Anyone looking for proof that private property is unsafe in Vladimir Putin’s Russian Federation must look no further than the dust-up over Russia’s largest prepared food company, Glavprodukt.
Confiscation, Kremlin-Style
The Kremlin seized the company, placing it under “temporary management” in October 2024.
The exact reason for this move is not clear. In some accounts, the government cited the need for “food security” associated with the war in Ukraine. Others point to charges that the company’s owner, Leonid Smirnov, illegally moved funds out of Russia. Still other accounts allude to cronyism, as the company’s new manager is closely connected with Alexander Tkachev, Russia’s agriculture minister from 2015 to 2018. He also owns Tkachev Agrocomplex, the sole purveyor of food to the Russian Army. A 2014 article in the Financial Times referred to Tkachev as one of Vladimir Putin’s “most loyal lieutenants.”
Regardless of the reason, the action fits into a recent pattern. Since the beginning of the war in Ukraine, the Russian government has taken over the assets of several other foreign companies doing business in Russia. The French yogurt maker Danone (which manufactures and distributes Dannon yogurt in the U.S.) and the Danish brewer Carlsberg have both suffered the seizure of their Russian assets, which were sold for pennies on the dollar to Russian corporations picked by the government. Likewise, two European utilities—Finland’s Fortum and Germany’s Uniper—are also under temporary management by government-approved agents.
Too Successful to be Private Property
Most readers have likely never heard of Glavprodukt, but it is Russia’s largest canned food producer. The New York Post calls it “the Campbell’s of Russia.” Its five hundred products include canned meat and fish, stews, puddings, vegetables, fruits, condensed milk, pâtés, sauces, olives and cabbage rolls. It is based in Moscow and operates three factories employing about a thousand workers.
Unlike most U.S. prepared foods giants, Glavprodukt is relatively new, founded in 1999.
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Many articles describing the dispute make much of the fact that Glavprodukt is U.S.-owned. Glavprodukt is owned by the Universal Beverage Company (UBC). The company’s website is vestigial, showing only a logo, a phone number, an e-mail address and an address in Beverly Hills, California. The site lists four company contacts, all with the same name: Leonid Smirnov.
Rags to Riches?
At first glance, Mr. Smirnov looks like the hero of a transnational “Horatio Alger story.” Detailed information is hard to obtain, at least in part because a more infamous man by the same name stole bomb grade nuclear materials in 1992. It is a story that only makes sense in the chaos of Russia following the fall of the Soviet Union in 1991.
All sources agree that Mr. Smirnov came to the United States as a Soviet refugee in the seventies. He settled near Los Angeles, where he made some money in real estate. He saw the opportunities presented by the rise of Boris Yeltsin. Badly in need of hard currency, the new Russian Federation was very friendly to foreigners with money to invest.
After the seizure of Glavprodukt’s assets, Mr. Smirnov told this version of his story to the Russian-language business site RBC.
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“I worked in Russia for a long time under Yeltsin. When it all started, when money was invested in this company in 1999, it was very welcome at all levels—everyone was happy that American investments were coming. We were a major investor in the Oryol region, we built enterprises, brands, distribution. The company is famous, I have devoted my whole life to it.”
Changing Objectives, Changing Attitudes
When Putin came to power, Glavprodukt continued to grow. However, after the invasion of Ukraine, the situation changed. Mr. Smirnov described the situation in the Washington Times.
“Mr. Putin declared America an “unfriendly” country shortly after the invasion. Under his decree, any foreign-owned business from an “unfriendly” nation can be subject to government control… Targeted companies are left with no options. To exit Russia, they can either walk away (like McDonald’s did) or sell their business with a government-mandated 60% discount from appraised value with a 35% ‘exit tax’ on top, leaving just 5% to take home. Neither option is acceptable to the rational investor.”
The situation became even more complicated in March, when Russian prosecutors accused Mr. Smirnov of illegally withdrawing roughly 1.38 billion rubles (about $15.5 million) over the past two years. No evidence has been made public, nor does any trial for that offence appear to be coming soon. Of course, this would not be the first time the Russian authorities devised charges to persuade innocent men to give up a claim to property that the government wanted to confiscate.
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The Appearance of Injustice
Nonetheless, Mr. Smirnov tried using the Russian courts to regain his company. On July 14, 2025, he lost the most recent decision when a Moscow court ruled that all assets were to be handed over to the Russian government.
Newsweek quoted a statement from Mr. Smirnov protesting his innocence and that of his company.
“Universal Beverage Company categorically denies any wrongdoing in relation to the distribution of dividends from its Russian subsidiaries comprising Glavprodukt.”
Not a Purely Russian Problem
This saga should be a cautionary tale for anyone, no matter how well-heeled, who considers doing business with Russia. The history of the world’s business is replete with situations in which an authoritarian government invited American and European business leaders to help them build their economies, only to deprive them of their just rewards when they completed the project.
Vladimir Putin may be providing a veneer of legality to his confiscations. However, those with assets who oppose the regime can never be secure. Their properties can easily end up in the hands of those who will use them to further the interests of the Russian state and its war on Ukraine.
Photo Credit: © Ruslan – stock.adobe.com
The post Caught in the Crossfire: Lessons from Russia’s Glavprodukt Business Saga appeared first on Return to Order.
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Author: Edwin Benson
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