German Machine Tool Manufacturer Continues to Work for Russia

Wednesday, 27 September 2023

One of the world's largest cutting machine tool manufacturers, the German-Japanese company DMG MORI, continues to help the Russian military industry despite the fact that it announced its withdrawal from Russia after the start of a full-scale war against Ukraine.

According to a project by Agentstvo (Agency) that includes Russian journalists who left Russia after the start of the full-scale invasion of Ukraine, the company has had a machine tool plant in Ulyanovsk since 2015. Despite the fact that at that time EU sanctions banned the supply of equipment and technology to Russia's military industry, the Ulyanovsk plant was named as a customer of the Russian military industry, the Rostec state corporation and its controlled companies that produce engines for missiles and military aircraft, as well as Su, MiG and Il fighters and bombers.

This plant was important to Russia because Russian companies do not produce modern machine tools in the required quantities.

Almost immediately after the start of the full-scale war, on 14 March 2022, the company announced its withdrawal from Russia and the shutdown of the machine tool plant in Ulyanovsk. However, this actually did not happen, as Agentstvo found out.

The register of legal entities says both of DMG MORI's Russian-based legal entities, DMG MORI RUS LLC and Ulyanovsk Machine Tool Plant LLC, continue to operate in Russia without changing ownership. 

Both companies still have revenue, although it decreased by 50% in 2022. The companies also have employees – at the end of 2022, they had 92. 

An Agentstvo source close to the company's Russian management confirmed that after the war broke out, the company continued to operate and began assembling at least 200 machine tools, as the components for them were at the plant when the shutdown was announced.

The fact that after March 2022, Russian legal entities began to receive components and machine tools through Asia also proves that the company continued to operate. The ImportGenius database of customs declarations shows that since March 2022, the Ulyanovsk plant has received components worth US$261,000 from Indian companies. And DMG MORI RUS purchased machine tools of unknown manufacture from a Chinese company for US$195,000.

DMG MORI is reportedly no longer selling its machine tools directly, but through related companies. The journalists studied the financial statements of these companies and found that they are actively selling DMG MORI machine tools to the Russian military industry and companies under Western sanctions.

On 20 September, the Ukrainian National Agency for the Prevention of Corruption (NAPC) added DMG MORI to the list of international war sponsors. The NAPC stated that the company's machine tools continue to be purchased by Russia, which is unable to manufacture weapons and components without them.

This summer, the EU member states agreed on a package of sanctions against Russia aimed at evading sanctions through third countries.

The European Commission shared recommendations for businesses on how to avoid becoming complicit in circumventing sanctions against Russia by trading with third countries.

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