Lehi MLM draws a picture of how to do débit in Russia | Magazine, Badinages, Work





Carissa Neely, photo courtesy of the Daily Herald

Nature’s Sunshine headquarters in northern Lehi, pictured in August. 21, 2018.

Editor’s note: The following story was published by the Utah Investigative Reporting Project in partnership with the Daily Herald.

As the war rages and evidence of atrocities and massacres emerges in Ukraine, many American companies have stopped doing business in Russia. But not everyone stretches.

Nature’s Sunshine, a multi-level marketing company based in Utah that sells vitamins and essential oils, is one of hundreds of businesses featured in the national database for continuing to operate in Russia. The company says it took immediate action by suspending exports to Russia, but the Yale University researchers who created the database say Nature’s Sunshine hasn’t done enough.

A review of corporate documents reveals that Nature’s Sunshine has closer ties to Russia than most multi-level marketers (MLMs) who have taken refuge in Utah. Lehi reported over $60 million in sales in Russia, Ukraine and Belarus in 2020, and it circulates in Russia in US dollars, a valuable crutch to help keep the economy under Vladimir Putin’s autocracy amid a flurry of international sanctions.

The US International Trade Administration has made clear that it is still perfectly legal for US companies to engage in a “wide range of business activities” in Russia, as long as it does not involve individuals or entities under special sanctions. But the war caused enough anxiety that many businesses decided to cease operations. Many others also fought against this decision, having made significant investments and hired many employees in the country in the years before the conflict began.

Why boycott?

Carissa Neely, photo courtesy of the Daily Herald

Nature’s Sunshine products are on display at Lehi’s headquarters on April 11, 2017.

The United States is among more than two dozen countries that have imposed sanctions on Russia following its invasion of Ukraine in February. These include bans on gas imports and flights, as well as the withdrawal of international companies from Russia.

An economic boycott of Russia is “one step away from bombs and bullets,” according to Stephen Tian, ​​director of research at the Yale Executive Institute, which helped create a database of companies continuing to operate in Russia.

Tian said the voluntary exit of corporations is putting economic pressure on Russia to change its course of action. Otherwise, he said, the next step would be war and possibly a “nuclear holocaust.”

“When you have a business blockade coupled with sanctions, you can put pressure on tyrannical regimes,” said Georgia Hurstie, a Yale University researcher who also worked on the database.

Companies not normally politically active, such as oil and gas companies and professional services, were among the first to legally leave Russia, Hersti said. This choice was motivated to some extent by pressure from employees and consumers to take a stand.

Carissa Neely, photo courtesy of the Daily Herald

Nature’s Sunshine co-founders Pauline and Christine Hughes (center) pose with a US representative. Mia Love (left), Utah Attorney General Sean Reyes, and Nature’s Sunshine CEO Gregory Probert at the company’s new building. 21, 2018.

But she said some companies use “smoke and mirrors” to give the illusion that they are doing more than they actually are, using manipulative claims, misleading language or hiding behind subsidiaries.

Sun of nature and Russia

Nature’s Sunshine is currently rated D on an A to F scale in the Yale University database by researchers who described it as “postponing future planned investment/development/marketing while continuing with core business.” It is one of only three companies in Utah with a D rating – all MLMs with a range of essential oils. The other two are Young Living and doTerra.

Young Living and doTerra have already faced criticism in the press for their involvement, with the companies opposing Yale’s list and celebrating their significant humanitarian donations to Ukraine.

Both of these companies are privately owned, making it difficult for the public to assess their relationship with Russia.

However, Nature’s Sunshine is a public company that is required to disclose detailed information, including about its activities in Russia, in its public records.

The company combines its revenues in Russia, Ukraine and Belarus with net sales of $51.2 million in 2020 and $61.4 million in 2021, according to financial statements the company has filed with the federal government. Nature’s Sunshine reported $6 million in assets in the region at the end of 2021.

“Due to the uncertainty associated with the length and extent of this conflict, we are currently unable to assess the impact on our business, financial condition or results of operations,” the company said in a March 8 statement, days after the incident. Russian invasion of Ukraine.

During an earnings call, CEO Terrence Moorehead said the region had three to five months of inventory left.

Nature’s Sunshine spokesman Chris Monteiro told Utah investigative reporters that exports to both Ukraine and Russia have been suspended. He said the company hopes to resume sales in Ukraine as soon as logistics allow, but did not give a clear answer as to whether the company plans to resume exports to Russia after current stocks are depleted.

“We are saddened by the suffering, loss of life and humanitarian crisis caused by Russia’s invasion of Ukraine,” he said in a company statement. “We pray for peace and hope for a speedy end to this conflict.”

He also cited support from the Impact Foundation, which has donated over $80,000 to support relief efforts in Ukraine.

US currency

Tian said Nature’s Sunshine’s operations in Russia are of particular concern because they use the US currency in the region. The company’s documents note that the dollar is more stable than the ruble.

“It is true that the ruble is a particularly volatile currency,” Tian said. But he said the company is undermining US foreign policy by pumping dollars into the Russian economy at a time when President Joe Biden’s administration is trying to cut off foreign exchange.

Tian also pointed to other steps the company could take to reduce its operations in Russia, including banning distribution centers from placing goods in the hands of retailers.

Hursty said international companies could also help the pressure campaign against Russia by shutting down its social media pages and websites.

Nature’s Sunshine’s financial filings suggest that the company controls its international operations either directly or through contracts with third parties.

But Nature’s Sunshine says the company’s Russian operations are beyond its control. Monteiro said any of Nature’s Sunshine’s products on the Russian market are already available from select sellers because the company has had no production capacity in the country since 1999. He said the company’s Russian website and Instagram page “belong to a team in Russia that acquired the business in 1999.” This appears to be in conflict with publicly available documents indicating that the Russian operations are part of Nature’s Sunshine’s business and not a separate entity.

Robert Fitzpatrick, MLM critic and author of Ponzinomics, the untold story of multi-level marketing, said that no significant number of independent salespeople can go against the wishes of an MLM company. These companies typically have tight control over their entire sales chain, he said. If a company wants to stop selling its products, it can simply say that sales are no longer allowed.

“MLMs don’t just sell products,” he explained. “They sell registration in a business plan. Buying products is part of a model for members who then earn money by hiring others who must buy in a similar way. The business is tightly integrated with recruitment lines and monitored for each enrollment.”

Fitzpatrick said multi-level marketing is inherently unethical because only a tiny percentage of sellers at the top of the pyramid can ever make a profit, and they will do so at the expense of the vast majority of those downstream. He said that Nature’s Sunshine was not unique in this regard, but he would not dare to take the word of any such organization.

According to the recording of the event, Russian distributors of Nature’s Sunshine were optimistic about the prospects for their region during the April 5 conference in Moscow.

The speaker of the conference assured the audience that the work will continue as usual, and there will be no problems with the supply of products. There was no direct mention of the war.



Newsletter

Join the thousands of people who already receive our daily newsletter.






Leave a Comment