The Ukrainian National Corruption Prevention Agency (NCPA) has accused US tobacco giant Philip Morris and Japan Tobacco of being “international sponsors of war” due to their continued operations in Russia. The Ukrainian government has expressed concern over these companies’ reluctance to exit the Russian market.
Philip Morris currently has two factories located in Russia’s Leningrad and Krasnodar regions. In 2019, the company’s trademarks held a market share of 30.1% in the country. With total investments exceeding $2 billion, Philip Morris has demonstrated confidence in Russia’s economic potential.
Similarly, Japan Tobacco holds a significant share of the Russian market, with 34.9%. The company is recognized as the largest investor and a leading taxpayer in Russia’s tobacco industry. Although Japan Tobacco has promised to halt new investments and marketing activities in Russia, it continues its manufacturing and sales operations in the country, according to the NCPA.
The NCPA has labeled these multinational tobacco companies as enemies of Ukraine, joining a list that includes Raiffeisen Bank International, Auchan, Metro, Procter & Gamble, Bonduelle, Leroy Merlin, and Xiaomi, among others. The Ukrainian government views their operations in Russia as detrimental to Ukraine’s interests and a hindrance to the resolution of the ongoing conflict between the two countries.
This accusation comes at a time when tensions between Ukraine and Russia are high, with the ongoing conflict in Eastern Ukraine and the annexation of Crimea in 2014. Ukraine is seeking support and solidarity from the international community against Russia’s actions. By labeling these companies as “sponsors of war,” the Ukrainian government is attempting to garner attention and apply pressure on them to exit the Russian market.
However, Philip Morris and Japan Tobacco have displayed their commitment to Russia’s market, citing its economic potential and the significant investments made in the country. These companies believe in the long-term benefits of operating in Russia and remain hesitant to withdraw.
The Ukrainian government’s stance raises questions about the role of multinational corporations in geopolitical conflicts. As entities with significant resources and influence, these companies are now being held accountable for their business decisions and the impact they have on the countries in which they operate.
It is yet to be seen how this accusation and increased scrutiny will affect Philip Morris and Japan Tobacco’s operations in Russia and their reputation globally. As the conflict between Ukraine and Russia continues, the pressure on multinational corporations operating in Russia may intensify, with potential consequences for their business strategies and relationships.