New Sanctions Purpose: Justice for Victims of Corrupt Foreign Officials Act
The German government on Wednesday called on Siemens AG , one of the country’s biggest corporations, to explain how gas turbines it sold for use at a Russian power plant got diverted to Crimea, possibly violating European Union sanctions tied to Russia’s annexation of the Black Sea peninsula from Ukraine.
Siemens filed a lawsuit in Moscow this week against Technopromexport, a subsidiary of Russia’s state-owned Rostec State Corp., after learning that two turbines it had sold to Technopromexport for a power plant to be built in Taman, southern Russia, ended up in Russian-occupied Crimea.
The German government, which under EU law is responsible for determining whether the shipment violated sanctions, said it was monitoring efforts to determine what happened and said it expected quick answers from the company.
“It is above all now up to Siemens,” government spokesman Steffen Seibert told reporters on Wednesday. He said the government was discussing how to respond to the “completely unacceptable” actions.
“The transaction itself is not in violation of any sanctions,” a Siemens spokesman said, adding that the terms of the contract with Technopromexport included clauses prohibiting delivery of the turbines to any third parties without the express permission of Siemens, a standard provision to prevent circumventing sanctions. Siemens declined to comment on Mr. Seibert’s remarks.
The EU imposed sanctions on Russia after its annexation of Crimea in March 2014. An EU spokeswoman said individual member states are responsible for enforcing sanctions, though EU officials were in touch with German authorities about the Siemens case.
The company said it received the contract for four turbines in March 2015 for use in a power station to be built in Taman. The turbines were delivered as agreed with the buyer to a warehouse in St. Petersburg in June 2016, the company said.
Weeks later, Siemens began to doubt that Technopromexport was abiding by the contract, a spokesman said. By September, Siemens had indications that the turbines had not arrived in Taman. Evidence cited by the company included a lack of activity at the site where the power plant was supposedly under construction. Siemens says it believes the turbines were delivered instead to the port of Sebastopol.
Media reports first raised suspicions two years ago that the Russian buyer, a contractor with close ties to the Kremlin, might have other plans for the turbines. But at the time Siemens said: “We have no reason to believe that the gas turbines mentioned in the news articles are destined for Crimea.”
Siemens said it had repeatedly sought assurances from Technopromexport that the turbines would be installed as agreed. On Monday, Siemens said it believed that the equipment had been diverted. “Siemens has received information from reliable sources that at least two of the four gas turbine sets… have been moved to Crimea against our will,” it said in a statement.
Technopromexport didn’t respond to a request for comment.
After Siemen’s statement on Monday, Kremlin spokesman Dmitry Peskov declined to comment, saying, “We do not deal with turbines in the presidential administration,” the news agency TASS reported.
German companies have long opposed economic sanctions against Russia for its annexation of Crimea. Siemens, which has done business in Russia since 1853, maintained close ties with Russian President Vladimir Putin even after the annexation sparked a political conflict with the West.
Stephen Szabo, executive director of the trans-Atlantic Academy think tank, said the apparent end-run around the EU’s sanctions to provide power for Russia-occupied Crimea was a “slap in the face” for Chancellor Angela Merkel, a staunch opponent of Russia’s expansionist policies in Eastern Europe. “For Putin, it’s another sign the West is tolerating the annexation of Crimea.”
—Zeke Turner and Nathan Hodge contributed to this article.