Manufacturers

Siemens to Initiate Criminal Charges Against Russian Partner

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Siemens AG says at least two gas turbines delivered to Russia were re-routed to Crimea, in violation both of European sanctions and a contract with the company.

Siemens said a Russian customer had illegally shipped two power plant turbines to Crimea instead of their intended destination in southern Russia. The turbines were made at Siemens Gas Turbine Technologies LLC, based in Russia's St Petersburg. It is 65 percent owned by Siemens and uses Siemens technology.

On Monday, Siemens responded to allegations in a statement to RT News: “Over the last few months, our customer has confirmed to us numerous times in writing that delivery to Crimea would not occur. As a consequence, Siemens will initiate criminal charges against the responsible individuals.” Seeking Alpha reported this morning that Siemens has already filed lawsuits.

Siemens said it had been lied to by its customer, Russian state firm Technopromexport (TPE), who repeatedly reassured Siemens that the turbines would not be sent to Crimea. TPE is owned by parent company, Rostec. The Russian government wholly owns Rostec. TPE is the firm that originally bought the turbines, saying it intended to install them in a power station in Taman, southern Russia. 

The Kremlin's spokesman, Dmitry S. Peskov, said Monday that the turbines had been made in Russia from Russian parts and were not subject to sanctions restrictions. According to Siemens, the turbines were made in Russia with a Russian partner but by contract subject to the sanctions.

“This development constitutes a clear breach of Siemens's delivery contracts, which clearly forbid our customer from making deliveries to Crimea,” Siemens told the New York Times.

The incident threatens to strain relations between Germany and Russia and discourage foreign investment. Siemens has done business in Russia for decades.

The United States and the European Union imposed sanctions against Crimea over its reunification with Russia in 2014; the EU allows the export of power generation equipment to Russia, but not to Russian-occupied Crimea.

“Russia-E.U. relations are already not in a good place, not least because there seems to be no pathway for E.U. sanctions easing at this point,” Mujtaba Rahman, managing director for Europe at Eurasia Group, a political consultancy, told the New York Times. “In this light, this is going to be seen as something of a provocative act by Russia and will further deteriorate relations between Berlin and Moscow.”

 

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