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IBM unsure how long it will keep Russia-based staff on payroll, CEO says

Published 10/05/2022, 12:15
Updated 10/05/2022, 12:27
© Reuters. FILE PHOTO: The logo for IBM is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid

By Paresh Dave and Jeffrey Dastin

(Reuters) - International Business Machines (NYSE:IBM) Corp is not sure how much longer it can pay its employees in Russia in light of escalating sanctions on the country, its chief executive told Reuters.

IBM in March ceased all business in Russia, where according to LinkedIn data it had more than 1,000 workers.

"We're all learning as we go," CEO Arvind Krishna said on Monday in an interview. But, he added, employees in Russia "didn't create any of this. They should not suffer any harm as a consequence."

Krishna said that as "sanctions sort of inch up, day by day, and week by week, our ability" to keep workers on the payroll "may go away." He did not elaborate.

Sanctions have begun to limit the number of banks foreign firms can use to pay employees in Russia.

Krishna's remarks, ahead of IBM's annual Think conference on Tuesday, reflect the ongoing uncertainty facing multinational corporations as Russia's invasion of Ukraine drags into a third month.

For years, Armonk, New York-based IBM did business with Russia's energy and banking sectors. Employees protested IBM's initial response to the February invasion of Ukraine that focused on protecting staff but did not take a side. IBM stopped short of layoffs in Russia when it announced the business suspension following internal criticism.

Russia last year accounted for about $300 million of IBM's $57.4 billion in revenue, the company has said. It expects zero contribution from Russia this year.

Russian prosecutors had warned companies including IBM of arrests and seizures for exiting the country or criticizing Moscow, the Wall Street Journal has reported.

Krishna said: "The government has not really taken our assets."

Russia calls its actions in Ukraine a "special military operation," while Western countries say it is unprovoked aggression.

IBM does due diligence on who is backing its business partners and projects financially, so it's "reasonably confident" that it is not engaging with sanctioned individuals, even indirectly, Krishna added.

© Reuters. FILE PHOTO: The logo for IBM is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 27, 2018. REUTERS/Brendan McDermid

For IBM to resume normal operations in Russia, a lot would have to happen, he said.

"They got to stop violence. They got to talk about reparations,” Krishna said. "This is a long road."

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