Over the past year and a half, at least 1.2 million euros worth of sanctioned technology has been shipped to Russia via a Dutch company owned by a Russian businessman. It shows from research by News hour to illegal trade and sanctions circumvention from the EU to Russia.
In collaboration with the German ARD, Nieuwsuur last Thursday already highlighted another company in Germany that sent large shipments of electronics for the defense industry to Russia. The German police raided the company just before the broadcast.
In the Dutch case, which Nieuwsuur paid attention to this Saturday, it concerns the company ETW-Tekhnologika BV from Voorschoten, which is owned by the Russian businessman Michaïl Volovik. The company was successively managed by two Dutch directors. Both stated to Nieuwsuur that they were not aware of the violations and have since resigned. The Russian owner could not be reached for comment.
According to the investigation, Volovik’s ETW buys technological items in the West and then sells them to Russia via Latvia as ‘medical’ goods, which are exempt from sanctions. According to former ETW director Freek Snel, he initially had no reason to doubt the legality of the action. “As long as those goods go directly to Russia and payments come directly from Russia, the matter is reasonably controllable,” says Snel. According to him, the invoices were in order and customs allowed the goods to pass.
Exception in sanctions legislation
But in the period after the Russian invasion of Ukraine and the imposition of Western sanctions, Snel suddenly saw the final destination of the goods change. The items no longer had Russia as their final destination, but went via Russia to destinations in Kazakhstan, the Emirates and Hong Kong, where new customers suddenly appeared. Payments to ETW also no longer came from Russia, but were channeled through companies elsewhere. The company cleverly took advantage of an exception in the sanctions legislation, which stipulates that the transit of goods via Russia to third countries is permitted. However, Russian customs data seen by Nieuwsuur show that dozens of goods were cleared in Moscow and remained in Russia.
The medical destination of the goods is also questionable. Customs data shows that ETW shipped items such as magnets and cooling, but also plugs and sockets that can be used to connect printed circuit boards to processors. The Russian defense industry, Nieuwsuur states in the report, “desperately needs such things to fire missiles at Ukraine.” In addition, Volovik’s wife has a company in Russia that counts sanctioned Russian state-owned companies such as Gazprom, Rosneft and the Russian defense company Remdizel among its clients, according to the website.
‘Useful idiot’
Shortly after the start of the war and sanctions, Director Snel saw the number of transactions increase rapidly. When he heard from “someone at the [Nederlandse] government” received a tip that the case was not right, he resigned. “Naïve,” he now calls himself in an interview, and a “useful idiot.”
There is no trace of the Russian owner, who is said to live in Israel and, like many wealthy Russians, has a passport from the Caribbean archipelago of St Kitts and Nevis. At an industrial estate in Latvia, from where ETW would forward the goods to Russia, the journalists are also frustrated. The broadcast shows that there are strong indications that internationally operating businessmen such as Volovik often have connections with the Russian intelligence services, which closely monitor the illegal trade in equipment useful for the Russian defense industry.
The research once again shows how inventive Russian or Russian-affiliated companies are in circumventing Western sanctions. Since the war in Ukraine, countless trade routes have been shifted, companies have been converted and new companies have been set up as a ‘cover’. Western companies that say they have left the Russian market also appear to be still active there, or are active again in some cases. It appears to be relatively easy to do so via third countries such as Kazakhstan, Turkey, Armenia and China dual use products into Russia: medical or household items, parts of which such as chips can be used for the defense industry.
Also read
this report on sanctions circumvention in Kazakhstan
Investigated earlier this year NRC ‘grey trade’ via Kazakhstan. An anonymous businessman in the Kazakh city of Almaty then told how his country was flooded with Russian businessmen after the imposition of the first anti-Russian sanctions.
After Russia was cut off from the international SWIFT payment system, Kazakhstan frantically opened businesses and bank accounts and bought expensive apartments, driving up housing prices. In the months after the invasion, exports of washing machines, semiconductors, refrigerators and other appliances from Europe to Russia’s neighbors skyrocketed.
Goat paths
Despite warnings from the European Union and the United States to third countries about so-called secondary sanctions, and the promises of those countries to respect the sanctions from now on, trade to Russia appears to continue in many cases through all kinds of back and forth. This is partly possible because a country like Kazakhstan wants to keep both Moscow and the West on friendly terms and strict control is technically virtually impossible.
It is interesting that in the case of ETW from Voorschoten, the route was reversed: it did not go via third countries to Russia, but went to Russia under the guise of ‘transit’ to elsewhere.
A spokesperson for Dutch customs acknowledges in the Nieuwsuur broadcast that detecting sanction violations is an almost impossible task for the Netherlands and other European countries. “We cannot check whether goods are actually forwarded or ‘accidentally’ remain in Russia,” says the spokesperson. It is notable, however, that Dutch customs say they do not use Russian trade figures and import data, and that European data is sufficient.
Another problem is that the EU does issue sanctions, but has not made any agreements about additional manpower to monitor compliance with the sanctions. Countries in the Baltic States in particular lack money, knowledge and people, a Lithuanian customs employee told Nieuwsuur in Thursday’s episode. “The EU has introduced sanctions without foreseeing how they should be enforced,” says the customs official.
ETW is not the only Dutch company in Russian hands that is circumventing the sanctions. Last year, Russian businessman Dmitri K. was sentenced to 18 months in prison by a Dutch judge in a similar sanctions case. Although the judge assessed the risk of flight as low and released K., the man immediately left for Moscow after the verdict.
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