Putin takes control of Japan Tobacco’s Russian assets

Russian President Vladimir Putin signed a decree on Thursday, November 5, putting the Russian assets of Japan Tobacco International (JTI) under "temporary administration." JTI's stakes in four Russian businesses now go to a local company called Industrial Assets. JTI is the international arm of Japan Tobacco and calls itself Russia's largest tobacco maker by sales volume. It is now the latest foreign company to lose control of its Russian operations as the Kremlin widens its crackdown. Interfax reported that JTI is the first global tobacco giant to have its Russian assets handed to a local manager.reuters.com+1

What the decree covers

The decree, published on Russia's official legal information portal, names four companies: JTI Donskoy Tabak, Petro, JTI Yelets and Kres Neva. The factories are in St. Petersburg, Rostov-on-Don, the Lipetsk region and the Leningrad region. Euronews reported that they employ about 4,000 people and account for roughly 40% of the Russian cigarette market. Under this system, the foreign owner keeps formal ownership but in practice loses the right to run the business.interfax.com+2

The decree gave no reason for the move. Several Russian companies are registered under the name Industrial Assets. The Moscow Times reported that the one taking over JTI's business was registered on September 16 and is owned by Sergei Dremov, a former officer of the FSB security service in the Kursk region. JTI's Russian unit said it had reviewed the decree, was analyzing the situation and was putting its employees and partners first.themoscowtimes.com+2

A widening campaign

In September, Moscow placed the assets of Nestlé, the German wholesaler Metro and the French retailer Auchan under temporary management. In October it took over four more European companies, citing Europe's support for Ukraine and what it called illegal expropriations of Russian property. Russia created the mechanism in 2023 as a countermeasure to Western sanctions. Putin has said control could go back to the former owners if conditions improve.nippon.com+2

Deteriorating ties with Tokyo

The seizure comes as relations between Japan and Russia get worse. Last month, the FSB arrested Yuki Imai, a journalist with the Hokkaido Shimbun newspaper, on espionage allegations, which Japan denies. Also in October, Russia's Foreign Ministry called a Japanese company's drone sale to Ukraine a hostile step and warned of a harsh response.macaubusiness.com+1

JTI has operated in Russia since 1999 with brands including Winston, Camel and Sobranie. It chose to stay after many Western companies left. Earlier, its parent company's chief executive had described the Russian business as continuing "business as usual" while the company worked to comply with sanctions.themoscowtimes.com