Ex-Carlsberg executives detained in Russia over fraud claims

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Russian authorities have arrested senior executives at Carlsberg’s seized subsidiary Baltika Breweries under criminal charges of fraud as the battle over the rights to the Danish brewer’s brand licences escalates.

The ministry of internal affairs raided Baltika’s St Petersburg office and arrested two executives for allegedly stealing Baltika’s intellectual property, weeks after the Danish brewer tried to block Baltika from selling its international brands such as Tuborg and Kronenbourg.

The raids come as Baltika Breweries has been placed under “temporary management” by Russian President Vladimir Putin, leaving Carlsberg with title to the shares but no operational control of its subsidiary.

Carlsberg said it was “heartbroken by the news of the arrest of two Baltika employees yesterday in Russia along with allegations against several others”.

“It is appalling that the efforts of the Russian state to justify their illegal takeover of our business in Russia has now evolved into targeting innocent employees,” a spokesperson said. Baltika declined to comment.

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The two managers that have been detained are former chief executive Denis Sherstennikov, who had stepped down from the Russian subsidiary following its seizure by the Kremlin, and Anton Rogachevsky, the company’s legal vice-president, according to state-run news agency Tass and the Vyborg Regional Court’s press service.

A St Petersburg court on Thursday ordered the two men be held in a pre-trial detention centre until December 30 and January 14 respectively, according to Tass. 

A third executive, Baltika’s former deputy legal director Elena Kuzmina, who has left Russia and joined Carlsberg as an employee, is also under investigation, according to the reports.

The executives are accused of securing the rights for Carlsberg to export Baltika’s Russian brands to Kazakhstan, Kyrgyzstan, Belarus and other countries in the region, depriving Baltika of access to its neighbouring markets.

Fontanka, the first Russian news outlet to report the arrests, said Russian authorities already had conducted multiple raids on Baltika in connection with the case, and were claiming Rbs295.6mn ($3.3mn) in damages from the alleged intellectual property rights infringements.

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“The allegations reported in Russian media are fake,” said the Carlsberg spokesperson. “Up until the introduction of external management by the Russian state, Baltika has acted in accordance with the law and the policies guiding all companies in the Carlsberg Group.”

“As Carlsberg, we will of course do what we can to help the employees under these difficult circumstances,” they added.

The arrests follow moves by Carlsberg to stop Baltika from selling its international brands in Russia and neighbouring countries.

After writing down the entire value of its Russian business last month, Carlsberg terminated the licence agreements that allow Baltika to sell brands such as Kronenbourg and Tuborg. 

The decision was a blow to Baltika’s future profitability — Carlsberg’s international brands make up approximately 40 per cent of the subsidiary’s value. 

Baltika has tried to prohibit Carlsberg from making changes to the trademarks and asked an arbitration court in St Petersburg to prohibit the Danish brewer from initiating legal proceedings against the company in a Danish court, according to court filings.

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“Those are our brands,” said Carlsberg’s chief executive Jacob Aarup-Andersen in an interview with the Financial Times before the arrests. “We have exercised our rights to call our licences and whatever reaction comes out of that from Russia, we’ll see.” Aarup-Andersen has accused Moscow of having “stolen” the group’s Russian assets.

News of the arrests was first reported in the Russian press on Wednesday evening shortly after Putin held a meeting with some of Russia’s leading businessmen and economic officials about the country’s investment climate.

On Thursday, Putin’s spokesman Dmitry Peskov said that Putin had discussed “possible steps to improve the investment attractiveness of our economy”. Peskov did not mention anything about the arrests.

Additional reporting by Max Seddon in London

Source: https://www.ft.com/content/145f2310-7222-4df9-9976-f268ed1f1eb2