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Putin critic warns Kremlin will seize more assets to punish foes

Marton Eder, Bloomberg News on

Published in News & Features

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.

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

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