American paper company maintains lucrative business relationship with Russian government

(Credit: Billy Hathorn)

More than a month after the Russian military began its assault on Ukraine, only a handful of American businesses have fully maintained their operations in Russia. One of those businesses is International Paper Company, which partners with Russian oligarch Zakhar Smushkin in a joint venture, Ilim.

Ilim operates three large pulp and paper mills, two corrugated box plants, and numerous other support offices in Russia. (It recently completed a $2 billion upgrade of two facilities.) Ilim accounts for "75% of all domestically produced market pulp" in Russia and its "total annual pulp and paper output exceeds 3.6 million tons." Its products are exported to more than 70 countries, although most of its output is sent to China. 

The board of Ilim consists of four International Paper executives and four Russians, including Smushkin and Boris Zingarevich, who are both billionaires. Smushkin is not among the oligarchs currently subject to U.S. sanctions but "has appeared with Putin at business conferences, including at least one event in 2019." 

Daniel Connolly 〽️ @DanielConnolly

Here's Smushkin (left) with Vladimir Putin at a business conference in 2019.

The Ilim joint venture and its predecessors in the Russian paper industry have significant links to Putin and the Russian government. Dmitry Medvedev, the former president of Russia who is currently Deputy Chairman of the Security Council, "worked as general counsel of Ilim Holding in the mid-1990s." 

Oleg Deripaska, another Russian oligarch, attempted to forcefully seize Ilim Pulp in 2002. "There were threats against its Western managers, and armed battles between the company's security guards and Deripaska thugs, who sought to take control of the company by sheer force," Newsweek reported. The effort ended when Putin called Deripaska and told him to "desist" or "I will break you." Sam Graves, the company's Canadian Chief Operating Officer at the time, expressed his gratitude. "We love Putin," Graves said.

Ilim's extensive operations in Russia help fund the war effort in Ukraine indirectly through taxes. But Ilim also has a direct business relationship with the Russian government. To run paper mills, you need wood. Ilim has "reached lease agreements with Russia's government to harvest trees from government-owned forests." 

While hundreds of companies have ended or curtailed their business operations in Russia, International Paper issued a short press release on March 11, more than two weeks after the Russian assault on Ukraine began:

International Paper announced its intention to explore strategic options, including the possible sale, of its 50% ownership interest in Ilim Group.

International Paper has no intention to seek suspension of operations or initiate any liquidation or bankruptcy proceedings with respect to Ilim Group.

Notably, the press release did not acknowledge, much less condemn, the Russian government's assault on Ukraine. International Paper was also clear it was not suspending operations and made no commitment to divest its stake. 

International Paper was more expansive about the importance of its Russian joint venture in a January 27, 2022 earnings call with shareholders. "For the full year, Ilim delivered outstanding earnings performance with adjusted earnings of $1.1 billion and an average margin of 40%," Tim Nicholls, International Paper's Chief Financial Officer, said. "Ilim's strong operational performance and low cost system make it a powerful cash generator." Nicholls said International Paper was expecting to receive a dividend of $200 million from Ilim in 2022. 

Ilim is a source of cash for International Paper. And International Paper is a source of cash for many members of Congress — Democrats and Republicans — through its political action committee (PAC).

Koch Industries is the only other American company that fully maintained its business operations in Russia with an active PAC. Already, four members of Congress — all Democrats — have announced they would return Koch Industries' contributions or reject future contributions. 

67 members of Congress have accepted PAC contributions from International Paper since 2021. Popular Information contacted all of them and asked if, in light of International Paper's ongoing business relationship with the Russian government, they planned on returning the money.

A member of Congress donating money from International Paper due to its ongoing business relationship with the Russian government

A spokesperson for Representative Alma Adams (D-NC) told Popular Information that she “plans on donating the $2000 contribution in solidarity with the people of Ukraine.”

Members of Congress that are keeping International Paper's money, despite its ongoing business relationship with the Russian government

Representative Tom Rice (R-SC) called Russia’s invasion of Ukraine “shocking and inexcusable.” On February 24, Rice tweeted, “Putin’s attack on the innocent people of Ukraine is an assault on a sovereign nation. I condemn this senseless violence and we must hold Russia accountable for their actions. I’m praying for the Ukrainian people and for peace in Europe.”

Rice also introduced the “Defund Putin Act” on March 3, a bill designed to “[remove] Russia as a most-favored-nation for purposes of trade and [allow] the United States to use tariffs and other trade sanctions.” 

Rice accepted $5,000 from International Paper Company on August 26, 2021.

When asked about the donation, Rice told Popular Information, “No, I will not return the contribution. International Paper is a great American company that employs over 50,000 people, including many at their mill in my district in Georgetown, [South Carolina]. IP has raised the issue to me regarding the joint venture in Russia and is working to find a responsible solution.”

Representative Raja Krishnamoorthi (D-IL), who accepted $5,000 from International Paper on May 28, 2021, told Popular Information that International Paper “is taking the steps necessary to withdraw from all operations in Russia” and that he “fully expect[s] them to follow through on this important step as quickly as possible.” This isn’t accurate, however. In a statement to Popular Information, International Paper confirmed that it was still “exploring strategic options” and only considering a "possible sale."

