Siemens considers quitting Russia

Siemens considers quitting Russia
Siemens power turbines may have been delivered to Crimea, breaking EU sanctions
By bne IntelliNews July 14, 2017

The CEO of German technology major Siemens Joe Kaeser is considering pulling out of projects and joint ventures in Russia, Russian media reported on July 14 citing a report by German magazine Wirtschafts Woche.

Reportedly the company is mulling exiting Siemens Gas Turbines Technologies, a joint venture with Russian Power Machines, and give up the 45.7% share in Russian Interavtomatika after a scandal over the supply of two Siemens gas turbines to power plants on annexed Crimea peninsula.

Earlier this week Reuters claimed that Interavtomatika, a Russian company in which Siemens owns a 47.5% stake, is supplying the German company's turbines to power plants in the peninsula in the first known breach of Crimea-related EU sanctions by a major European company.

Meanwhile the general manager of another Siemens partner in Russia Power Machines (Silovie Mashini) Roman Filippov was detained and questioned by Russian law enforcement authorities on July 13, as reported by Interfax.

Unnamed sources claimed Filippov was detained under treason accusations, which was also confirmed by sources of the RBC business portal. At the same time it remained unclear how the accusations are related to the reports of Siemens turbines finding their way into Crimea.

In response to the reports Siemens threatened to press charges against parties that moved two gas turbines "against its will" to the annexed Russian Crimea peninsula in violation of international sanctions.

"Siemens has received information from reliable sources that at least two of the four gas turbine sets, which were delivered for the [abandoned power plant] project in Taman, Southern Russia, have been moved to Crimea against our will," the company said in a statement after the report surfaced.

The Siemens turbines are reportedly a crucial part of the project to complete two  940mW power stations needed to secure the peninsula's energy needs. Such equipment cannot be independently replicated by Russian companies, Reuters claimed.

The Siemens statement referred to a power plant in the city of Taman in Russia's southern Krasnodar region. In September 2016, Vedomosti daily reported that a company called Tekhnopromexport scrapped the project and put four turbines acquired for it up for sale.

Tekhnopromexport, a subsidiary of the Rostekhnologii (Rostec) state technology agency, is also involved in the construction of power plants in Crimea and holds 17% in Interavtomatika. The company claimed that the two controversial turbines were acquired on the secondary market and modernised by domestic contractors.

"Over the last few months, our customer has confirmed to us numerous times in writing that a delivery to Crimea would not occur," Siemens explained, adding that "as a consequence, Siemens will initiate criminal charges against the responsible individuals."

Russian authorities, meanwhile, say the turbines are Russian-made.

"The turbines installed in Crimea were produced in Russia, assembled from Russian components," Kremlin press secretary Dmitry Peskov told media on July 10.

The EU sanctions against Russia and specifically against Crimea were imposed in summer 2014 after Moscow annexed the peninsula from Ukraine and supported a pro-Russian rebellion in the east of the country.