By Steve Stecklow, David Gauthier-Villars and Maurice Tamman
In March this year, a new firm appeared in Turkey’s corporate registry. Azu International Ltd Sti described itself as a wholesale trader of IT products, and a week later began shipping US computer parts to Russia.
Business was brisk, Russian customs records show. The United States and the EU had recently restricted sales of sensitive technology to Russia because of its Feb. 24 invasion of Ukraine, and many Western tech companies had suspended all dealings with Moscow.
Co-founded by Gokturk Agvaz, a Turkish businessman, Azu International stepped in to help fill the supply gap. Over the next seven months, the company exported at least $20 million worth of components to Russia, including chips made by US manufacturers, according to Russian customs records.
Azu International’s rapidly growing business didn’t come from a standing start, Reuters reporting shows: Agvaz manages a wholesaler of IT products in Germany called Smart Impex GmbH. Before the invasion, Russian custom records show that the German company shipped American and other products to a Moscow customer that recently has imported goods from Azu International.
Reached at his office near Cologne in October, Agvaz told Reuters that Smart Impex stopped exporting to Russia to comply with EU trade restrictions but sells to Turkey, a non-EU country that doesn’t enforce most of the West’s sanctions against Moscow. “We cannot export to Russia, we cannot sell to Russia, and that’s why we just sell to Turkey,” he said. Asked about Azu International’s sales to Russia, he replied, “This is a business secret of ours.”
Contacted again shortly before publication, Agvaz said Smart Impex “observes all export restrictions and manufacturer bans” and “has not circumvented Western sanctions against Russia.” He said he couldn’t answer questions about Azu International. Turkish corporate records show he sold his 50 percent interest in the Istanbul company on Nov. 30 to his co-founder, Huma Gulum Ulucan. She couldn’t be reached for comment.
Azu International is an example of how supply channels to Russia have remained open despite Western export restrictions and manufacturer bans. At least $2.6 billion of computer and other electronic components flowed into Russia in the seven months to Oct. 31, Russian customs records show. At least $777 million of these products were made by Western firms whose chips have been found in Russian weapons systems: America’s Intel Corp, Advanced Micro Devices Inc (AMD), Texas Instruments Inc and Analog Devices Inc., and Germany’s Infineon AG.
A joint investigation by Reuters and the Royal United Services Institute (RUSI), a London-based defense think tank, details for the first time the global supply chain that continues to feed Russia with Western computer components and other electronics. The investigation into this trade identified a galaxy of obscure importers and exporters, like Azu International, and found that shipments of semiconductors and other technology continue to arrive in Russia from Hong Kong, Turkey and other trading hubs.
One Russian importer, OOO Fortap, based in St. Petersburg, was set up by a Russian businessman in April and has since imported at least $138 million worth of electronics, including US computer parts, according to Russian customs records. They show that one of Fortap’s biggest suppliers is a Turkish company, Bion Group Ltd Sti, a former textile trader that recently expanded into wholesale electronics. Bion’s general manager declined to comment.
Another Russian importer, OOO Titan-Micro, registered an address that’s a house in a forest on the northern edge of Moscow. It, too, has imported Western computer components since the invasion, according to the customs records.
Some of the suppliers — including firms in Hong Kong and Turkey — have ties to Russian nationals, according to a review of company filings.
The customs records — which Reuters purchased from three commercial providers — don’t identify the precise type of semiconductors and other electronic products, nor do they show what happens to the components once they arrive in Russia. Reuters reported in August that Western companies’ mass-produced chips, in many cases not subject to export restrictions, have shown up inside missiles and weapons systems the Russian military has deployed in Ukraine.
