The Russian invasion of Ukraine forced a paradigm shift in global business. While US and EU sanctions have dented operations in Russia, many businesses took a further step to exit the country in protest of Vladimir Putin’s aggression. The moral compass of business leaders, shareholders and customers points to the door. The objective is to starve Russia of the benefits of business and to hasten the end of the war. More largely, the corporate response is part of larger strategy to stop Putin’s further advance. The Yale School of Management describes 750 public companies and their completeness of withdrawal graded A-F.
Companies that stay in Russia communicate a tacit disregard for the oppression of Ukrainians and callous desire to profit from the warmongering Russian regime despite the costs. Many that stay are from China, whose government supports the invasion. Indeed Chinese companies like Huawei provide the Russian military with hacker soldiers. Eutelsat is in the same boat; it delivers Putin’s required censorship so the Russian people can’t get different perspectives on Ukraine.
The situation reveals the gulf between what is legal and what is right and how companies use the moral compass to navigate. Information and telecommunications providers are critical players.
Eutelsat, Ecco and Mavenir: Three companies still working in Russia. What would you do if you were CEO?
Eutelsat positions 37 satellites to serve half a billion viewers in Europe, the Middle East, Africa, and India with 7000 channels for TV and 1100 for radio. Eutelsat sends Russian broadcast content from NTV-Plus (part of Gazprom-Media Holding) and Tricolor. On March 8, Eutelsat implemented the Putin’s dictat to block international news from BBC World, CNN, Deutsche Welle, Euronews and France 24 for viewers in Russia.
Before taking the helm at Eutelsat, Eva Berneke led the Danish operator TDC and IT solutions provider KMD, on top of a 20-year career with McKinsey. Earlier Denmark celebrated Berneke, a product of its egalitarian system to produce female CEOs and to equalize the gender gap in tech industry leadership. Now that Denmark houses some 30,000 refugees and the first Danish soldier has died in Ukraine, Berneke tarnishes the democratic Danish brand whose exponents should follow moral compass and leave Russia.
As CEO of Eutelsat, Berneke had two choices: leave Russia or stay and support Putin. Berneke not only rejects the direction of the moral compass, she supports Putin’s war by censoring information as he demands.
Another case is the Danish shoe manufacturer Ecco which justifies its remaining for the sake of its Russian employees in 250 stores. But what of Ecco’s distribution in Ukraine? Already more than 2000 Ukrainians have died; more than 3000, injured; and millions, displaced. Ecco is not getting a free pass; consumers hammer the company on social media for ignoring the moral compass.
The American company Mavenir which makes telecommunications infrastructure also stays in Russia. It issued a seemingly incongruous statement, but concludes that it continues to operate in the country.
The law is on the side of these three companies, but the moral compass points in a different direction. Sanctions only curtail certain types of transactions. Governments never instructed firms to cease operations or leave. And yet, many companies did because their ultimate regulator is the marketplace. Shareholders and customers decided that the price of working in Russia is too high. The moral compass points to the exit.
This is just the beginning – the Chinese angle.
The solidarity demonstrated by US and EU firms with the people of Ukraine is encouraging. Sanctions have made life difficult for Russians and oligarchs. However new sanctions are difficult and are unlikely to have the same effect.
Moreover, the vacuum left by the departure US and EU has been filled by China. The computers earlier sold by HP and Dell will now be supplied by Lenovo. Communications infrastructure provided by Cisco, Ericsson, Nokia, and others will be provided by Huawei and ZTE. Chinese companies clearly do not care about the moral compass. In fact, if Russia’s demand can be filled by China, then the effect of sanctions are diluted. However, Ukrainian supporters need not despair. In fact, voters and consumers have more power than they think.
If the US and EU are serious about starving Russia, then they needs to boycott the firms still operating there, whether Eutelsat, Ecco, Mavenir, or Lenovo.
In the case of IT, eliminating Chinese firms is a good idea anyway, as Chinese government surveillance capability is embedded in almost every product.
Doing business with Huawei and Lenovo is like doing business with Russia’s Putin. There is little difference between Russia and China when it comes authoritarianism, though China takes it to a higher level.
What’s next for Eutelsat
There is a way out for Eutelsat. Eva Berneke can decide to leave or ask the US and EU leaders to compel it. Indeed French actors, abhoring the loss of liberty in Ukraine, are shining a light on the moral compass.
In March 2022, the Denis Diderot Committee formed in France to restore the free flow of information, without war propaganda, between Europe and Russia to support to Ukrainian, Russian and Belarusians civil societies. In this case, the presence of information is important to the Russian people so that they can see and learn what is happening. The Committee has tried to engage with Eutelsat with various solutions for its 12 million Russian household subscribers including:
Honor the EUTELSAT IGO Convention for universality, non-discrimination, and respect of the Council of Europe Convention on Transfrontier Television principles
Continue to provide broadband services to Russia to avoid implementation an isolated Russian internet.
Implement at least one transponder on Eutelsat 36E B satellite to allow for the transmission of alternative media channels, such as Euronews, in Russian, Ukrainian Russian languages channels, as well as international channels like BBC World, France 24, CNN and others. All of these services should be broadcast free to air, insuring easy reception in Russia.
Revoke the contracts with NTV Plus and Tricolor
Invite the 8 news channels (BBC, CNN, DW, Euronews, France 24, NHK World, RAINews 24, TV5 Mondes), Ukrainian channels, as well as ETV+ (Estonia) and Radio Free Europe / Current TV News (Czech Republic) and YLE (Finland) to innovate a free-to-air package to millions of Russians
Review partnerships with RSCC, Konnect Russia, RTCOMM and Gazprom to avoid further transfer of technology and collaboration with the Russian military complex.
Remember that Eutelsat could be charged for complicity in war crime and genocide
Many want to help Eutelsat follow the direction of the moral compass and if need be, get the help of EU to make it easier for Eva Berneke and Eutelsat. The Denis Diderot Committee offers a petition and LinkedIn group for people to support the effort.
The petition was signed by 52 European and Canadian media professors, researchers, lawyers, journalists, professionals of the audiovisual industry and by all the Members of the National Council for radio and Television Broadcasting in Ukraine. The European Federation of Journalists (EFJ) and the International Federation of Journalists (IFJ) have filed an alert in the Council of Europe Platform for Journalists Safety.
The responsibility of France to the war is also impugned; the French State is reputed to have a 40 percent share in Eutelsat S.A. and the French communication regulatory authority, Arcom, has some competences in the monitoring of the company, in particular for TV channels not established in the European Union.
Companies doing business in Russia must make a choice. French firms Michelin, Louis Vuitton, Chanel, Citroën and others have withdrawn from Russia. They follow the moral compass which points to the door because Putin’s end game is not good for Ukraine or the world economy. Facing the same choice, Eutelsat has not only decided to stay in Russia, but to support Putin’s disinformation campaign so Russians stay uninformed about what is happening Ukraine.
The telecom industry is at the forefront of a paradigm shift in which companies must align their operations with their values, to follow the moral compass. The law may nudge companies in the right direction but the moral compass points true north to freedom from oppression. Consumers and shareholders want to stop Vladimir Putin, and they expect companies to do their part. CEOs must take tough decisions. Executive search provider Russel Reynolds published The Ukraine Crisis: How are global Executives responding? to inform the inquiry.
Strand Consult’s goal is to create transparency. Huawei and Lenovo tell the press that they are not influenced by the Chinese government, yet their continued presence in Russia suggests otherwise. Check out Strand Consult ́s reports and research notes about China and cyber security. Standard Consult