In a shocking turn of events, two employees from Carlsberg's Russian brewery, Baltika Breweries, have been detained by Russian authorities over allegations of fraud. The Danish brewer stated that the allegations were completely false, and condemned the Russian government's attempts to justify their illegal takeover of their business in Russia. CEO Jacob Aarup-Andersen had previously stated that Russia had essentially stolen their business, leading Carlsberg to sever all ties with its Russian operations and refuse to enter into any deals with the Russian government.

Two Carlsberg executives have been detained in Russia, @FT reports.

And that's after the authorities seized Carlsberg's Russian assets.

It's a grim picture for Western businesses still operating in Russia.

— Elisabeth Braw (@elisabethbraw) November 16, 2023

Carlsberg expressed outrage that the efforts of the Russian state to legitimize their seizure of assets have now resulted in innocent employees being targeted. Russian media reported that the Baltika employees were detained in St Petersburg, and requests for comment from the local police and Baltika went unanswered. This recent development highlights the challenges faced by Western companies trying to disentangle themselves from Russia. Executives at other firms attempting to exit the country have voiced concerns about the potential repercussions for their local staff.

Carlsberg's decision to scrap licenses allowing Baltika to produce, market, and sell their products demonstrates their firm stance in not legitimizing Moscow's seizure. However, Baltika is now suing Carlsberg in Russia for the right to continue using the trademarks. Prosecutors allege that Denis Sherstennikov and Anton Rogachevsky, Baltika's CEO and vice president, illegally transferred intellectual property rights to Carlsberg during the government takeover. Both Sherstennikov and Rogachevsky were detained on Wednesday, and Baltika successfully requested that court proceedings be held behind closed doors to protect trade secrets.

The charges of large-scale fraud could potentially carry a maximum sentence of 10 years in prison. Ian Massey, Head of Corporate Intelligence at risk consultancy S-RM, commented on the arrests, highlighting the limited options available for departing multinationals. Either they accept highly opaque processes and heavily discounted valuations to divest, or they navigate a challenging ongoing relationship with Russia, risking asset seizures, significant write-downs, and the inability to ensure the safety of their employees. The situation continues to unfold, with Carlsberg and Baltika facing a complex legal battle in Russia while denouncing the false allegations brought against their employees. The consequences of Moscow's takeover and the subsequent fallout for Western businesses operating in Russia remain uncertain.