Business 13 December 2021

​​Ex-U.S. citizen turned Russia-cheerleader arrested for fraud

The co-owner of one of Rive Gauche, one of Russia’s biggest cosmetics chains, was arrested Wednesday in St. Petersburg. August Meyer — the co-owner of now defunct online retail giant Yulmart — was born in San Diego and moved to Russia more than 20 years ago. He has since renounced his U.S. citizenship and expressed support for Putin.

  • Meyer and his wife, Inna Meyer, are suspected of stealing 2.4 billion rubles ($32.6 million) from state-owned bank Sberbank to develop Yulmart shortly before the retailer’s collapse. If found guilty, the two could face up to 10 years in prison. Meyer was remanded in custody Thursday, while his wife was put under house arrest. They both deny the accusations.
  • The Meyers are not the first people to be accused of embezzling funds from Sberbank on the pretext of developing Yulmart. Back in 2017, Dmitry Kostygin – another co-owner of Yulmart and once a friend of Meyer – was arrested on fraud accusations. He was placed under house arrest in 2017, and one year later was bailed for 25 million rubles ($340,500).
  • Yulmart topped Forbes’ ranking of the 20 leading online stores in Russia in 2013, with annual sales of more than $1 billion. Yet, within just three years, the company ran into big financial problems, and Meyer and the other shareholders became embroiled in conflict. The company effectively ceased operations last year. A number of the company’s legal entities are currently going through bankruptcy proceedings.
  • Despite these problems, Meyer was ranked Russia’s 181st richest man by Forbes in 2021 with an estimated fortune of $650 million. Most of these funds came from the sale of his share in hypermarket chain Lenta following a bruising shareholder battle. The rest comprises a 25.5 percent stake in Rive Gauche, a 37.5 percent in cosmetics chain Ulibka Radugi, and a 17 percent share in confectionery producer Lyubimy Krai.
  • Meyer received Russian citizenship in 2015 — and has renounced his U.S. passport (“America is sinking like the Titanic, but Russia has a future,” Meyer said in an interview in 2010). On several occasions, Meyer has publicly talked up Russia’s business climate and praised the authorities. “The perception of Putin in the West does not seem to me to be fair. He’s not some madman who wants to rebuild the Soviet empire,” Meyer said in 2017. Speaking in court, however, he no longer seemed so sure: “What’s this, the Soviet Union in 1931?” Meyer asked Thursday as he tearfully told of investigators’ attempts to hold his wife hostage. According to Meyer, the investigator promised to release his wife if he confessed.

Why the world should care: Considering Sberbank’s long-running conflict with Yulmart shareholders, arresting a foreigner – even if he does have a Russian passport – looks like a tactic to pressure others to pay their debts as quickly as possible. At the same time, this is another signal to foreign investors that it’s not wise to do business in Russia without a reliable patron.