‘You may have read misinformation in the news today about an important topic – our exit from Russia,’ board member Stacey Tank wrote to her colleagues at Heineken on Tuesday. She was referring to the coverage that followed an exposé published earlier that day by Follow the Money, showing that Heineken reneged on its promise to stop investing in Russia.

“We know you may receive questions about this from family and friends,’ Tank wrote. ‘Please feel free to share this information as it may be helpful.’

She then continued explaining the actual situation. ‘We are very concerned with recent news publications incorrectly stating: “Heineken has broken its promise to leave Russia.” This is categorically untrue and misleading. We’re working hard to transfer our business to a viable buyer in very challenging circumstances and we expect at a significant financial loss to the company, amounting to around 300M euros. In the meantime, our local colleagues at Heineken Russia are doing what they can to keep the business going, after fully delisting the Heineken brand, to avoid nationalisation and ensure their livelihoods are not at risk.’

Website offline

Heineken reported something similar to the press. Yesterday, the AD, the newspaper with the widest reach in the Netherlands, headlined: ‘Heineken: ‘We did exit Russia.’’

However: Follow the Money did not question Heineken’s exit; we wrote that the group reneged on its promise to stop investing in Russia. This could be gathered from Heineken’s own website, www.heinekenrussia.ru, which was full of posts about record sales and the launch of 61 new products in Russia. That website is now completely offline ‘due to technical maintenance’.

Heineken announced to Dutch national newscaster NOS and others: ‘Heineken Russia is completely separate and finances its own operational expenses. No money moves between Heineken and our local business in Russia, and we receive no dividends, fees or royalties. We aim to complete the sale in the first half of 2023.’

The brewery presents its Russian subsidiary as an independent company, which it isn’t.

Based on its most recent annual report (2022), Heineken Russia is still a wholly owned subsidiary. The current director in Russia, Greek Georgios Polymenakos, reports to Roland Pirmez, Heineken’s director of the Eastern Europe region. And according to a Heineken manager, approval from headquarters is required for any major innovation, especially for the introduction of a new product.

The brewery stresses that there are no more money flows between Russia and the rest of the corporation. However, it is common for multinationals to locally and self-finance their subsidiaries as much as possible – and that has no bearing on control.

The fact is that Heineken owns 100 per cent of the Russian subsidiary, and that this subsidiary is ‘consolidated’, as the annual report shows. That means that the parent company can exercise control over the subsidiary. It also means that the subsidiary’s results are included in the parent’s results. If Heineken makes a profit in Russia, it counts towards the parent company’s profit.

Putin’s war chest

By announcing it would no longer invest, Heineken gave the impression in March last year that it was winding down in Russia and responding to calls not to pad Vladimir Putin’s war chest with tax revenues.

Heineken did the opposite: partly due to the introduction of new brands, the company sold 72 million litres more beer and soft drinks last year and hired 243 new employees in Russia.

Moreover, Heineken is trying to take advantage of the international sanctions against Russia by offering alternatives to products no longer available in that country. Heineken launched substitutes in Russia for its own beer label, Carlsberg, Budweiser and Guinness, and for the Coca-Cola and Pepsi soft drink brands.

In earlier reports following the invasion of Ukraine, Heineken referred to its 1,800 staff in Russia. ‘Supporting our employees and their families is a key principle as we define the path forward,’ the company wrote.

Heineken and other companies often play the employee card when their presence in a country is questioned. But less than two years ago, top executive Dolf van den Brink announced 8,000 job cuts worldwide, almost 10 per cent of the workforce. That reorganisation is one of the reasons for the record 2.8 billion euro profit that Heineken announced last week.

Hearing

Outrage was expressed in The Hague regarding Heineken’s Russian investments.

Foreign Affairs Minister Wopke Hoekstra considers the matter ‘morally inexplicable’. ‘We hear the most appalling stories about what Russia is doing,’ he told Dutch newspaper De Telegraaf. ‘I find it very difficult to comprehend that people then act like it’s business as usual.’

Finance Minister Sigrid Kaag told RTL Nieuws that she was ‘astonished’. ‘I think Heineken should provide a good explanation for that.’

Prime Minister Mark Rutte was asked about the investments in a debate in the Dutch House of Representatives last night. He referred to the brewery’s press release. ‘I am now quoting a statement from Heineken. It indicates that they are not making a profit in Russia and that they want to end operations as soon as possible. That’s all I know.’ He said he had no indications that Heineken was ‘doing anything improper’ in Russia.

‘This is unacceptable,’ MP Tom van der Lee (GroenLinks) tweeted earlier. He announced he would hold Heineken to account in a parliamentary hearing, which is supposed to take place after next week’s recess.

Translation: Delia Burggraaf