Tracking cookies

To make our website even easier and more personal, we use cookies (and similar techniques). With these cookies we and third parties can collect information about you and monitor your internet behavior within (and possibly also outside) our website. If you agree with this, we will place these tracking cookies.

Yes, I give permissionNo thanks
Logo
{aantal_resultaten} Resultaten
Source - Reuters

If you can't, but you really want to, you can: how technology is coming to Russia avoiding the sanctions

16.12.2022

In March this year, a new firm appeared in Turkey’s corporate registry. Azu International Ltd Sti described itself as a wholesale trader of IT products, and a week later began shipping U.S. computer parts to Russia.

Business was brisk, Russian customs records show. The United States and the EU had recently restricted sales of sensitive technology to Russia because of its Feb. 24 invasion of Ukraine, and many Western tech companies had suspended all dealings with Moscow.

Co-founded by Gokturk Agvaz, a Turkish businessman, Azu International stepped in to help fill the supply gap.

Over the next seven months, the company exported at least $20 million worth of components to Russia, including chips made by U.S. manufacturers, according to Russian customs records.

Azu International’s rapidly growing business didn’t come from a standing start, Reuters reporting shows: Agvaz manages a wholesaler of IT products in Germany called Smart Impex GmbH. Before the invasion, Russian custom records show that the German company shipped American and other products to a Moscow customer that recently has imported goods from Azu International.

Reached at his office near Cologne in October, Agvaz told Reuters that Smart Impex stopped exporting to Russia to comply with EU trade restrictions but sells to Turkey, a non-EU country that doesn’t enforce most of the West’s sanctions against Moscow. “We cannot export to Russia, we cannot sell to Russia, and that’s why we just sell to Turkey,” he said. Asked about Azu International’s sales to Russia, he replied, “This is a business secret of ours.”

Contacted again shortly before publication, Agvaz said Smart Impex “observes all export restrictions and manufacturer bans” and “has not circumvented Western sanctions against Russia.” He said he couldn’t answer questions about Azu International. Turkish corporate records show he sold his 50% interest in the Istanbul company on Nov. 30 to his co-founder, Huma Gulum Ulucan. She couldn’t be reached for comment.

Azu International is an example of how supply channels to Russia have remained open despite Western export restrictions and manufacturer bans. 

At least $2.6 billion of computer and other electronic components flowed into Russia in the seven months to Oct. 31, Russian customs records show. At least $777 million of these products were made by Western firms whose chips have been found in Russian weapons systems: America’s Intel Corp, Advanced Micro Devices Inc (AMD), Texas Instruments Inc and Analog Devices Inc., and Germany’s Infineon AG.


Photo: infineon.com

A joint investigation by Reuters and the Royal United Services Institute (RUSI), a London-based defense think tank, details for the first time the global supply chain that continues to feed Russia with Western computer components and other electronics. The investigation into this trade identified a galaxy of obscure importers and exporters, like Azu International, and found that shipments of semiconductors and other technology continue to arrive in Russia from Hong Kong, Turkey and other trading hubs.

One Russian importer, OOO Fortap, based in St. Petersburg, was set up by a Russian businessman in April and has since imported at least $138 million worth of electronics, including U.S. computer parts, according to Russian customs records. They show that one of Fortap’s biggest suppliers is a Turkish company, Bion Group Ltd Sti, a former textile trader that recently expanded into wholesale electronics. Bion’s general manager declined to comment.

Another Russian importer, OOO Titan-Micro, registered an address that's a house in a forest on the northern edge of Moscow. It, too, has imported Western computer components since the invasion, according to the customs records.

Some of the suppliers – including firms in Hong Kong and Turkey – have ties to Russian nationals, according to a review of company filings.

The customs records – which Reuters purchased from three commercial providers – don’t identify the precise type of semiconductors and other electronic products, nor do they show what happens to the components once they arrive in Russia.

Reuters reported in August that Western companies’ mass-produced chips, in many cases not subject to export restrictions, have shown up inside missiles and weapons systems the Russian military has deployed in Ukraine.


