Siemens turbines found in Crimea
Siemens is scrambling to reverse a transaction with a Russian partner to try to save face after gas turbines from one of the biggest German investors in Russia’s economy turned up in the annexed region of Crimea, flouting EU sanctions.
Siemens is scrambling to reverse a transaction with a Russian partner to try to save face after gas turbines from one of the biggest German investors in Russia’s economy turned up in the annexed region of Crimea, flouting EU sanctions.
At least two of four turbines manufactured by Siemens for Technopromexport for an electricity project in Taman, southwest Russia, were moved to Crimea “against our will”, the Munich-based company said in a statement on Tuesday.
Siemens would initiate criminal charges against the individuals involved and push for a reversal of the deal, it said.
After years of cosying up to President Vladimir Putin and cementing Siemens’ position as one of the largest German investors in Russia, the maker of trains, healthcare equipment and power plants is finding how commercial relations can be soured by political tension.
COMPANY REPUTATION
Any transaction that goes against international rules could undermine the reputation of a company that less than a decade ago was immersed in the biggest bribery scandal in German history.
Foreign companies and a number of Russian businesses with an international presence have pulled out of Crimea since its annexation by Putin’s regime in 2014. Relations between Russia and its European counterparts worsened after the subsequent conflict in Ukraine, which was worsened by Russian-supporting insurgents.
“Implementation and enforcement of EU restrictive measures rest with the member states,” Maja Kocijancic, a spokeswoman at the European Commission, the 28-nation EU’s executive arm in Brussels, said in a statement on Tuesday. “The commission is in touch with the German competent authorities on this particular case.”
Russian-made turbines assembled from Russian components were being installed in Crimea, Kremlin spokesman Dmitry Peskov said on Monday.
“It’s the responsibility of companies to comply with sanctions law that’s in place,” German economy ministry spokeswoman Beate Baron said. Both declined to comment on the specifics of the case.
Siemens said it was still working out what other actions could be taken.
Under former CEO Peter Loescher, the company increased the number of manufacturing sites in Russia, adding a plant in Voronezh, south of Moscow. The site makes highvoltage circuit breakers needed to update the power grid.
AFTER YEARS OF COSYING UP TO VLADIMIR PUTIN, SIEMENS IS FINDING HOW COMMERCIAL RELATIONS CAN BE SOURED BY POLITICAL TENSION
Siemens has operated in Russia for more than 160 years and has partnerships with state companies including Russian Railways and Gazprom, according to its website.
Siemens shares had fallen 0.2% to €120.80 by 1.52pm in Frankfurt, valuing the company at €102bn.
Russian state company Rostec said it bought four turbines for Crimean power stations on the secondary market and updated them in local facilities to fit local technical specifications.
Rostec declined to comment on Siemens’ accusations regarding alleged misuse of turbines meant to be used in the Krasnodar region.
“This development constitutes a clear breach of Siemens’ delivery contracts, which clearly forbid our customer from making deliveries to Crimea,” the company said in the statement.