A Russian spy network has acquired sensitive technology from EU companies to fuel Vladimir Putin’s war in Ukraine even after a US-led crackdown on the covert smuggling ring.
The network – set up to procure goods ranging from microchips to ammunition – has managed to obtain machine tools from Germany and Finland despite US sanctions imposed in March 2022, a Financial Times investigation has found.
The procurement cell’s continued ability to operate in Europe illustrates the challenges faced by western governments as they attempt to choke off the supply of critical technology for Russia’s military-industrial complex.
The “Serniya network” has been accused by the US department of justice of working on “highly sensitive and classified procurement activities” on behalf of Russia’s FSB spy agency, including for its Directorate for Scientific and Technological Intelligence, commonly known as “Directorate T”.
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Other clients include the Kremlin’s Foreign Intelligence Service, known as the SVR; the state-owned defence conglomerate Rostec; Russia’s ministry of defence; and Rosatom, the state atomic energy company in charge of the country’s nuclear arsenal.
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The Financial Times has found that a Russian company, controlled by the same person that controls a Serniya network entity described by the US as “engaged in proliferation activities at the direction of Russian intelligence services”, has continued to buy items from companies inside the EU.
Corporate records, import declarations and interviews reveal that Trading House Treydtuls, registered to an address in an industrial estate in north Moscow, has acquired $900,000 (€815,000) of materials since the Ukraine war started, including microchips and items for industrial manufacturing, mostly from the EU.
Treydtuls is registered at the same address as Robin Trade, part of the Serniya network, and owned by the same person, a Russian national called Alexey Zibyrov. One western official presented with the Financial Times’ findings confirmed that Zibyrov, who has not been named or charged by the US authorities, is considered to be a person “of interest” in relation to his FSB ties.
Commercially available customs records, corroborated with import data shared with the Financial Times by Maxim Mironov, a finance professor at the IE business school in Madrid, show Robin Trade moved $12.2 million (€11 million) of goods into Russia up to April 2022 before its revenues plummeted by 90 per cent after sanctions were imposed.
As other parts of the network ceased their buying activity in the wake of sanctions, Treydtuls began to import machine tools from a company in Germany. Customs records show Treydtuls brought in 22 tonnes of equipment from Germany to Russia, with a declared value of $554,000 (€502,000), by the end of 2022.
Customs records also show that Treydtuls simultaneously bought $253,000 (€229,000) of integrated circuit boards from a small company in Singapore. The items were made by the US semiconductor groups Analog Devices, Texas Instruments and Altera, and the German company IC-Haus.
All these companies have ceased exports to Russia, increasing the need for Russian state and military entities to source advanced electronics from third countries.
Treydtuls also sourced $3,700 (€3,350) of reinforced grinding and cutting disks from a company in Finland. These items are restricted by the UK government from being exported to Russia, North Korea and Iran, but not prohibited by the EU.
There is no evidence to suggest that the European companies were aware they were dealing with a company connected to Russian intelligence. Zibyrov did not respond to an emailed request for comment from the Financial Times.
Securing advanced electronics and machine tools is critical for Russia to maintain its military-industrial complex.
A report by the Center for a New American Security last October said Russia was turning to “grey imports via the black market or through a chain of companies designed to conceal the end-user”. These are akin to smuggling programmes run by North Korea and Iran, which are also under extensive US sanctions.
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Emails intercepted by US authorities, and included in the department of justice indictment, showed how in August 2020 one company in the procurement network had received a renewal of its licence from the FSB, allowing it to “carry out work related to the use of information constituting a state secret up to the top-secret level”.
The department of justice in December charged five Russian nationals linked to Serniya with conspiring to procure military-grade and dual-use technology for Russian defence companies.
Among them was Vadim Konoshchenok, who is suspected of being an FSB colonel and was arrested by Estonian border guards after attempting to cross into Russia with US-made electronics, microchips and ammunition, according to the US indictment.
Some of the network’s smuggling activities involved technology that the US said could be used to develop hypersonic weapons.
While Treydtuls has so far avoided western sanctions, its multiple ties to the indicted FSB network were visible through trading relationships before Russia’s full-scale invasion of Ukraine, raising further questions about how it has been allowed to continue to buy items from inside the EU.
Records show that in 2019 Treydtuls imported items from two UK-incorporated companies, Majory LLP and Photon Pro LLP, registered to offices in the Shoreditch area of London. Both were hit with sanctions by the US last year for serving as front companies in the FSB network.
One of Photon Pro’s two directors, according to its UK corporate filings, is a Russian national called Yevgeniy Alexandrovich Grinin, who last December was indicted by the US but remains at large and is wanted by the FBI.
Majory LLP was, until it was dissolved in February, controlled by Andrey Georgiyevich Zakharov, who the US has also accused of running front companies to import sensitive technology in defiance of western sanctions.
Treydtuls is also registered at the same Moscow address as a tech company co-owned by Zakharov, NTS Wellink, according to Russian company records. Wellink has participated in Russian government tenders for highly sensitive state-controlled entities, including the Federal Protective Service responsible for Putin’s personal safety.
Erki Kodar, an Estonian minister with responsibility for sanctions, told the Financial Times: “Even before the Russian aggression in Ukraine, their modus operandi was to smuggle goods and try to find people willing to move these goods over the border. Our security services have tracked this for the past 10 to 15 years. It has been intensifying.”
Brian Nelson, a senior US treasury official, earlier this month visited Switzerland, Austria, Italy and Germany to warn how Moscow was continuing to evade export controls and buy advanced equipment.
– Additional reporting by Anastasia Stognei in Riga
– Copyright The Financial Times Limited 2023