Members of Congress who remain silent on donations from International Paper

Senator James Lankford (R-OK) has called on corporations to step up and “find practical ways to be able to help.”

In a floor speech following an address to Congress from the president of Ukraine, Lankford said that companies who continue to sell luxury products to Russia are “choosing income over peace.”

“[I] would call on companies, even in my state, or anywhere they may be in the United States, or around the world, to be able to pull back income from Russia, to allow them to feel the effects of what they’re doing to their neighbors around them,” Lankford said.

Lankford has accepted $10,000 in contributions from International Paper since 2021––$5,000 in June 2021 and another $5,000 last month––according to FEC filings. 

Lankford did not respond to a request for comment.

Senate Majority Leader Chuck Schumer (D-NY) has described the war in Ukraine as a “holocaust.” 

“When you see that people are lined up on buses to just leave a conflict zone, and Putin's artillery shells those buses, that is just below humanity, below dignity,” Schumer said. 

Two weeks ago, Schumer released a statement alongside Senator Ron Wyden (D-OR) condemning Koch Industries for “shamefully continuing to do business in Putin’s Russia and putting their profits ahead of defending democracy.”

“It is time for Koch Industries to put the values of democracy ahead of its own profits. We are calling on Koch Industries to immediately suspend their operations in Russia,” Schumer and Wyden wrote. 

Schumer and Wyden also threatened to withhold U.S. tax benefits from American companies that continue to do business in Russia.

FEC filings reveal that Schumer accepted $5,000 from International Paper’s PAC on August 26, 2021. 

Schumer did not respond to a request for comment. 

Representative Earl “Buddy” Carter (R-GA) believes that “the United States, the leader of the free world, cannot turn a blind eye to Ukraine’s suffering”

In early March, Carter co-authored a letter to the CEO of Coca-Cola criticizing the company for not living up to its “own humanitarian standard” and requesting that the company “immediately suspend operations…and sales of [its products] in Russia.”

“Why has Coca-Cola not joined the growing list of companies who are united in cutting Russia’s dictatorial regime off from the rest of the free world?” the authors asked.

“Put the Ukrainian people before profits by cutting off Russia from your operations and products.”

When Coca-Cola eventually announced that the company was halting business in Russia, Carter applauded the company and said that “it’s never too late to do the right thing.”

Carter accepted $5,000 in contributions from International Paper’s PAC, according to FEC filings.

Carter did not respond to a request for comment. 

Representative Ann Kuster (D-NH) released a statement condemning Russia’s “illegal” and “unprovoked attack” against Ukraine. “We stand united with our international allies and the people of Ukraine against Russia’s illegal invasion,” the statement said. “[T]he consequences imposed by the United States and our allies and partners will be severe. Vladimir Putin’s decision to invade Ukraine will ultimately leave Russia weakened strategically, economically, and diplomatically.” 

As part of the House Energy and Commerce Committee, Kuster also voted to ban the “import of Russian energy products,” stating, “[w]e cannot allow American dollars to support Putin’s violent invasion of Ukraine… The United States must use every economic and diplomatic tool available to hold Russia accountable and deter future aggression.” 

Kuster accepted $2,500 from International Paper Company on February 7. 

Kuster did not respond to a request for comment. 

Senator John Kennedy (R-LA) described Russia’s invasion of Ukraine as “barbaric.” On February 24, Kennedy released a statement that said, “Putin is invading and waging war on a sovereign nation and its people. There’s no room for weakness in response. ”

The statement continued to say, “President Biden should impose swift, comprehensive crippling sanctions on Russia. The only path to peace is through unwavering strength.” Kennedy also told USA Today, “I’m in awe of President Zelensky and the Ukrainian people. They have united the world.”

Kennedy accepted $5,000 from International Paper Company on September 24. 

Kennedy did not respond to a request for comment.  

Unless otherwise noted, these members did not respond to a request for comment.

Campaign committees that remain silent on donations from International Paper

Among the recipients of donations from International Paper Company is the Democratic Senatorial Campaign Committee (DSCC). The DSCC is dedicated to supporting Democratic candidates for the Senate. 

On February 25, the DSCC released a statement that said: “We stand with the people of Ukraine against this appalling and unprovoked attack by Russia. Putin will be held accountable and bear the consequences of his choice to make war against Ukraine.” The DSCC also expressed its support for “a unified opposition to Putin’s invasion of Ukraine.” 

The DSCC accepted $15,000 from International Paper Company on January 18 and $15,000 on March 31, 2021. 

The DSCC did not respond to a request for comment. 

The National Republican Senatorial Committee (NRSC), an organization dedicated to getting Republicans elected into the Senate, also received donations from International Paper Company. 

On March 22, the NRSC shared a Facebook post that stated, “The people of Ukraine are inspiring to the world. #StandWithUkraine” 

The NRSC accepted $15,000 from International Paper Company on January 18 and $15,000 on March 31, 2021.

The NRSC did not respond to a request for comment.