MOSCOW— Prosecutors have launched an investigation into the financials of Ronald McDonald House Charities in Russia on suspicion that it may be running its operations like a Hamburglar.
Moscow prosecutors started the official probe in response to a request from State Duma Deputy Andrei Krutov, who suggested that the charity may be dodging taxes or laundering money and should be registered in Russia as a foreign agent.
Now the legal wrangling that began with questions about the quality of the Filet-O-Fish sandwich and continued with the closure of several McDonald’s restaurants on health grounds this summer is embroiling McDonald’s charitable activities as well.
For the company that has been a symbolic face of America in Russia since the waning days of the Soviet Union, the level of scrutiny — coming during the lowest period of Russian-U.S. relations since the Cold War — is unprecedented.
“They use donations from ordinary Russians, so that is why we want to know how this money is spent,” Krutov said in an interview. “I am talking only about financial aspects of their activities and technical questions about their work. We do not want you to think that we have political reasons for doing this.”
But that’s what it looks like to McDonald’s executives, who denounced the charges as “groundless” and “unreasonable” even as they supplied the prosecutor’s office with all the requested documents, they said.
“If you look at the bigger picture, they started unannounced checks of McDonald’s at the end of July — now we’ve had over 200 unannounced checks done so far,” said Svetlana Polyakova, head of the Ronald McDonald House Charities in Russia, which include a sports facility for physically and mentally disabled children in Moscow and a 24-bedroom residential facility near a children’s hospital in Kazan. Polyakova is also a spokeswoman for McDonald’s Russia.
“The charity has helped thousands of Russian children and families in challenging life circumstances,” said Polyakova, adding that the charity had not faced a similar inquiry since it started working in Russia in 1995. “The reports are prepared according to all the approved forms, and we’ve been doing that for all these years.”
Yet Krutov argued that the Ronald McDonald House Charities aren’t being transparent because they claimed the lion’s share of their targeted expenditures as “other” on relevant 2013 tax forms.
“The activity of the foundation reminds us of an advertisement campaign — in all their events that they organize, they use signs, logos of McDonald’s. So we’re just asking whether it’s some kind of advertising trick or are they providing real aid to the Russian children as they declare?” Krutov said.
Krutov’s complaints are exclusively based on financial reports the charity publishes on its Web site. Polyakova said Krutov never reached out to McDonald’s directly, and Krutov said he has never been to visit a Ronald McDonald House Charities facility in Russia.
He acknowledged he hadn’t heard any direct complaints from donors to the charity or recipients of its services.
“But I haven’t heard any gratitude either,” he added. “We haven’t heard from a single Russian who received assistance from this foundation.”
Coming forward to defend McDonald’s is not exactly the most winsome activity these days in Russia, as government agencies have slapped the restaurant chain with health code violation charges and shuttered franchises throughout the country.
“The strange psychological position of [the] Russian population is such: We do go to the restaurants still, but our government closes it off to us,” said Pavel Chikov, a human rights lawyer and head of Agora, a group that has defended several bloggers, human rights workers and nongovernmental organizations. “I doubt that Russians know the Ronald McDonald House separately from McDonald’s restaurants.”
To the extent Russians do know the charity, the view is largely positive, Chikov said — and Polyakova said that coin donation boxes in restaurants are one of the charity’s most successful fundraising sources.
But McDonald’s is still an unofficial face of America at a time when anti-Americanism is riding high in Russia.
“An attack on McDonald’s is a very populist act right now, when there is clear tension between Russia and the West — this is the main idea,” Chikov said. “If the government decides to attack a certain business, all NGOs around that business will be attacked, too. It absolutely doesn’t matter if they’re politically focused or not.”
Chikov said he doubted that Moscow prosecutors would agree with Krutov that McDonald’s should have registered as a foreign agent. The 2012 law on “foreign agents” has been used to effectively silence many civil society groups receiving foreign funding. But it only applies to entities engaging in political activity, which doesn’t include health care, social work or support for the disabled.
The Moscow prosecutor’s office declined to comment on the matter Thursday.
“But the task is to find a violation, and definitely they will,” Chikov said. “The question is just what will be next.”