Russian Defense Industries Acquired U.S. Technology Through Third-Country Supply Chains

Part 2 in a series on emerging Russia sanctions evasion typologies

(Source: Testing&Control)

By Robert Kim and Kharon Staff

August 8, 2022

In the years preceding the Russian invasion of Ukraine in February 2022, Russian companies acquired technology from Western suppliers through intermediaries located in third countries, Kharon research shows.

Sernia GmbH is a Germany-based company that prior to February 2022 acquired dual-use items from manufacturers in the U.S. and other Western countries and distributed them to Russian defense, military, and intelligence end users.

Sernia GmbH is connected to a network of companies that the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned on March 31 of this year for acquiring Western technology for Russian military and intelligence use. “This network operates across multiple countries to obfuscate the Russian military and intelligence agency end-users that rely on critical western technology,” according to OFAC, working “to illicitly procure dual-use equipment and technology for Russia’s defense sector.”

One of the sanctioned companies in the network is Moscow-based Sernia Film Co. Ltd., also called S-Film Ltd. Sernia GmbH supplied Sernia Film Co. with U.S. and German-origin electrical, camera, and semiconductor equipment from 2019 to 2021, according to trade records reviewed by Kharon. Sernia Film was not sanctioned at the time.

Sernia GmbH has also sold U.S.-made items to Russian companies that show a pattern of selling similar products to Russian military end users (MEUs) and state-owned Research Institutes.

From June 2019 to January 2022, Sernia GmbH sold electrical equipment manufactured in Germany, Malaysia, and the U.S. to the Russian company Sertek OOO, according to shipping data reviewed by Kharon. In 2018 Sertek, a wholesale distributor of electronic parts, sold U.S.-manufactured laboratory instruments to the Ioffe Institute of the Russian Academy of Sciences, according to tender data reviewed by Kharon. The Ioffe Institute has conducted scientific research for U.S.-listed Russian MEUs, including Concern Radioelectronic Technologies and the Design Bureau of Special Machine-Building, according to procurement data reviewed by Kharon. Concern Radioelectronic Technologies and the Design Bureau of Special Machine-Building were both sanctioned by the U.S. in 2014 and 2022, respectively.

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