woman, Vika Kuchak, said she got to know the rapper online when she was 13. Despite a 10-year age gap, Fedorov started actively chatting with her, she said. When she was 16, Kuchak went to one of his concerts after which she alleges he raped her. “Grooming a child for three years, then having sex with her – that’s rape,” she explained. After the podcast was released she lodged a complaint against Fedorov with the authorities.
• The third alleged victim, Vika Mikhailova, got to know the musician when she was 15 and he was 23. Fedorov asked her to send intimate photos and repeatedly encouraged her to have sex with him, she said. 
• The allegations have been heavily discussed and kick-started a movement of young women coming forward to speak of how they experienced or witnessed violence or harassment from older men while they were teenagers, including famous journalist Anna Narinskaya.
• Fedorov himself has not commented on the allegations. On his most recent Instagram post there were hundreds of angry comments demanding an explanation.

Why the world should care

Since the start of the war many cultural figures who spoke out against the invasion were adopted as kindred spirits by the Russian opposition — both those who left Russia and those who remained but refused to support the Kremlin. But these allegations suggest some of these celebrities turned out to have skeletons in their closets.

Russia’s economy risk freezing over

Russian economic activity is showing a slowdown not only in manufacturing, but also in the service sector — early signs of an impending hit to growth after 2024’s robust expansion of 4.1%. 

• The monthly PMI index — a closely watched indicator of business activity — recorded a slowdown in both the manufacturing and service sectors. On an index where scores above 50 indicate expansion and those below signify contraction, the service sector index for February was down to its lowest level in six months at 50.5. The reading for industry fell from 53.1 points in January to 50.2 points in February — just above the level which represents decline.
• Russian analysts point out that the slowdown is linked to high interest rates, still at a two-decade high of 21%. At the same time, an economic downturn in itself is unlikely. 
• The central bank is using high borrowing costs to try to cool the economy, which has been overheating amid the war on Ukraine. But in recent months a real risk of an “overcooling” has emerged. This requires a more cautious monetary policy, analysts at Raiffeisenbank warned, who pointed out that at the end of January, output excluding mechanical engineering products “nosedived” significantly below the long-term trend, falling to the levels of early 2023.

Why the world should care

While it is premature to draw conclusions about the Russian economy based on the results of the first two months of 2025, there is no doubt that growth will be far lower than last year. Read our article on what the possible consequences of that will be.