Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
A German businessman has been charged by prosecutors with smuggling millions of euros of sensitive engineering equipment to Russia to manufacture sniper rifles.
Referred to in the prosecution as Ulli S, the executive is accused of having used a network of shell companies in Switzerland and Lithuania to hide the sales of equipment to an unnamed Russian arms company. In charges filed in Stuttgart on Monday, German prosecutors said six specialist German machines worth about €2mn had been shipped to Russia via the network in 2015-16.
Germany has enforced a ban on the sales of arms and dual-use equipment used to make weapons to Russia since 2014, in compliance with an EU embargo following Moscow’s illegal annexation of Crimea from Ukraine that year.
Faced with critical shortages of precision engineering equipment and high-tech electronics, Russia has since ramped up its efforts to illegally source components and machinery — often using its security services to help foreign entities violate sanctions.
After President Vladimir Putin launched his full-scale invasion of Ukraine in February last year, the importance of such illicit networks has only grown. Concern in western capitals has mounted in recent months about Russia’s ability to evade export bans intended to hamper its war effort.
Germany, with its network of small and medium-sized specialist engineering companies, has been a particular target.
In a separate case Waldemar W, a Russian-born German citizen, was arrested by police in August under suspicion of setting up a network to supply sensitive electronic equipment to Russia, including for use in Orlan-10 drones.
In their charges against Ulli S, German prosecutors alleged that he was fully aware of the purpose for which the machines he sold would be used.
They claimed he established a corporate chain that would help provide plausible deniability about the machines’ ultimate recipient, and said he sent employees to Russia to install and calibrate the machines at the arms manufacturer’s facilities. His company also pledged it would help to train Russian factory workers to operate the machines to make guns, they added.
The indictment against him also claimed that he shipped four sniper rifles in 2015 from the Russian manufacturer — also a breach of sanctions rules — to western Germany, to ensure the machines would function at maximum efficiency for his Russian client. Ulli S forged the dates on the rifle order’s contracts so that it predated the EU’s embargo, the indictment also claimed.
Ulli S has not yet appeared in court to respond to the charges. The German national was arrested in France in August and transferred back to his home country for questioning. It is standard practice in German criminal investigations for the full names of suspects not to be disclosed.
In March, the US said it was doubling down on efforts to police sanctions, amid fears that Moscow was securing access to the sensitive materials it needed by routing shipments through third-party countries such as the Gulf states and Turkey.
Switzerland has also become an increasing point of focus. Prosecutors claimed Ulli S executed two of the three banned contracts he made with Russian entities via the Alpine country.
Read the full article here