Page 14 - bne magazine February 2024_20240206

14 I Companies & Markets bne February 2024
Kremlin grabs control of Russia's best car dealership Rolf
bne IntelliNews
Russian President Vladimir Putin signed off on a decree transferring the ownership of Russia’s most successful Rolf car dealership to the temporary management of the Federal Property Management Agency on December 21.
The decision includes the legal entity Rolf and shares owned by the Cypriot company Delance Limited, which controls the business founded by the former taxi driver turned billionaire Sergei Petrov.
Founded in the wild 1990s. Rolf was the most successful car dealership in Russia and emblematic of the transformation from the wild capitalism of the first decade following the collapse of the Soviet Union, to a modern market-based economy.
However, Petrov became the victim of forced takeover of his attractive business and was forced to flee the country to avoid arrest. He was eventually forced out of the company in 2021 which he sold to rival KlyuchAvto at a knockdown price.
Petrov told bne IntelliNews in a lengthy interview over lunch at Russia’s top hotel, the Ritz Carlton in 2011, that he began his career as the driver for the head of Mitsubishi Russia, who he persuaded to give him a soft loan to start the business.
At the time the Russian market was flooded by the import of foreign cars, many of them stolen in countries like Germany and driven back to Russia where they sold for a huge profit. However, Petrov set up the first legal distribution of quality cars like Audis that came complete with service contacts and all the customer services to be found in the west. As order was slowly imposed on the Russian car market and incomes began to rise Rolf flourished making Petrov a billionaire.
"We earned enormous money [in the early 1990s]," Petrov told bne IntelliNews. "After Yeltsin introduced trade exemptions for charities as a way of funding their work, we were approached by one and imported the cars under this scheme without duties. We had to pay a third of the duties and were making about $20,000 per sale. It was a lot for a small company like ours." Petrov chose the name Rolf as it is not a name Russians use and emphasised the company’s western outlook. By the same token leading juice producer in the 1990s Wimm-Bill- Dann named its flagship brand J-7, as there is no “J” in the Cyrillic alphabet.
Putin’s decree to transfer the ownership to the Federal Property Management Agency is “unprecedented and raises questions about the motivations behind such a decision,” The Bell reported on December 22.
www.bne.eu
Rolf is now on the same list that includes numerous nationalised foreign companies from "unfriendly" countries, such as Uniper, Fortum, Danone, and Carlsberg.
Petrov protested Putin’s decision, calling it "legal chaos." He emphasised concerns about the impact on potential investors, stating, "I don't know how investors in Asia, whom we are now waiting for, will invest in Russia, or how our investors will continue to invest and think long-term. In my opinion, the state is shooting itself in the foot." Authorities may
have reasons to be displeased with Rolf. After Rolf was well established, Petrov stepped back from operational control and entered politics as a Duma deputy from 2007 to 2015. However, as an altruist, genuinely concerned with improving the lives of average Russians, Petrov made himself unpopular by supporting things like the 2011 white ribbon protests and abstained from voting on the decision to annex the Crimea. While never named as an opposition politician, his presence in the Duma was uncomfortable for the so-called systemic opposition. He was also accused of financing jailed opposition blogger and anti-corruption activist Alexei Navalny.
Rolf’s problems started in 2019 when it was raided in connection with a criminal case involving the alleged transfer of RUB4bn abroad using forged documents. Petrov is still facing an arrest warrant in Russia, sought refuge in Austria, which has refused to extradite him. Despite these challenges, Rolf remained a market leader in terms of revenue in 2021, earning RUB232bn ($2.5bn), actively expanding its dealer network for Chinese brands.
The recent decree adds another layer to the ongoing legal saga surrounding Rolf. The company's top manager, Anatoly Kairo, who did not leave Russia in time, received an almost maximum 8.5-year prison sentence in September for his alleged involvement in withdrawing funds abroad.
The founder of Russia's best car dealership Rolf is a former taxi driver turned billionaire, but was forced into exile after he was accused of money laundering as part of a corporate takeover bid. Now the Kremlin has seized control of the $2.5bn company. / bne IntelliNews