Russia is planning to use a US-owned company seized by the Kremlin to be placed under state control and used for supplying food to the Russian army, Reuters reported, citing a document. The move can potentially threaten the warming relations between Washington and Moscow.

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The canned food producer Glavprodukt, which was seized in October, is the only American-owned company to be taken under the control of Rosimushchestvo, Russia’s state property management agency.

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US Secretary of State Marco Rubio said that its treatment will be part of discussions about resetting US-Russia relations.

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According to a letter addressed to Russia’s prosecutor general from Glavprodukt’s new management, the seizure will ensure stable production, including for future supplies to the national guard and defence ministry, the report added.

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The company’s Los Angeles-based founder, Leonid Smirnov, and his affiliated firms were accused of transferring approximately RUB 1.38 billion ($17 million) out of Russia between 2022 and 2024, according to a RBC daily report.

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Smirnov denied any wrongdoing, calling it a “Russian-style corporate raid” intended to take over his business. However, the company’s property was seized by the Moscow Arbitration Court on March 12 at the request of the Prosecutor General’s Office. A hearing is scheduled for April 18.

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Strategic assets

Around a dozen European companies have also had their Russian subsidiaries seized by presidential decree, including Danish brewer Carlsberg and Finnish utility Fortum. The Kremlin has warned of more asset expropriations.

Watch | Moscow plans to use seized US company to supply food to Russian military: Report

The Kremlin had expected the Ukrainian invasion to be a quick operation, but the war has now dragged on for over three years. This has prompted Russia to ramp up its defence spending and secure strategic assets. In 2022, Moscow struggled to secure essential military supplies, including food.