Siemens set to violate sanctions regime, helping build power stations in Crimea

Siemens logo

 

2015/07/01 • Analysis & Opinion, Crimea, Featured, Op-ed, Russia

We are seeking an economic or legal advisor that could consult us on what measures are available to make sure that Siemens doesn’t get away with violating EU sanctions – please contact us at euromaidanpress (a) gmail.com

According to the Russian business newspaper Vedomosti, German multinational technology giant Siemens entered into a contract to supply modern gas turbine-powered electricity generating plants for Sevastopol and Simferopol in Crimea, the Russia-occupied Ukrainian peninsula, in violation of Western sanctions.  EU sanctions prohibit European Union companies from either exporting energy technology or providing services for energy infrastructure in Crimea. The contract with the Russian engineering company Techpromeksport  at issue was signed last spring and the downpayment has already been made  for two new power stations in Crimea. The plant producing the equipment is a joint company of Siemens AG, which owns 65 percent, and the company Power Machines OJSC.

Russian heavy howitzers stationed in the Crimean village of Voloshine next to the unoccupied Ukrainian territory facing the dividing line. (Image: Ukrainian patriot in Crimea via Twitter)

Russian heavy howitzers stationed in the Crimean village of Voloshine targeting the unoccupied Ukrainian territory. (Image: Ukrainian patriot in Crimea via Twitter)

Specifically designed to skirt the Western sanctions targeted against Putin’s annexation of Crimea, the contract states that the turbine plants will be shipped to the town of Taman in the Krasnodar region of Russia, just across the strait from Crimea. Vedomosti‘s source stated that this was only done “as a formality” to get around the sanctions. Then the Siemens technology will be transported to Crimea, which will be its final destination. It is unclear who disclosed this information and for what purpose. Whether it is a Siemens competitor in Russia, an official that did not get his share of the bribe, or the Russian government intending to gauge Western reaction in advance of the alleged violation, the chances that the equipment will remain in Taman are extremely dubious. The severe shortage of electric power-generating capacity exists in the occupied Crimea fully dependent on the Ukrainian power grid, not in Taman. The tens of thousands of Russian military now stationed in the peninsula need that electric power to keep their war machines operational and to not be dependent on Ukraine.

crimea

Moreover, even technical maintenance of the plants will not be affected by the sanctions, as replacement parts could be “easily purchased” from Siemens in China or Iran, while maintenance servicing can be procured in Russia, according to Vedomosti.

In an official statement published on their site, Siemens has refuted the allegations, claiming that it has not signed a contract with Technopromexport in which equipment will be supplied to Crimea. Refusing to disclose the details of the contract, Siemens stated: “we have no reason to believe that the gas turbines mentioned in the news articles are destined for Crimea.” According to the Russian energy portal neftegaz.ru, Techpromeksport has also refuted the claims and stated that the equipment will be used only for generators in Taman. However, no official notice has been published on their site.

If the equipment indeed ends up in Crimea, would Siemens  be held accountable for violating the sanctions regime? German law provides for fines and personal criminal liability for such actions. However, Vedomosti provides the opinion of Nikolai Zaichenko, a partner of the Nevsky IP Law firm: Siemens could get away with it – according to Russia’s private property law, the customer has a right to redistribute and ship to other regions the product ordered from the supplier. Moreover, Siemens could just say that it trusted the information in the contract, he adds. According to another expert Arthur Zurabyan, the EU sanctions apply to subsidiaries of European companies with a share of foreign capital above 50%. In theory, the German side could challenge this criterion if it proves that it was the Russian side that made the decision on this issue; a minority shareholder could have additional powers in this case, adds Zurabyan.

If Siemens equipment will indeed be shipped to Crimea, this would be a bold violation of the Western sanctions.  Siemens is a sophisticated player on the world’s energy stage and should not be turning a blind eye to Russia’s intended use for its equipment. If Siemens didn’t have knowledge of Russia’s intent before, it certainly does now that the deal has become public. It will be critical for Siemens to abide by the law and either ensure that the equipment stays in Taman or stop the execution of the contract. Otherwise, it will run afoul of the spirit of the sanctions and will support the Russian annexation of Ukrainian territory. In addition, going forward with this deal while the world is watching could create a backlash against the company and complicate Siemens’  future business in Ukraine and other countries in Eastern Europe threatened by Russian neo-imperialism. As a global security matter, skirting the sanctions regime would further embolden Putin and sabotage the agreement among the Western world to oppose Putin’s war via non-military means.

We request that Siemens makes public the ways it plans to ensure that the equipment does not end up serving Putin’s occupation regime in Crimea and takes the necessary enforcing measures.

This slideshow requires JavaScript.

 

 

Edited by: Melodia Kouklewsky

Tags: , , , , , ,

  • W8post

    Frau Merkel taking care of [German] business…
    (Siemens Greek bribery scandal – Wikipedia)
    (The World Wide Web of Siemens’s Corruption – ProPubli)

    (At Siemens, Bribery Was Just a Line Item – NYTimes.com)

    as one can see, they (Siemens) know their way around [pun!]

  • Dagwood Bumstead

    If true, this would be an extremely short-sighted and stupid move by Siemens to say the least. First, the German government would take the company to court for violating the EU sanctions which could result in a very hefty fine plus possible jail sentences for the management.
    Secondly, Kyiv can and will take them to court for dealing with the occupying power over the Crimea without Kyiv’s permission. Remember that nobody has recognised the illegal annexation of the Crimea apart from a few crackpot countries such as Venezuela and Nicaragua. Crucially, neither has the German government. Siemens would lose such a court case and,again, could expect a hefty fine from these proceedings as well. Dealing with Russia re the Crimea is totally illegal in international law. The Siemens management don’t have a leg to stand on.
    The best thing Siemens mamagement can do is cancel the deal and apologise to both the German and Ukrainian governments. Otherwise it will be in deep you-know-what.

    • puttypants

      If they pursue this track I believe the executives should be charged with criminal intent.

  • Jack McColley

    During World War II, ITT provided telephone equipment for the Nazis and Ford Motor Company provided engines for the Nazis. The simply shipped it through “neutral” Spain to get around the restrictions. Multi-national companies are interested in one thing: the bottom line. Conflict and wars benefit them greatly. They can sell to both sides and make a pile of $$$$$$$$$$ No morality here.

    • Dagwood Bumstead

      Don’t forget various US oil companies shipping oil to “neutral” Spain which then ended in occupied France.

  • Mike Tiller

    I hope everyone will be realistic and forget about it ASAP, spending your energy for talking nonsense is ridiculous. Yes, generations will pass and everyone in other countries (maybe not Russia and Ukraine) will forget about Crimea, whom it belongs to and even its name…. people, not politicians, who change every 4 years will be determining what they want to know and listen to and what they will just “let go”. Same goes to those who live in Crimea. In the long run, people just want peaceful coexistence and decent living conditions. Siemens as a capitalist company just want money and best for their Founders, Managers, Staff and who knows what else. It’s the world of free market now, enough of politics. Some people with “Napoleon complexes” just want to tell others what to think and to do. Go see therapists and shrinks.

  • ViZhy