Russia targets billionaire's empire over alleged links with Ukraine

Russian prosecutors are targeting Denis Shtengelov's KDV Group, one of the country's largest snack producers, for expropriation

Denis Shtengelov built his company from the streets of his Siberian hometown more than 30 years ago into a global confectionery empire with billions of dollars in revenues. Now the tycoon, worth at least $2.6 billion according to the Bloomberg Billionaires Index, is at risk of losing a big part of his fortune.

 

Russian prosecutors are targeting his KDV Group, one of the country’s largest snack producers, for expropriation. They argue companies tied to the entrepreneur, who now appears to live in Australia, supplied Ukrainian forces with food, according to an Interfax report. They also claim his father, Nikolai, established a paramilitary unit in the enemy’s territory and that KDV sent income from its Russian operations to so-called unfriendly jurisdictions without regulatory approval. 

 

 

The case is the latest indication of how asset seizures are surging in Russia since the invasion of Ukraine, as the country cracks down on those it sees as enemies of the state. The total value of confiscated property since 2022 reached 3.9 trillion rubles ($46.8 billion) as of June, according to estimates from Nektorov, Saveliev & Partners, a law firm in Moscow. 

 

The claims against KDV couldn’t be independently verified, while the text of the prosecutor’s lawsuit isn’t available for public viewing. The firm’s press office didn’t reply to multiple calls and emailed requests for comment.

 

This summer a Moscow court also ordered the nationalization of the Russian developer behind the game World of Tanks after its co-founders were designated as extremists — a similar charge to that facing KDV — over one of the former partners’ fundraising projects for Ukraine. 

 

“We can expect an increase in the number of big enterprises seizures where extremism will be only a formal basis for appropriation,” said Kirill Gorlov, legal counsel of Transparency International Russia.

 

Moscow court

 

On Sept. 23, a Moscow court will review the KDV case to see if Russia can proceed with transferring Shtengelov’s business to the state. Meanwhile, the court banned any transactions related to property and shares of more than 50 companies that are part of KDV, Tass reported.

 

KDV said in a post on its website earlier this month that “our team sincerely hopes for a fair and balanced resolution to the current situation” as “the company conscientiously fulfilled its obligations to the state, paid taxes, and invested in Russia, creating jobs, supporting regions, and numerous charitable projects.”

 

While the state has rarely invoked extremism as a legal basis, it has already appropriated assets worth 200 billion rubles under those grounds. That figure would more than triple if it does take over KDV, whose market value is put by prosecutors at 500 billion rubles.

 

The tycoon began his business career in the 1990s after graduating from university in Siberia. In those turbulent years as Russia moved to a market economy after the collapse of the Soviet Union, his early ventures included supplying sunflower seeds to elderly women in his hometown of Tomsk, who roasted and sold the popular snack known as semechki. He also pressed seeds into oil, which he bartered to cash-strapped confectioners for candy. 

 

Shtengelov made a point of controlling businesses across the supply chain, from milk farms to factories producing chocolates, choux pastry and cookies. Today, KDV employs more than 39,000 people at 14 factories and is Russia’s fourth biggest producer of food and beverages, according to researcher INFOLine. It makes hundreds of items from crisps and snacks to baby food and posted revenue of 305 billion rubles in 2024, according to Spark-Interfax database.  

 

In 2021, KDV bought the US-based Liberty Orchards Co., a maker of Aplets & Cotlets candies, and Dutch vegetable products supplier Hak. He also owns a stake in Zvecevo confectionery in Croatia, Forbes reported.  

 

State attention

 

This isn’t the first time that Shtengelov has attracted the attention of the Russian state. In 2018, a deadly fire killed more than 60 people in a Siberian mall he co-owned. Shtengelov wasn’t involved in the operational management of the mall, but paid 3 million rubles to relatives of each victim, he said in a rare interview at the time. He also said that he shares his time between Russia and Australia where he has a sport venue on the Gold Coast. 

 

Shtengelov, 53, has been linked to the Australian company KDV Sport Pty Ltd. since 2011. He stepped down as a director in 2020, leaving Maria Karzhilova as the sole director.

 

The company’s centerpiece is the KDV Sport complex in Carrara, a suburb on the Gold Coast about 70 kilometers (43 miles) south of Brisbane. Spread across the site are 20 tennis courts, including clay surfaces, along with 18- and 9-hole golf courses and a driving range. The grounds also house padel and pickleball courts, a gym and fitness center, and a hotel with a day spa and restaurant. 

 

Two other businesses are tied to KDV Sport in Australia: Elite Gold Coast, the hotel operating within the sports center, and Eurofood Shop, a retailer of Russian and Polish groceries on the Gold Coast.