The appalling greed of French companies over Russia

TheThe contrast was striking. On Wednesday March 23rd a video address by the Ukrainian president Volodymyr Zelensky to France's National Assembly and Senate produced a very rare moment of national unity. Yet within a few hours his appeals, in particular those aimed at large French companies with a presence in Russia, had been met with a chorus of hypocrisy, even outright rejection. First came the emotion, then the disillusionment...

During his brief video appearance the Ukrainian president delivered a strong message, in particular, to French groups involved in the Russian market. Asking for “more weapons” from European nations for Ukraine to defend itself against the Russian invader and also more “economic sanctions”, the Ukrainian head of state referred by name to French groups “Auchan, Leroy Merlin, Renault and others “, urging them to leave Russia and to “stop being sponsors of its war machine”. President Zelensky then added: “They must stop funding the murder of children and women, rape. Values are worth more than profits.”

Both before and after the Ukrainian president's words Members of Parliament and Senators of every political persuasion all stood to greet their guest with long applause.

But it did not take long before this mood of unity towards the president of an invaded and ravaged country began to fall apart. One after another, many large French groups – those who had been mentioned, plus others – let it be known that they had no intention of going along with the Ukrainian president's appeal. Others gave the appearance of responding to it, but came up with nitpicking reasons why, after all, they would remain in Russia. There are other French groups, too, who have not been talked about in this context and who so far also seem to have very little intention of abandoning their Russian operations.

The most remarkable point is that, in most cases, the French government itself scarcely seems inclined to push the companies concerned to respond to Ukraine's appeal. This absence of action is then picked up on by the big companies, who all use the same argument: given that Emmanuel Macron is not himself asking us to pack up and leave, why would we do so?

One leading French conglomerate, which is controlled by the Mulliez family and combines supermarket group Auchan, DIY chain Leroy Merlin and sports equipment retailer Decathlon, immediately let it be known that it would not be abandoning its activities in Russia, and that its 400 or so shops there, employing close to 45,000 staff, would remain open.

Though a Leroy Merlin store was bombed in a suburb of Kyiv, and though the group's Ukrainian employees have started a petition asking management to end their Russian operations, even publicising it on Leroy-Merlin's Instagram account in Ukraine (see below), the Mulliez conglomerate ignored their pleas. Bombs may be falling on Ukraine but this very wealthy family does not want to do anything that will limit its huge profits. It has become the fourth richest family in France with assets worth a breathtaking 48 billion euros, and clearly pursues only one course of action, even during a war: business as usual!

It should be pointed out that, as greedy as the Mulliez group might be, they employ an argument which bears closer examination. Just after the Ukrainian president addressed the French Parliament, Adeo, the holding company that oversees Leroy Merlin, made a statement to the news agency AFP. It said that the reason it was not closing its shops in Russia was that it did not want to expose its business there to any potential risk of expropriation by the Putin regime. But it was also because the French government was not asking it to. Indeed, Adeo made the point that the group was applying “all the sanctions implemented by European Union countries” and was respecting “all the directives from the French government”.

In an interview on Wednesday March 23rd with the regional newspaper La Voix du Nord, Adeo's managing director Philippe Zimmermann was even more explicit about this. He said that if President Emmanuel Macron asked Leroy Merlin to leave Russia then “that would be different”. This was a clear indication that the group had not received any such request.

The Adeo executive's comments are corroborated by other information. According to La Voix du Nord the chair of the Auchan supermarket group, Yves Claude, met Emmanuel Macron at the Élysée on March 4th along with around 15 other business leaders. No instructions were apparently given about whether they should maintain or halt their Russian activities. That was also the message given by finance minister Bruno Le Maire a few days later, on March 7th, on the 24-hours news channel BFMTV. “Private companies are free to take their decisions. We ask just one thing of them and that's to apply the sanctions rigorously and strictly,” he said. In other words, he was not asking them to leave Russia.

There is no point beating around the bush: the greed of large French companies is feeding off the ambiguity of the French government. For further proof of this, one need only look at the case of car makers Renault.

On the evening of Wednesday March 23rd, a few hours after President Zelensky's address, the French manufacturer released a statement in which it announced that following a board meeting the company had decided to suspend immediately all “industrial activity at the Renault factory in Moscow”. But one quickly realised this was a hypocritical announcement because while Renault does make and sell vehicles under its own name in Russia - SUVs under the makes Duster, Kaptur, Arkana and Nissan Terrano – most of its sales are made through its subsidiary AVTOVAZ. Since 2016 it has owned a 69% stake in this firm, which is the market leader in Russia thanks to its Lada brand.
Yet in relation to this subsidiary Renault board has so far made no decision. After its broad meeting the parent company said that it was going to assess the “available options, taking into account the current environment, while acting responsibly towards its 45,000 employees in Russia”.

What Renault did not say, though all the board members know it, including the French state officials who sit on the board, is that this subsidiary AVTOVAZ is a joint venture bringing together the French manufacturer and the Russian firm Rostec. The latter is a giant of the Russian defence industry and is most notorious for its subsidiary Kalashnikov, which makes the well-known assault rifle the AK-47.

