Russian Evasion Networks Use Shell Companies in Germany and Malaysia to Acquire Technology for Military Use | Kharon The Kharon Brief

Russian Evasion Networks Use Shell Companies in Germany and Malaysia to Acquire Technology for Military Use

By Kharon Staff

February 16, 2023

The recent sanctioning and arrest of a Russian national for exporting U.S. military and dual-use technologies to Russia revealed only parts of a broader network of companies in Europe and Asia that acquired sensitive dual-use electronics for Russia’s defense industry prior to, and following, the 2022 invasion of Ukraine.    

In October 2022, the U.S. Department of the Treasury designated Russian national Yuri Orekhov and two companies he controlled for procuring military and dual-use technologies from U.S. manufacturers for Russian end-users. At the same time, the U.S. Department of Justice indicted Orekhov and six co-conspirators in a global scheme to purchase U.S. technologies and sanctioned Venezuelan oil. 

The Russian Space Program

The U.S. indictment accuses Orekhov and his co-conspirators of illegally acquiring semiconductors and other microelectronics used in fighter aircraft, missile systems, smart munitions, radar, satellites, and other space-based military applications from U.S. companies. One of their methods was to falsely claim they were acquiring items for the Russian state space corporation Roscosmos and other Russian space program entities, taking advantage of less stringent U.S. oversight of exports for the space program. 

NDA Nord-Deutsche Industrieanlagenbau GmbH, a German company owned by Orekhov and one of his indicted co-conspirators, Artem Uss, was designated with Orekhov in October 2022. The second company designated with Orekhov was a UAE-based company named Opus Energy Trading LLC. Orekhov used NDA Nord-Deutsche and Opus Energy Trading in his illegal procurement schemes, according to the Treasury and the U.S. indictment.   

NDA Nord-Deutsche is co-located in Hamburg with SKOY Aeroservice GmbH, which was wholly owned by Orekhov until 2017, according to the German Company Register. NDA Nord-Deutsche maintains a branch in Norway and a separately registered subsidiary in Switzerland. 

Following the Russian invasion of Ukraine, Orekhov and his network shipped U.S.-origin electronics to a sanctioned Russian defense procurement firm. From February 28 to March 31, 2022, NDA Nord-Deutsche shipped U.S.-origin electronics to Moscow-based company OOO Radioavtomatika, according to the indictment. The U.S. designated Radioavtomatika on March 3, 2022, then in September 2022 designated Radioavtomatika’s leadership team and network of foreign front companies it uses to procure items for Russia’s defense industry in circumvention of Western sanctions.

A Falsified End User 

Another frequently used scheme was to falsely claim that the end user was a Malaysian company, NDA Aerospace Research Sdn. Bhd. Orekhov co-owned NDA Aerospace with a former managing director of the U.S.-sanctioned NDA Nord-Deutsche, according to corporate information.

Orekhov used NDA Aerospace as the false end user in numerous attempts to acquire semiconductors and parts for fighter aircraft from U.S. suppliers, according to the indictment. A New York-based company supplied Orekhov and NDA Nord-Deutsche with military-grade electronics suitable for use in weapons systems, military aircraft, and satellites in five separate transactions in 2018-2020, believing that NDA Aerospace was the end user, according to the indictment. A California-based company obtained an export license to ship semiconductors with satellite and military applications to NDA Aerospace in a 2018 transaction described in the indictment. 

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