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Kiev brands German building materials giant ‘sponsor of war’

Knauf has been blacklisted by the Ukrainian government for paying taxes in Russia

Ukraine has labelled German building materials giant Knauf a “sponsor of war” for paying taxes in Russia. The designation was announced on Thursday by the National Agency on Corruption Prevention (NACP), which operates the blacklist.

Kiev regularly attempts to shame foreign companies for doing business in Russia, aiming to drive them out of the country with threats of reputational damage and potential problems in third nations.

Knauf is the 47th entry on the Ukrainian blacklist, although the designations of five firms have been suspended for “consultations” with the European Commission.

NACP called Knauf the “largest German investor in the construction industry in Russia,” estimating that the firm had poured over €1.65 billion ($1.8 billion) into the country since 1993. In 2022 alone, it paid $117 million in taxes in Russia, the statement added.

Another accusation was that one of Knauf’s manufacturing sites in Tatarstan was located near a factory making military drones. NACP did not specify why it considered the area an aggravating factor.

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“Knauf specialists continue to build cities in the aggressor state, while thousands of residential buildings have been destroyed in Ukraine by the aggressor’s army funded, among others, by Knauf’s tax contributions,” the statement claimed.

The Yale Chief Executive Leadership Institute, which tracks commitments by foreign firms to disengage from the Russian economy as well as refusals to do so, lists Knauf as “still operating across 14 sites in Russia but suspend[ing] new investments.”

The company has said it remains responsible for the well-being of some 4,000 employees in Russia and will not exit the country, despite condemning the Ukraine conflict. It has denied claims in the German media that its Russian subsidiary was assisting the government in drafting some of its workers into the military. NACP stated those claims as an established fact.

Kiev’s use of the “international sponsor of war” label previously contributed to a spat with Budapest. Ukraine kept the Hungarian OTP Bank on the blacklist between May and early October, when it agreed to reverse the designation amid criticisms by the EU nation’s government.

READ MORE: Exodus of Western firms prompted growth of Russian businesses – Putin

Moscow has argued that firms that leave Russia under pressure from Ukraine and its Western backers were simply surrendering their market share to competition. President Vladimir Putin pledged in June not to ban such companies, should they try to return, but said the government would “take into account their behavioral patterns” and prioritize support of local producers, including foreign companies that stayed in Russia.

November 23, 2023 at 07:34PM

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