Ukraine’s military displays sections of Russian missiles that didn’t explode on impact
Photo: REUTERS/Clodagh Kilcoyne

Reuters provided to Intel, AMD, Texas Instruments, Analog Devices and Infineon data from Russian customs records that detail shipments of their products that have arrived in Russia in recent months. Reuters excluded data between Feb. 25 and March 31 to account for shipments that might have been in transit before the invasion or before the manufacturers’ announced suspensions.

A spokesperson for Intel said the company is taking the findings “very seriously and we are looking into the matter.” The spokesperson said Intel adheres to all sanctions and export controls against Russia and “has a clear policy that its distributors and customers must comply with all export requirements and international laws as well.”

Similarly, a spokesperson for AMD said the firm “strictly complies” with all export regulations and has suspended sales and support for its products in Russia. “That includes requiring all AMD customers and authorized distributors” to stop selling AMD products into Russia.

Infineon, too, said that after the invasion, it “instructed all distribution partners globally to prevent deliveries and to implement robust measures that will prevent any diversion of Infineon products or services contrary to the sanctions.”

Texas Instruments said it has not shipped to Russia since the end of February. Analog Devices didn’t respond to requests for comment.

A spokesperson for the U.S. Department of Commerce said, “Since the start of the invasion, Russia’s access to semiconductors from all sources has been slashed by nearly 70 percent thanks to the actions of the unprecedented 38 nation coalition that has come together to respond to (Russian President Vladimir) Putin’s aggression. It is no surprise that Russia is working hard to circumvent controls.”

But the Reuters review of Russian customs data found that since the invasion, the declared value of semiconductor imports by Russia has, in fact, risen sharply.

The spokesperson said the Commerce Department had analyzed different data and therefore couldn’t comment on Reuters findings.

Putin’s office and Russia’s Ministry of Industry and Trade didn’t respond to requests seeking comment for this article.

Among the firms shipping Western technology to Russia is a Hong Kong- registered company called Pixel Devices Ltd. A Reuters journalist who visited Pixel Devices’ office in a Hong Kong business tower found a small room with cardboard boxes stacked to the ceiling, and no employees. There was little sign that the company has shipped at least $210 million in electronics to Russia since April 1, including at least $50 million in Intel and AMD products through Oct. 31, according to Russian customs records.

Company records show that Pixel Devices was incorporated in 2017 by a Hong Kong firm called Bigfish Investments Ltd, controlled by Kirill Nosov, a Hong Kong resident with a Russian passport. Nosov told Reuters in an email that he helped set up the firm but doesn’t work for it and isn’t in a position to comment about its activities.

Pixel Devices’ current owner is a Singapore company, Asia Global Neolink Pte Ltd, which in turn is owned by a Seychelles company called White Wings Ltd, according to Hong Kong and Singapore company records.

Pixel Devices’ only director at present is Pere Roura Cano, a Spaniard, who is also listed as a director of Asia Global Neolink and runs an aviation club in Catalonia.

Reached by telephone in Spain, Roura Cano confirmed that Pixel Devices has been shipping semiconductors and other products to Russia.

Pixel Devices’ website, www.pixel-devices.com, was originally registered in 2017 with a web-services firm in St. Petersburg, according to internet intelligence firm DomainTools. The website states that Pixel Devices’ “Components & Subassemblies” division serves businesses in diversified sectors including military and aerospace. In response to questions from Reuters, Pixel Devices said it doesn’t sell products to the military sector and prohibits its customers from reselling to defense companies. It said some of the information on the website is “quite outdated.”

Pixel Devices said it has been supplying IT equipment to Russia for several years and “it is possible” that it shipped Intel and AMD products this year “as part of long-term contracts.”


Photo: Intel Corporation

It said it acquires its products from manufacturers or their resellers and doesn’t supply components “that violate any binding policies imposed on the company by its partners, vendors, or distributors.” Intel and AMD told Reuters that Pixel Devices isn’t an authorized distributor of their products.

