Russia has unleashed its war machine against the people of Ukraine. The international community has responded with sanctions. Russia is fighting a military war. The west is fighting an economic one. Both have consequences.
 
And it is important that people understand – and are willing to live with – those consequences. In recent days, a host of politicians have said that the nature of sanctions is to hurt Russia but not other counties. Unfortunately, sanctions do not work that way. It is impossible to impose serious sanctions that hurt only one side.
 
We are seeing it in relation to Aughinish Alumina’s extraction plant in Limerick. It is clearly a vitally important part of the local economy, providing steady employment to more than 400 people in an area of the country with a high unemployment rate. Plus, given its operations, it is strategically important to Europe’s aluminium supply.
 
However, the plant’s largest ultimate shareholder is Oleg Deripaska, one of a number of Russian billionaires sanctioned by the UK government last month as a result of their close ties to the Kremlin. Now he is in the sights of the EU.
 
To date, due to the complex ownership structure of the plant, it has not been impacted by international sanctions. Indeed, when tensions heightened in 2018, Deripaska sold down his majority stake in EN+ and left the boards of EN+ and Rusal in 2019, so that US sanctions also imposed on those companies in 2018 were lifted. Rusal owns the Aughinish plant.

This time, however, it is unlikely that such canny accounting techniques will be enough. Nor should it be.

Local politicians, including a number of junior ministers, have been at pains to highlight the gulf between Deripaska and the 400 people who work at the Limerick plant. But this misses the point. If we are serious about waging an economic war against Russia, we must be willing to make sacrifices.

EN+ has stated previously that the possibility of “carving out” Rusal’s international business, which includes Aughinish Alumina, was under discussion.

Aughinish is a major supplier to European industry and the company has told the government that further sanctions on its owners would do more damage to large companies in France and Germany than to Russia.

As I reported last week, the state is looking at several potential solutions. These include nationalising the plant. Such a move, while extremely controversial, would maintain employment at the Limerick facility and ensure the continued production of alumina at the plant.

The state considered nationalising the plant in 2018 when previous sanctions were imposed. Now this is back on the agenda. If it is to happen, the government won’t use words like nationalisation. Instead, they will talk about preserving a strategic national asset. But, in essence, it would amount to a nationalisation.

Other options under consideration involve a quickfire sale of the plant. The Irish Times reported yesterday that Swiss giant Glencore may take over Aughinish Alumina from the Russian parent. The paper reported that discussions are advancing rapidly amid pressure to cut the connection between Aughinish and Russia
 
A trade sale would clearly suit the government. Either way, soemthing ahs to give. We can’t look at the horrors being committed in Ukraine and expect they do not impact us.

Kerry’s woeful strategy

Some Irish companies, however, have really let themselves down. Like many others in the business community, I have long admired Kerry Group – for its entrepreneurial zeal, its brilliance at creating wealth in the southwest and for its capacity to create an Irish multinational from the ground up.

However, its response to Russia’s actions have displayed both a distinct lack of corporate leadership and a woeful public relations strategy.

Other Irish companies such as Kingspan and Smurfit Kappa have pulled out of Russia, as have hundreds of other multinationals around the world. Kerry, meanwhile, is merely suspending its Russian operations, and has sought to be too clever by half.

The chronology speaks for itself, sadly. Two weeks ago Kerry Group announced that it did not expect to make a profit or pay taxes in Russia, but would donate any such profits to humanitarian relief efforts. It justified its position at the time as follows: “As a producer of food, beverage and pharmaceutical solutions, Kerry Group plays a critical role in the food chain and recognises this responsibility across all its markets.”

On Monday, it issued this statement: “Kerry Group has continuously monitored the unfolding situation in Ukraine and we are horrified at the escalation of the humanitarian crisis. Over the last number of weeks the Group has scaled back activities in Russia and Belarus. Following extensive ongoing consultation with stakeholders, the Group announces today that it is suspending its operations in Russia and Belarus. This suspension will be managed in an orderly manner, during which the company will continue to pay employees and fulfil our legal obligations.”

I have been working in business journalism for a long time and have seen thousands of statements from companies. This was as weak a statement as I have ever seen, and I have little idea what it actually means.

We sought to understand just what they meant, and Thomas dispatched 11 questions to the company about the nature of its withdrawal. The answers, when they came, were even weaker.

A spokesman told Thomas that employees would get paid for the full duration of the activity suspension. He declined to provide further details on Kerry Group’s “legal obligations” in Russia and Belarus or contractual arrangements there, adding that these were “very complicated” and sensitive for the security of local employees at this time.

At this point, I don’t know what is driving Kerry’s position other than the pursuit of profit. The response of the business has been depressing and dispiriting.

We can only hope that Kerry is temporarily spreading its own fog of war to keep the Russian authorities at a distance while securing a safe exit for its staff there. The alternative would constitute an attempt to keep a foothold in the Russian market so that the group can re-launch its recent expansion there in the near future, in the space abandoned by other multinationals. This would be so morally reprehensible that it should exclude Kerry’s stock from the portfolio of any responsible investor.

We will know for sure within weeks. The fine tradition of the company deserves a whole lot better.

*****

Elsewhere last week, we published a major piece with Gerry Brandon based on a series of interviews over a 12-month period. Brandon has bolted together a €50 million business from the discarded bits of other companies. Over the course of a year’s reporting, Sean learned how he pivoted from plastics to cloned human skin, to sewage, to Instagram ads.

For three decades, CPL has been a staple of corporate Ireland – but with new Japanese owners and a fresh CEO in Lorna Conn, it’s expanding, and aggressively so. She spoke with Rosanna.

Lukasz Salamander claimed his Meath-based international property investment firm would deliver an 8 per cent return. However, it quickly collapsed, and he is now in Spain. Based on evidence discovered, a court-appointed liquidator is seeking to censure the convicted fraudster.

To the relief of thousands of counsellors, psychotherapists and chiropractors, the authorities have said Vat need not be charged on their fees. However, a practitioner of Chinese medicine and an acupuncturist was not so lucky. Eoin gave his view.

We also published the final part of Sinead’s six-part series on the strategies used by the wealthy to maintain long-term wealth. She has looked at the various asset classes used to grow wealth over a number of generations. It has been a fascinating series and shines a light on the distinction between short-term goals and long-term planning.