Corporate complicity multinationals face scrutiny for funding Russian war economy after invasion of Ukraine

Multinational companies continue to confront growing criticism for their continued financial contributions to the Russian state more than three years after the invasion of Ukraine. A recent report by the Kyiv School of Economics and campaign group B4Ukraine reveals that international businesses operating within Russia paid at least 20 billion dollars in tax to the Russian government last year alone, raising the total figure since February 2022 to more than 60 billion dollars. According to the report, this collective sum is equivalent to nearly half of the projected Russian military budget for 2025, underscoring the direct impact of foreign business on the nation’s war economy.

AstraZeneca, the United Kingdom’s most valuable public company, has emerged as a prominent example. In the previous year, AstraZeneca paid 43 million dollars in profit tax to Russian authorities, ranking eighteenth among foreign entities. Other notable global giants in the top twenty tax contributors include Pepsico and LOréal. Despite significant pressure and the British government’s robust support for Ukraine, AstraZeneca has maintained its expansive operations and investments in Russia, justifying its presence by highlighting the critical importance of providing essential medicines to Russian patients. Company leadership emphasise their compliance with all applicable regulations and their intention to remain apolitical.

The report indicates that over half of the international companies tied to Russia at the start of 2022 have maintained their business in the country. Conversely, the remainder have announced complete shutdowns or reductions in activity. The tax contributions recorded by these lingering firms have increased, mirroring a steady rise in their combined revenues, which reached 201 billion dollars last year. Equally notable, net profits of international businesses in Russia hit a three-year peak at 19.5 billion dollars during 2024.

Not all multinational departures from Russia have been clear-cut. Inditex, the Spanish parent of Zara, for instance, injected fresh funds into its Russian subsidiary before orchestrating a sale to the Lebanese Daher family. Civil society groups have voiced scepticism regarding the genuineness of such divestments, raising questions about the facilitation of future market re-entry.

LOréal claims to have shuttered direct retail operations and cut most of its product lines in Russia, yet continues to support Russian employees and protect its assets. The company insists it has gone beyond the requirements posed by EU and UK sanctions. Meanwhile, Pepsico and other multinationals typically refrain from public comment on their ongoing involvement.

Some business leaders defend their decisions to retain a presence in Russia as matters of practicality. Sir Rocco Forte of Rocco Forte Hotels, who kept his St Petersburg ventures open after the 2022 invasion, argues that forced sales at dramatically reduced market values would ultimately benefit the Russian state or domestic buyers disproportionately. Often, western companies remaining in Russia cite strict compliance with sanctions and restrictions on capital extraction as justification.

The continued presence of foreign firms in Russia has sparked widespread criticism from advocacy groups, including B4Ukraine, who accuse such companies of prioritising profit over principle. While 82 per cent of foreign business revenues now originate from so-called unfriendly countries, this share has declined from 95 per cent in 2021, with countries aligned with Russia notably expanding their footprint. The sector breakdown places finance and payments as the leading contributors of profit tax, while the fast moving consumer goods segment stands out for its revenue performance.

The UK government asserts that sanctions have deprived Russia of hundreds of billions in funding, yet the reality of relentless foreign business activity suggests that multinational compliance with sanctions varies sharply by sector and geography. As the war in Ukraine continues, the tension between commercial imperatives and ethical responsibilities only grows sharper for western companies with stakes in Russia.