In other words, Renault is allied with a group at the heart of the Russian defence industry, a group which was created by the Kremlin and is run by Sergey Chemezov. He is close to Vladimir Putin with whom he spent time when they were both working for the KGB in Dresden in the former East Germany. How can the Renault group seek to dupe public opinion by failing to mention that its business ally, a key part of Putin's industrial-military complex, has blood on its hands as a result of Russia's attack on Ukraine and also because of its role in earlier conflicts? Renault's actions are even more unacceptable given that Rostec was one of the leading Russian groups most heavily sanctioned by the international community after the 2014 Russian invasion of the Crimea.

Once again the Renault group's stance is explained by the French government's own confused position. The French state is the leading shareholder in the car maker with a stake of 15.1% - virtually on a par with its commercial partner Nissan (15%) - and can thus have a major say in its strategic decisions.

Similarly, the board of directors which took these decisions contains a number of state representatives, chief among them Martin Vial, the director of the very powerful Agence des Participations de l’État, the body which oversees the French state's stakes in companies. He is also the husband of the Armed Forces minister Florence Parly. In brief, the U-turns and contradictions within Renault are fed by those within the state itself.

So what do the representatives of the French state who sit on Renault's board think about their alliance with a pariah company such as Rostec? One would love to hear their explanations, but we know that, in the hushed environs of the board meetings, the state representatives happily receive their directors' fees but never report on what they do or how they vote. So we will not know how Martin Vial or the other state representatives on the Renault board voted on Wednesday. But at the same time there is no real mystery here: we know that this small band of directors all approved forging an alliance with Rostec, which is the military branch of the Kremlin.

It is therefore possible to understand the Ukrainian anger aimed at Renault, and in particular the anger of Ukraine's foreign minister Dmytro Kuleba. On the evening of Wednesday March 23rd he sent a Tweet (see below) calling for a global “boycott” of the French car maker because it “refuses to pull out of Russia”.

With the French state setting a bad example, many French groups embarked on a kind of contest to show the greatest hypocrisy, suggesting on the one hand that they were responding to the Ukrainian president's appeal, while on the other hand taking measures to safeguard their positions in Russia and, at the same time, their profits in this country.

In this grim contest the top prize undoubtedly goes to French oil firm TotalEnergies which, on Tuesday March 22nd, announced that it was stopping the purchase of all Russian oil and oil products before the end of 2022 because of the worsening conflict in Ukraine ... but not of gas, which is its main activity there.

The energy company issued a statement explaining its reasoning. It said: “In accordance with the European Union's decisions to maintain at this stage Russian gas supplies, TotalEnergies continues to supply Europe with liquefied natural gas from the Yamal LNG plant within the framework of long-term contracts that it must honour as long as Europe's governments consider that Russian gas is necessary. Contrary to oil, it is apparent that Europe's gas logistics capacities make it difficult to refrain from importing Russian gas in the next two to three years without impacting the continent's energy supply.

“However, given the worsening situation in Ukraine and the existence of alternative sources for supplying Europe, TotalEnergies has unilaterally decided to no longer enter into or renew contracts to purchase Russian oil and petroleum products, in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 at the latest.”

So the argument being employed is always the same: why would we leave, why would we respond to Volodymyr Zelensky's appeal, when the French and European authorities are not asking us to?

And behind this two-faced approach and its convoluted arguments there are also all the many groups who are rarely spoken about and who remain discreet so they can carry on doing business in Russia. There are so many of them that they cannot all be listed here.

In this group there is, for example, Société Générale. While many foreign banks have chosen to leave Russia this French establishment is remaining there for the time being, through its subsidiary Rosbank, which has 12,000 staff. The food company Danone is doing the same, as are a host of agro-industrial groups.

There should be no mistake as to the moral of this story. One cannot expect large companies to show ethical behaviour. Some would have you believe they can, but that is nothing more than a tall tale because their world is governed by the implacable law of money. In The Communist Manifesto, Karl Marx said about the bourgeois then, and unfortunately it still applies today, that they drown everything in the “icy water of egotistical calculation”. And in the business world this selfishness operates even in the barbarous times in which we live, as long as the public authorities fail to establish control by setting out what is in the general interest and inviting everyone – including businesses – to unite around it.

Yet as we can see, rather than urging businesses to show solidarity with the Ukrainian people, rather than setting out guidelines with which everyone could comply in order to isolate the Putin regime as much as possible, the French government has let French groups adopt the approach of 'every man for himself'. And we can also see the damning outcome: contrary to Volodymyr Zelensky's hopes, it seems that “values are worth less than profits”.

Ultimately, however, the large French companies face losing twice over. Firstly, because they risk paying a heavy price for the economic collapse that Russia looks as if it might experience: and secondly because they will long carry with them the shame of having supported the economy of a murderous regime...

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• The original French version of this op-ed can can be found here.

English version by Michael Streeter