Siemens Cuts Russia Presence After Turbines End Up in Crimea -- 2nd Update
July 21 2017 - 12:20PM
Dow Jones News
By Ulrike Dauer
FRANKFURT-- Siemens AG on Friday announced measures to reduce
its presence in Russia, including its exit from joint venture
Interautomatika, after four gas turbines delivered by one of the
German company's Russian partners for a power plant project turned
up in Russian-occupied Crimea, possibly violating European Union
sanctions.
The EU imposed sanctions on Russia after its annexation of the
Black Sea peninsula from Ukraine in March 2014.
Siemens said it hasn't uncovered any indication that
export-control regulations were violated in the matter. But it said
it had received credible information that all four gas turbines
that the German engineering company delivered last summer for the
Taman power plant project in southern Russia have since been
diverted to Crimea.
The Moscow office of the joint venture Interautomatika did not
immediately respond to requests for comment.
The redirection constituted a "blatant breach of Siemens'
delivery contracts, trust and EU regulations," Siemens said.
Siemens said it would take several steps to ensure better
control of its deliveries to customers in Russia.
As one measure, Siemens will sell its minority stake in
Interautomatika, which offers products and services for power plant
instruments and control systems.
Siemens holds a 46% minority stake in Interautomatika, 17% is
held by Siemens' customer Technopromexport and the remaining 37% is
held by Russian power research institute VTI.
Technopromexport bought the gas turbines from Siemens and
commissioned Interautomatika with instrumentation and control of
the power plant in Taman.
Technopromexport declined to comment on the matter. A press
representative for VTI could not be immediately reached.
Siemens has said it repeatedly sought assurances from
Technopromexport that the turbines would be installed in Taman as
agreed, only to find out they ended up in Crimea.
Last week, the German government, which is responsible for
determining whether the shipment violated EU sanctions, called on
Siemens to explain how the turbines got diverted to Crimea.
Siemens has sued Technopromexport, a unit of state-owned Rostec
State Corp., in Moscow. The legal action aims to stop delivery of
other Siemens equipment that might be destined for Crimea and
ensure that equipment already dispatched there is returned to
Taman, the original destination.
Siemens said it would also replace or suspend two Siemens
employees representing the German company on Interautomatika's
supervisory board, with immediate effect, while investigating the
matter.
A Siemens spokesman said the German company will keep the board
seats until it is eventually able to pull out of the joint venture,
when board representation will become obsolete. This won't happen
immediately, he said.
As another measure to prevent any shipping or services that
could violate export-control regulation, Siemens said it has
initiated steps to end a license agreement with Russian companies
involved in equipment supply for combined-cycle power stations.
Siemens said it is reviewing all potential collaboration between
its subsidiaries and other entities around the world as regards
deliveries to Russia.
It will halt delivering power-generation equipment to
state-controlled clients in Russia under existing contracts for
now, Siemens said.
Siemens renewed its offer to buy back the turbines that were
sent to Crimea and cancel the contract with Technopromexport.
Write to Ulrike Dauer at ulrike.dauer@wsj.com
(END) Dow Jones Newswires
July 21, 2017 12:05 ET (16:05 GMT)
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