 "Sergey Petrov")
By Marton Eder
Sergey Petrov could do nothing from his home in the outskirts of Vienna as Russian President Vladimir Putin moved to take over the car dealership he had founded and built.
Putin signed the decree in December transferring ownership of Rolf, Russia’s largest car dealership, from a Cyprus-registered entity controlled by Petrov’s family to the state property agency Rosimushchestvo for temporary management. Soon after, armed officers raided the firm’s headquarters to make sure the appointment of a new board went seamlessly, according to Petrov.
“It’s a kleptocracy,” Petrov said in an interview at his home in Austria, where he has resided permanently since at 2016. “There are no laws, only the selective application of justice.”
During Putin’s two-and-a-half decade rule, Russia has sought to build state-owned champions and at times used the criminal justice system to hand assets to Kremlin allies. That has accelerated after Russia invaded Ukraine, which caused a rupture in relations with the West and increased pressure on private businesses to publicly support the war.
Petrov’s family held Rolf via Delance Ltd., which was vulnerable to laws that allow Putin to seize the assets of some foreign companies because Cyprus is categorized by Russia as a so-called unfriendly country. Russian lawmakers have yet to ratify a treaty on mutual investment safeguards with Cyprus, hindering efforts for a legal remedy. Russia nationalized Rolf in February.
Petrov, a dual Russian-Austrian citizen, said his situation reflects a new normal in Russia, where Putin is increasingly comfortable using the justice system to meddle in business and reward loyalists. He said the harassment by prosecutors is politically motivated and due to his criticism of the Russian leader’s actions, such as when, while serving as a lawmaker in Russia’s parliament, he didn’t participate in a 2014 vote to annex Crimea. In 2011-2012, he also openly backed the biggest anti-government protests of Putin’s rule.
Russian authorities opened a criminal investigation into him in 2019, accusing him of illegally transferring money abroad. Petrov says the allegations are based on obscure regulations, and courts ignored substantial procedural shortfalls when giving one of his managers, a co-defendant in the case, a prison sentence of more than eight years.
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The Kremlin didn’t respond to a Bloomberg request for comment. Representatives from Rolf also didn’t respond when asked for comment.
Austria’s government has rejected an extradition request against Petrov, but a 2022 Russian civil verdict referencing the criminal case forced Rolf to transfer 20 billion rubles ($214 million) to the Russian government.
While an appeal was filed against the decision in Russia, Petrov said it was unlikely to succeed, and he’s hoping for compensation by following the blueprint of the now-defunct Yukos Oil Co., once the largest Russian oil and gas company. Two decades of legal battles handed former shareholders a $50 billion award over claims that Russia was politically motivated when it imposed several tax demands on Yukos Oil that ultimately led to bankruptcy. Russia has said it won’t pay.
His lawyers have filed a claim with the Human Rights Committee at the United Nations based on the International Covenant on Civil and Political Rights — a treaty that Russia has yet to pull out of. They are also assessing options for arbitration.
An agreement with prosecutors, as in the case of sanctioned billionaire Andrey Melnichenko who was allowed to keep some energy assets after his company agreed to contribute funding toward charity projects, is unlikely, according to Petrov.
For now, the company is operating with state overseers that are pressuring managers to stay on board, Petrov said. Already reeling from a sanctions-induced shift from selling western vehicles such as Porsche and Mercedes Benz to offering Chinese brands and used cars, he worries that things will head for the worse for Rolf.
Umar Kremlev, the head of the International Boxing Association and its Russian national organization, has been presented to the company as its future owner, Petrov said. Under Kremlev, the international boxing body was stripped of the right to run Olympic boxing tournaments in Tokyo in 2021 and Paris in 2024 over concerns about the group’s governance and accusations its Russian head had used violent and threatening language about Olympic committee personnel, according to the Associated Press.
Russia has become increasingly aggressive in seizing assets from local tycoons since the start of the Ukraine war. Prosecutors filed at least 55 cases seeking to nationalize assets since the start of Moscow’s invasion of Ukraine two years ago, according to research published in December by the RBC newspaper in Moscow. At times, those transfers occurred in violation of laws requiring an auction to dispose of state-held companies, Petrov said.
The Russian unit of food conglomerate Danone has been under a similar temporary management regime. A dairy company owned by a member of a management team linked to Putin-loyalist and Chechen leader Ramzan Kadyrov is slated to buy that asset, the Financial Times reported in February.
Other production plants have drifted into government oversight, including units of Carlsberg A/S and US-owned AgroTerra. In the car industry, a company linked to Rolf-competitor Avilon bought plants abandoned by Volkswagen AG and Hyundai Motor Co.
“They tried to buy in the cheapest way with the hope that they’ll find a way to make money from it,” Petrov said of the plant purchases. “It’s speculation.”
