Russian President Vladimir Putin puts the country’s largest car group, Rolf, under state management.

Today, Russian President Vladimir Putin has placed the country’s largest automobile group, Rolf, under temporary state management. Rolf is owned by a Cyprus-based company and was founded by Russian businessman Sergei Petrov. The decision has been justified in the name of “economic expedience,” but the company’s founder claims that this action will be permanent and tarnish Russia’s image as a safe destination for investors.

This incident is the latest example of private assets being confiscated by the Russian government. It stands out as the first time a high-level Russian company has had its control seized by the Kremlin. Until now, seizures have primarily targeted foreign companies, many of which were involved in a US-led embargo in response to the invasion of Ukraine.

Rolf, one of the first car dealerships to emerge after the collapse of the Soviet Union, has a portfolio that includes over 30 car brands spread across 59 showrooms. According to Interfax, these outlets collectively sold about 100,000 cars in 2022.

A spokesperson for the Kremlin told Reuters, “This is solely related to economic expedience and compliance with the current legislation of the Russian Federation, given the known international economic situation that surrounds us now.” The government added that this temporary management change would have no impact on Rolf’s operations. However, Petrov has called this action a blow to Russia’s attractiveness for foreign investment. He questioned whether Asian companies would be willing to risk purchasing stakes in the country’s assets if such actions continued.

Petrov has accused the Russian government of asset redistribution within the country. He has not been favored by the Russian authorities. Currently residing in Austria, he was part of a small group of business leaders who signed a letter condemning Putin in 2014 in response to the annexation of Crimea.

In 2019, Rolf was accused of buying shares at an inflated price and moving assets out of the country, accusations that Petrov denies. A warrant was issued for his arrest, and one of the top executives of the automobile group was sentenced to eight and a half years in prison for his alleged involvement in the case.