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Reuters
FRANKFURT
Germany's Siemens moved to distance itself from a Crimean sanctions scandal, saying it would halt deliveries of power equipment to Russian state-controlled customers and review supplies to Russian subsidiaries.
The industrial group said it now had credible evidence that all four gas turbines it delivered a year ago for a project in southern Russia had been moved to Crimea, confirming a series of Reuters reports over the past weeks.
Siemens said it had not yet uncovered any indication of sanctions violations on its part as of Friday, reiterating that the turbines had been locally modified and illegally moved to Crimea against its will and in breach of contractual agreements.
Crimea is subject to EU sanctions on energy equipment since Russia annexed the Black Sea peninsula in 2014. Russian President Vladimir Putin has promised to provide the region with stable energy supply.
"This development constitutes a blatant breach of Siemens' delivery contracts, trust and EU regulations," Siemens said.
"Based on the advanced state of ongoing investigations, Siemens has not uncovered any indications of possible violations of export control regulations. Nevertheless, Siemens will again take immediate and decisive action if it discovers any further indications of such activities."
Siemens said it would now divest its minority stake in joint venture Interautomatika (IA), which sources have told Reuters was involved in the installation and commissioning of the turbines in Crimea, and suspend its two representatives on IA's supervisory board.
It said it had reviewed its licensing agreements with Russian companies associated with the matter, and was reviewing potential cooperation between its subsidiaries and other entities around the world regarding deliveries to Russia.
Long history
Munich-based multinational Siemens has been active for 170 years in Russia, where its primary activities are supplying energy equipment and rail technology.
Its business there has slowed in recent years as the Russian economy struggled with the falling oil price and the impact of sanctions. Siemens made sales of 1.2 billion euros ($1.4 billion) in Russia last year, about 2 percent of its total.
Siemens said it would put in place additional controls to ensure that energy equipment in future will only be dispatched once Siemens has confirmed it can be installed at the final and contractually agreed destination.
Any new business in gas turbine equipment will be executed only by its majority-owned Siemens Gas Turbines Technologies joint venture with Russia's Power Machines, and its wholly owned subsidiary, OOO Siemens, it said.
