Scheme to smuggle sanctioned goods for Russian army exposed

An investigation by the Russian non-governmental media Verstka claims that almost all sanctioned goods worth hundreds of billions of dollars continue to enter Russia.

The investigation is based on classified data from Russian customs and communication with knowledgeable interlocutors – logisticians, freight forwarders, and entrepreneurs who know about the supply of sanctioned goods.

The journalists found out that in the first half of 2023 alone, sanctioned chips made in the West were imported into Russia worth more than $500 million. These components are used to manufacture missiles and other weapons.

They also imported numerous pieces of equipment used by the Russian military-industrial complex, civil aviation equipment worth at least $171 million, and iPhones worth $389 million.

According to their conclusions, it is now possible to import “anything from anywhere in the world – from dual-use chips to a turbojet engine for Airbus” to Russia, and Western companies are involved in schemes to circumvent sanctions through third countries.

The investigation claims that components such as Intel processors, Xilinx and Texas Instruments chips, and Analog Devices Inc. transceivers used in the X-101 strategic cruise missile are still being imported into Russia.

“Over the past six months, the Russian authorities have cleared over $98 million worth of components from American Analog Devices Inc., over $75 million from Xilinx, over $42 million from Microchip Technology, at least $38 million from Texas Instruments, and over $28 million from Infineon, Germany’s largest semiconductor manufacturer,” the investigation says, mentioning products from Marvell, Cypress Semiconductor, and Atmel.

Intel and AMD products, including microprocessors, were imported for more than $169 million and $35 million, respectively.

As noted, almost all Western electronics enter Russia through China and Hong Kong. Thus, the top 3 largest shippers of Intel components are Time art international limited (for $40 million), Union Tech Inc. Limited (over $17 million), and Dexp International Limited (almost $15 million). Among the intermediary exporters, the Turkish company Margi̇ana Inşaat Diş Ticaret Li̇mi̇ted Şi̇rketi̇ is also mentioned.

Hundreds of companies import dual-use chips, and 11 of the 25 largest importers are direct suppliers to the Russian military-industrial complex. The investigation cites dozens of specific examples.

The Unimatic company allegedly imported at least $5 million worth of Italian O.M.V. and German Arinstein machines to Russia. One of Unimatik’s main state customers is the Russian Plant No. 9, a leading manufacturer of tank guns. A company from Hong Kong shipped the German machines.

In its simplest form, the import of sanctioned goods is organised through the registration of a company in a third country that will act as an exporter, and it buys the goods there or orders them directly from the manufacturer and re-exports them to Russia.

Non-Russian citizens are preferred to register these intermediaries because suppliers pay attention to this. China or Turkey are the most commonly chosen countries for registration.

Some cargo goes through the UAE, Kazakhstan, Kyrgyzstan, Uzbekistan, and Armenia. The interlocutors mention Georgia as a country where problems may arise with the re-export of sanctioned goods, but it is not shown in the infographic.

China is called a key hub for re-exporting sanctioned goods to Russia.

The latest package of EU sanctions aimed to close loopholes in the sanctions already imposed on Russia and combat their circumvention through third countries.