Pixel Devices said it couldn’t confirm the accuracy of the values found by Reuters of the company’s exports of electronics to Russia; it didn’t provide its own figures. It also noted that export restrictions aren’t universal and there isn’t a complete ban on the export of IT equipment to Russia. The company said it doesn’t sell to entities controlled by sanctioned individuals.

Russian customs records show that Pixel Devices’ main client in Russia is a company in St. Petersburg called OOO KompLiga. Its website, states that the firm can supply a wide range of IT products and parts. According to the customs records, since April 1, KompLiga has imported at least $181 million worth of electronics, almost exclusively from Pixel Devices.

KompLiga’s general manager, Aleksandr Kotelnikov, told Reuters he was reluctant to provide details on how his company manages to continue procuring Western electronic components.

“I’d rather not disclose details about my company’s work so as not to tip off rivals and give them a helping hand in their hard work,” Kotelnikov wrote in an email.

Not every Russian company is reluctant to discuss how to deal with export restrictions. A Moscow-based logistics firm, OOO Novelco, has been advising Russian businesses on how to continue importing foreign goods.

In September, Novelco organized a seminar in Moscow for its clients on “how to find alternative ways to deliver goods” to Russia. In a 45-minute presentation entitled “Foreign trade tactics and strategies to compensate for sanctions,” Novelco’s chief executive, Grigory Grigoriev, urged companies to stockpile products and develop diversified pools of suppliers from more than one country.

To resolve shipping problems, Novelco executives have recommended on the company’s YouTube channel using lessons learned during the pandemic, such as transporting goods through third countries, rather than directly from a supplier.

In March, Grigoriev registered in Istanbul a company called Smart Trading Ltd Sti, Turkish corporate records show. Since then, the company has shipped at least $660,000 worth of products made by U.S. semiconductor makers, according to Russian customs records.


Photo: nantonov/i Stock Editorial via Getty Images

Some other Russian firms believe it is unwise to discuss publicly how to handle trade restrictions.

In an August blog post, a senior executive at F+ tech, a Russian IT equipment manufacturer that relies on many imported components, said the business of procuring foreign parts requires discretion.

“We ourselves increase the risks of sanctions by publicly reporting on who will carry what and from where,” Evgeny Krivosheev, F+ tech’s head of production and development, wrote in a blog post, which was published by Russian business daily Vedomosti and on the company’s website. “Such publicity attracts unnecessary attention.”

Many recent shipments of Western computer parts to Russia have arrived from China and other countries that haven’t joined the United States and the EU in restricting exports to Russia.

But there are some exceptions, Reuters found. Customs records show shipments of Analog Devices and other U.S. components directly from the EU.

Elmec Trade Oü, an electronic-components wholesaler based in the Estonian capital Tallinn, shipped at least $17 million worth of goods to Russia between April 1 and Oct. 31, according to Russian customs records. These included chips made by Analog Devices and other U.S. manufacturers, the records show.

Elmec Trade’s general manager, Aleksandr Fomenko, told Reuters that his company buys its products through official channels, follows all legal requirements and complies with all sanctions and export restrictions.

Asked how his company could continue to export Analog Devices and other Western chips months after the manufacturers announced they had suspended sales to Russia, he said that “the majority” were orders placed last year. The shipments were delayed because of pandemic-related transit disruptions, he said. Analog Devices didn’t respond to requests for comment.

A spokesperson for the European Commission didn’t respond to questions about Elmec Trade. In general, the spokesperson said, “The EU takes circumvention very seriously, as it is a practice that can undermine the effectiveness of EU sanctions.” The spokesperson noted that the 27-member bloc has been encouraging other countries to align with EU measures adopted against Russia.

Source: Reuters

Licence to Kill: How Europe allows Iran and Russia to eliminate regime undesirables with impunity
Source - POLITICO

Licence to Kill: How Europe allows Iran and Russia to eliminate regime undesirables with impunity

The yuan is the new dollar or how China is benefiting from the war in Ukraine
Source - Reuters

The yuan is the new dollar or how China is benefiting from the war in Ukraine