Investigation uncovers flourishing trade in sanctioned technology flowing through Kazakhstan to Russia.

Investigation uncovers flourishing trade in sanctioned technology flowing through Kazakhstan to Russia.
The US has warned Kazakhstan to curb its trade in sanctioned technology with Russia, but the trade is flourishing. / bne IntelliNews
By Ben Aris in London May 30, 2023

A joint investigation by German magazine Der Spiegel and the Organised Crime and Corruption Research Centre (OCCRP) has uncovered details of how banned technology is avoiding sanctions and is being shipped via Kazakhstan into Russia.

The West has been concerned about sanctions leakage via Russia’s friends in Central Asia. Earlier this year US Secretary of State Anthony Blinken flew to Astana and warned Central Asian leaders that the US was closely monitoring their compliance with sanctions against Moscow.

During the meeting, Kazakh Foreign Minister Mukhtar Tleuberdi acknowledged the challenge of avoiding sanctions evasion by Russia due to Kazakhstan's membership in the Eurasian Economic Union (EEU), which eliminates customs borders between member countries. Blinken’s trip was a warning to Central Asian leaders, but Washington is wary of cracking down too hard on the region for fear of driving the five Stans deeper into the arms of Moscow, due to their long cultural ties, heavy economic dependence on Russia and few alternatives to co-operating with their huge neighbour.

Blinken’s trip prompted some statements of solidarity and a burst of inspections to “ensure sanctions compliance” but the recent customs statistics indicate that Kazakhstan’s trade in technology continues unabated, particularly in the areas of micro-electronics and drones, the investigation found.

Imports of integrated circuits to Kazakhstan have more than doubled since the Russian invasion, reaching $75mn in 2022 compared with $35mn in the previous year. Conversely, Kazakhstan's export of microcircuits to Russia remained relatively low at $245,000 in 2021 and $18mn in 2022.

Furthermore, the import-export report from the Bureau of National Statistics of Kazakhstan has revealed the emergence of drones in trade activities. While no mention of drones was made in 2021 customs data, Kazakhstan imported drones worth $5mn and exported $1.23mn worth of drones to Russia in 2022.

Detailed customs statistics from Russia show that the Kazakh company Aspan Arba sent over 500 drones to Russia in 2022. Aspan Arba, registered in Kazakhstan in April 2022, became the official dealer of Chinese DJI drones in the country. The Russian firm Celestial Mechanics also emerges as a key player in the drone trade.

Aspan Arba, meaning "heavenly cart" in Kazakh, shares similarities not only in name but also in ownership with the Russian company Celestial Mechanics. Ilya Golberg, the founder of Aspan Arba, has the same name as the owner of Celestial Mechanics. Mikhail Sapozhnikov, the current director of Aspan Arba, was previously a co-owner of Celestial Mechanics. Furthermore, leaked data from the courier company CDEK revealed that the phone number listed on the Aspan Arba website corresponds to that of an employee of Celestial Mechanics, the investigators found.

These findings raise concerns about the extent of sanctions evasion facilitated by Kazakhstan and the potential collusion between Aspan Arba and Celestial Mechanics. International scrutiny on sanctions compliance is intensifying ahead of the implementation of the eleventh package of sanctions, which could land Kazakhstan in hot water.

Celestial Mechanics' other customers

Celestial Mechanics is a new Russian company specializing in drones. In April 2022, the Moscow Regional Federation of Armed Conflict Veterans, Lynx, purchased DJI Mavic 2 drones from Celestial Mechanics for a total value of RUB11mn. Lynx's founder, Andrey Mezhevykh, a municipal deputy and member of United Russia, has a controversial background. He was included in Ukraine's "Peacemaker" base for allegedly violating the state border in an attempt to enter the territory occupied by Russian-terrorist groups in the Donbas region.

Another purchase of a drone, the DJI Matrice 300 RTK quadrocopter, was made by the Kamchatka Regional Council of War and Labour Veterans for RUB2.7mn in February 2023. When asked if the drone was intended for participants in the war in Ukraine, Yuriy Zhmurko, the head of the council, responded with the provocative question "Who does Crimea belong to?" and declined to provide further answers.

The Future of Kamchatka Foundation, created to support social, charitable, cultural and educational initiatives, has also acquired drones from Celestial Mechanics. The foundation purchased quadrocopters worth RUB1.5mn, but it did not respond to inquiries from Important Stories, a Russian publication investigating these purchases.

Among the prominent buyers of Celestial Mechanics drones is DJ Ars Moscow, which received goods worth almost RUB500mn. DJ Ars, operating under the Digbox brand, sells drones and other equipment on Ozon, one of Russia's largest online stores. It is noteworthy that the military sector is also a customer of this platform.

Golberg, the owner of Celestial Mechanics and Aspan Arba, declined to answer questions posed by Important Stories, leaving unanswered queries about the purpose and potential implications of these drone sales.

Microcircuits from Kazakhstan .

Another Russian company, Stack, based in a Moscow apartment, is another player in the international trade of electronic components that is suspected of sanctions busting.

Its website highlights its achievements and its role in supplying electronic components to the market. Import data reveals that in the period of 2022-2023 Stack imported electronic components worth $4.2mn from Kazakhstan. While specific manufacturer information is not available, the data indicates that the components originated from countries such as Hong Kong, Germany, the Netherlands and Singapore.

Among Stack's notable clients are the Russian special design bureau MPEI, responsible for developing radio engineering systems for Roskosmos, the Russian space agency, and the Moscow Searchlight Plant, a manufacturer of power supply systems for Russian missile systems.

Further investigations conducted by Important Stories reveal that in 2022 Stack primarily supplied components to a company called "Set-1." The nature of this partnership and the specific applications of the supplied components remain unknown.

Questions arose about the sourcing of components by Stack. Investigators found that a company named Elix-St, owned by Russians Evgeny and Elena Chernet and based in Stuttgart, Germany, is a key player in this supply chain. Elix-St's related company in Kazakhstan, Da Group 22, owned by Alexander Chernet, receives components from Elix-St and subsequently supplies them to Stack in Russia. This arrangement involves prominent manufacturers such as Analog Devices, Infineon, Texas Instruments and STMicroelectronics, which have previously claimed to have severed ties with Russia.

The investigations also found the importing of American microelectronics to Russia by Prime-Ek was facilitated by sending them through Kazakhstan. Prime-Ek and Prime, another company with a similar name, share offices in the same building as Prime, which has been linked to state corporation Rostec, another state organ and a major player in the Russian arms industry. One of Prime's significant clients is the Penza production association Elektropribor, which manufactures communications equipment for the Ministry of Defence, including the P-240I complex used by Russian military forces in Ukraine.