Bypassing Sanctions: How Taiwan Supplies High-Precision Equipment to the Russian Military-Industrial Complex

15:23, 09.02.2024

After the imposition of US sanctions on the export of dual-use goods to Russia, the latter was forced to seek alternative routes to support its defense industry through China and Turkey. Recently, documents obtained by The Washington Post revealed active trade in precision equipment between Taiwanese and Russian companies. This indicates that Taiwan, a strategic partner of the US, which itself has imposed restrictions on exports to Russia, has joined the list of suppliers. The documents contain information that the company attempted to supply equipment to support secret Russian efforts in the mass production of strike drones. The investigative report with details was published in The Washington Post on February 1.

Dalton Bennett, one of the reporters and authors of the material, cited intelligence sources, emphasized that in recent years, around 70 percent of Russian CNC machines were supplied from abroad.

"After the West imposed export restrictions, Russia increasingly turned to Asian suppliers, including Taiwan, for equipment essential to its defense industry. From January to July of last year, I Machine Technology paid over $80 million for unspecified goods and services provided to over 40 arms manufacturers and Russian military contractors, according to tax documents provided by the Council of Economic Security of Ukraine, which tracks goods used by the Russian defense industry and investigates cases of sanctions evasion. Several of these companies are under US Treasury sanctions for assisting the Kremlin in its war efforts."

Since January 2023, the Russian company I Machine Technology has imported CNC equipment from Taiwan worth over $20 million. This equipment is indispensable in many industries, including weapon production.

After the sanctions against Russia, I Machine Technology became a major supplier of CNC equipment to Russian arms manufacturers, including the Russian Avangard plant, which supplies S-400 air defense systems.

The investigation points to the interaction between the Taiwanese company I Machine Tools and the Russian company I Machine Technology, where similarities in names and open cooperation indicate deep ties. In particular, there is a "Russian sales" division in the Taiwanese company that provides access to Russian defense enterprises.

Equipment arrived in Russia in 63 shipments. The first batches worth $4.47 million were directly sent to the Russian company from I Machine Tools. The sales director of I Machine Tools, Yu Min Ye, was previously a co-owner of I Machine Technology in Moscow and has connections with the general director of the Russian company, Alexey Bredikhin.

Since the end of May 2023, the direct supply of CNC equipment to Russia has stopped. The remaining goods worth $17.8 million were imported through alternative routes – China and Turkey.

In a comment to The Washington Post, Bredikhin denied importing sanctioned goods after the restrictions were imposed in January 2023 but acknowledged long-term cooperation with Taiwanese companies before that. He claimed to have imported only details after January, which, according to him, did not violate sanctions. However, when presented with documents showing that the shipments contained more than just "details," Bredikhin did not respond.

After The Washington Post's interview with Bredikhin, videos and photos from the Instagram page of the Russian company I Machine Technology disappeared, including materials featuring Yu Min Ye, Taiwanese company directors, and Bredikhin's visits to Taiwan.

Yu Min Ye repeated the same statements as his Russian colleague, and upon seeing evidence in the form of documents, he suggested they might be unreliable, and his company does not supply goods to Chinese and Turkish legal entities that sent shipments to I Machine Technology. He also claimed not to be aware of I Machine Technology's connections with the Russian army.

Representatives of the Taiwanese government did not comment on specific documents but announced their intention to prohibit Taiwanese companies from selling products to I Machine Technology, indicating the government's dissatisfaction with the potential violation of sanctions.