US Sanctions Four Kyrgyz Companies for Evading Russian Sanctions

Published: 22 July 2023

Sanctions Russia BlurredFlagThe U.S. administration sanctioned four Kyrgyz companies for evading international sanctions against Russia. (Photo: Jernej Furman, Flickr, License)

By Alexandra Li

Just hours after Kyrgyzstan’s head of national security declared on Thursday that no company in his country has violated U.S. sanctions against Russia, the U.S. Treasury announced sanctions against four Kyrgyz firms for doing exactly that.

"Neither the Kyrgyz state itself, nor any state structures and companies are involved in the violation of the regime of compliance with the sanctions restrictions imposed by the United States and Western countries in relation to Russia," said Kamchybek Tashiev, the deputy head of the Cabinet of Ministers and the head of the State Committee for National Security in the morning.

"Entities based in the Kyrgyz Republic have been frequent exporters of controlled electronics components and other technology to Russia since Russia began its full-scale invasion of Ukraine," stated the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) in a press release in the afternoon. "Some of these shipments have subsequently supplied sensitive dual-use goods to entities in Russia’s defense sector."

All four sanctioned companies were registered in Kyrgyzstan soon after the beginning of the Russian invasion of Ukraine, and they all supply dual-use goods to Russia, including to firms that have supplied electronics to Russia-based defense companies.

There were warning signs long before sanctions were finally introduced. Several Western diplomats visited the country to discuss concerns over its trade with Russia and the possibility of sanction evasions.

"Kyrgyzstan, while small relative to other countries, is a clear example of every factor at play at once to create an unacceptably [sanctions] evasion-friendly environment," an anonymous senior U.S. official told The Washington Post on Tuesday.

OCCRP has discovered that Kyrgyz authorities recently changed the way they publish trade statistics, effectively concealing the banned trade with Russia from the public.

Altering the Format of export data

Last month, Kyrgyzstan’s National Statistics Committee changed the format of the export data the institution publishes on its official website.

In many countries around the world, export statistics are typically broken down into very specific categories using 10-digit codes. For example, the code 3603400001 designates "non-electric detonating caps." There are also shorter 4-digit codes, however, which are much broader. In this system, the type of detonating caps mentioned above would fall under the more general code 3603, which includes "safety fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators" — making a detailed analysis of exports impossible.

Kyrgyzstan’s numbers for the first three months of 2023 were still published using the 10-digit codes and clearly show the export of sanctioned goods.

When new data was uploaded in June, however, the 10-digit codes had been ditched for the first time since 2019 in favor of the broader 4-digit versions, effectively concealing sanctioned products. The same holds true for the latest numbers uploaded in July. And since the statistics website only shows the most recent data, the earlier detailed information disappeared as soon as the June update was made.

The head of the National Statistical Committee’s foreign trade department, Gulsara Sulaimanova, told OCCRP that the removal of the 10-digit codes was an "optimization of information."

"We saw that the need [for 10-digit codes] is not so important for users and decided to just save time," she said. "Four digits quite satisfy the users of the information."

Sulaimanova declined to comment on whether the "optimization" idea was put on the table only this year and if there was any analysis conducted to support the Committee’s opinion that 10-digit data is not popular with users.

"This is an internal decision; I won’t comment on it," replied Sulaimanova. "It shouldn’t be of any interest to you."

The Sanctioned Companies

One of the companies sanctioned on Thursday, RM Design and Development, has sent hundreds of shipments of goods including semiconductor devices, electronic integrated circuits, and capacitors to Russian companies that fell under targeted sanctions on the same day.

Progress Lider was established in Kyrgyzstan by Russian businesswoman Tatyana Ivanova in March 2022. The company made numerous shipments to Ivanova’s Russian company CIC that primarily deals with electronic and optical equipment and computers. Both companies were sanctioned on Thursday, as was Ivanova herself.

Cargoline supplied sanctioned goods to Russia worth $1 million. Back in May 2023, the Russian independent media outlet Project revealed that Cargoline was among the top five largest suppliers of spare parts for Russian airline companies.

But apart from these companies, there are dozens more Kyrgyz exporters of banned goods to Russia that have not faced sanctions yet.

For example, Kas Impuls, the first factory in Central Asia to produce detonators, sent 661,000 of the devices to Russia from January until April 2023. While many of those items may have been produced in China, at least 19,600 originated in Kyrgyzstan. The shipments went to ORICA CIS, a part of Evoblast Group, a Russian manufacturer of industrial explosives and initiation systems for the mining and construction industries. None of these exported detonators are indicated in official statistics.