Oleg Davygora20:59, 25.07.24

Since the war in Ukraine began, chips worth about $4 billion have entered Russia through more than 6,000 companies.

In a nondescript seventh-floor office at 135 Bonham Strand in Hong Kong’s financial district, there are at least four companies with a shadowy mission: facilitating the illegal sale of Western technology to Russia .

According to The New York Times, companies located at that address purchased millions of chips and sensors for Russian military-tech companies, many of which have been sanctioned by the U.S. government.

The companies have names like Olax Finance and Rikkon Holding. Their office, with a faded number 704 on the door, appears to be unoccupied.

But the companies are a critical link in a chain that connects American research labs to Chinese factories, Russian weapons makers and the battlefields of Ukraine, and a sign that the U.S. government and tech giants cannot control where their technology goes.

Since the war in Ukraine began, about $4 billion worth of chips have entered Russia through more than 6,000 companies, including those at 135 Bonham Strand, according to a New York Times analysis of Russian customs, corporate records, domain registrations and sanctions data. The analysis examined about 800,000 shipments of banned electronic goods to Russia since mid-2021.

Even as the West sought to cut off access to semiconductors through trade restrictions, Russia had built such a robust parallel supply chain that it imported nearly as many critical chips in the last three months of 2023 as it did in the same period in 2021.

Vladimir Putin’s ability to circumvent Western trade restrictions has been one of the failures of the US-led response to Moscow’s actions in Ukraine.

Russia’s technology imports begin with U.S. chipmakers selling their products to international distributors. By law, chipmakers are not required to track where their products go. Russia then turns to international distributors — which, according to the Times analysis, are in Hong Kong, China, Turkey, India, Serbia, and Singapore — to maintain a steady supply of technology.

Some of the front companies are part of long-running networks of offshore companies owned by Russian businessmen. Four of the shell companies at 135 Bonham Strand are owned by oligarchs with ties to Russia’s military-industrial base, according to a NYT analysis.

The speed with which the shell companies have sprung into action has stunned Western regulators. As soon as one supplier is identified, more spring up in its place, sometimes with the same owner. Some of these companies operate in the U.S. backyard, including one Russian-linked firm that is apparently unwittingly run by a Latvian-Canadian retiree living in a two-story house in suburban Toronto.

China plays a major role. As the world’s leading assembler of electronics, it imports vast quantities of Western components and turns them into consumer electronics. Chinese firms could easily route those supplies to Russia, experts say.

On July 8, a Russian missile hit a children’s hospital in Kyiv. The long-range cruise missile, the Kh-101, was loaded with electronics from American chip makers.

One of the key elements was a Field Programmable Gate Array, or FPGA, chip made by American companies like Advanced Micro Devices and Intel. The chip is used in fire alarms, internet modems, missiles and drones for lightning-fast data processing and is banned from sale in Russia.

Since the war began, Russia has imported more than $390 million worth of FPGAs, according to Russian customs data. The shipments are just one part of the Kremlin’s efforts to skirt sanctions and keep critical technology flowing.

China has become the dominant supplier of chips to Russia. According to the Semiconductor Industry Alliance, 29% of all semiconductors pass through China. FPGA chips are shipped in huge quantities to Chinese manufacturers, who install them in products sold around the world.

In 2008, Russian businessman Alexei Chichenev gained control of Hong Kong-based Saril Overseas. It was one of a growing portfolio of shell companies at 135 Bonham Strand headed by Chichenev, a Russian expatriate in Hong Kong, and his partner Mikhail Vinogradov.

Over the next decade, the pair came to operate nearly a dozen shell companies with names like Syssoft and Toren Limited that engaged in international real estate development and trading, according to press releases and company websites.

According to public records, the two companies at 135 Bonham Strand, Rikkon and Midicon, were owned separately by Andrey Kozitsyn and Igor Kudryashkin, who are linked to the Ural Mining and Metallurgical Company. According to the Finance Ministry and publicly available documents, UMMC has ties to Putin, the arms industry and Russian organised crime.

In 2014, after the annexation of Crimea, Kozitsyn and Kudryashkin transferred ownership of Rikkon and Midicon to Chichenev and Vinogradov. By 2022, Chichenev and Vinogradov controlled at least 11 companies at 135 Bonham Strand, according to the Hong Kong corporate registry.

Since February 2022, more exporters registered at this address have begun supplying products to an expanding network of Russian importers, despite trade restrictions.

How China Helps Russia – Details

Chinese companies exported precision parts used in Russian weapons to a Belarusian defense contractor even after it was hit with sanctions, documents obtained by Nikkei Asia show.

China insists it is not providing armed support to Russia’s military actions in Ukraine, but the documents suggest Chinese companies may be knowingly facilitating arms shipments to Russia.

(C)UNIAN 2024