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Moscow Targets McDonald’s Charity Operation

Moscow Targets McDonald’s Charity Operation

Los Angeles, CA – Ronald McDonald House Charities is the latest target of Moscow’s campaign of investigations into the Russian operations of global fast food giant McDonald’s.

Russian authorities are reportedly preparing to level tax evasion and money laundering charges against the charity, which operates a sports facility for physically and mentally disabled children in Moscow, and a residential facility near a children’s hospital in Kazan, 450 miles east of Moscow.

In an interview with the Washington Post, Russian Duma legislator Andrei Krutov said, “They use donations from ordinary Russians, so that is why we want to know how this money is spent. I am talking only about financial aspects of their activities, and technical questions about their work. We do not want you to think that we have political reasons for doing this.”

In August, Russia’s consumer protection agency ordered four of the company’s largest restaurants to suspend operations over a host of alleged hygiene violations and shortly afterwards added another five to the list.

Since then, 12 restaurant in Russia have been closed for alleged “sanitary reasons” while more than 200 unscheduled hygiene and safety “inspections” have been carried out.

Last week, nine more McDonald’s outlets – four in Moscow, two in Yekaterinburg, two in Volgograd and one in Sochi – were “temporarily” shut-down.

The latest move subjects more than half the McDonald’s franchises in Russia to government scrutiny.

McDonald’s Russia issued a statement on its website over the weekend saying that, “Right now, more than 200 probes have been initiated,” adding that a Russian court had extended the government’s temporary closure of the initial nine restaurants and added that it would appeal against the decision.

The company, which opened its first restaurant in Russia in 1990, has 450 restaurants across the country, more than 100 of which are in Moscow and the surrounding region. More than 60 are in St Petersburg and the surrounding region, the country’s second big metropolitan area.

Moscow’s investigation campaign is seen in the West as a slap-back at the economic and financial sanctions and executive orders put in place earlier this year by the US in response to Russia’s seizure of the Crimea and continued incursions into neighboring Ukraine.

10/20/2014

Moscow Says ‘Nyet!’ to McDonalds; Cites ‘Food Safety’

Los Angeles, CA – Russia has ordered the closure of four McDonalds fast-food restaurants in Moscow because of what the government says are possible “breaches of sanitary rules.”

The four restaurants include the first ever McDonald’s in Russia, which the Oak Brook, Illinois-headquartered global mega-giant says is the busiest in its entire 35,000 outlet global network.

Raising an eyebrow at the move by Russia’s food safety watchdog, many in the business community dismiss Moscow’s assertion saying the move is a another reaction to the sanctions imposed by the US and the European Union over the country’s seizure of the Crimea and its incursion into Ukraine.

“Obviously, it’s driven by the political issues surrounding Ukraine,” said Alexis Rodzianko, president and CEO of the American Chamber of Commerce in Russia at a press conference held after the move was made public. “The question on my mind is: Is this going to be a knock on the door, or is this going to be the beginning of a campaign?”

The day after the decision, a sign on the door of the largest McDonalds that was shuttered said the restaurant had been closed “for technical reasons.”

A statement released by the government stated that “documents” had been presented to McDonalds’ management and that the shops had been closed for “numerous sanitary violations dealing with product quality,” without giving any details.

McDonald’s head office released a statement to the press saying that the company “is closely studying the subject of the documents to define what should be done to re-open the restaurants as soon as possible.”

Russia’s first McDonald’s opened on Moscow’s Pushkin Square in 1990.

The company currently operates 438 restaurants in Russia and considers the country, which currently generates about 10 percent of the company’s European operating profit,  as one of its top seven major markets outside the US and Canada.

Other US companies with operations in Russia are closely monitoring the situation, curious as to whether Moscow will expand the regulatory scope of its sudden, intense concern over “product quality” issues.

That list of vulnerables includes such icons as Coca Cola, Starbucks, KFC, Pizza Hut, Jack Daniels, and McDonalds’ arch-rival Burger King.

08/22/2014