Siemens is considering withdrawing from two joint ventures (JVs) in Russia - Siemens Gas Turbine Technology and Interautomatica, the newspaper Wirtschaftswoche reports citing sources. The company was in the center of the scandal because of the supply to Crimea of two turbines produced by Siemens gas turbine technology, which violates the EU sanctions regime. Siemens can not confirm the intention to withdraw from the joint venture - it only "assesses the possible consequences of the situation with the supply of turbines to the Crimea", said a representative of the German concern Philip Ench.
The Russian authorities are not aware of Siemens' intention to withdraw from projects in Russia, Interfax reported citing Dmitry Peskov, presidential spokesman.
In the joint venture Siemens Technologies of Gas Turbines, Siemens owns 65%. The remaining 35% - at the "Power Machines" Alexei Mordashov. The joint venture produced four combined-cycle plants based on gas turbines with a capacity of 165 MW for the Taman stations worth 4.2 billion rubles. On the order of "daughter" of "Rosteha" - JSC "VO" Tekhnopromexport ". In September 2016, Tekhnopromexport, which by that time had fallen under sanctions because of the status of a station builder in the Crimea, put out turbines for sale. Who bought them, it is not known. The information on the auction placed on the site of the B2B-Center has been deleted.
Who is guilty
The fact that two of the four installations were in the Crimea, in early July, reported with reference to its sources Reuters. According to him, two turbines model SGT5-2000E were unloaded in the port of Sevastopol. Siemens confirmed this five days later, saying that the installations were "transferred to the Crimea against the will" of the concern.
However, the forthcoming supply of turbines to the Crimea became known two years ago. Then the sources of Vedomosti reported that sending turbines to Taman was a formality to bypass sanctions.
How much energy does the Crimea need?
1400 megawatts of electricity consumes Crimea during peak periods. Of this, about 70-90% accounted for the flow from the Ukrainian energy system.
"Not only did we check everything, but in the contract we laid down all possible conditions for these turbines to go to the station in Taman, up to the termination of the contract," the president of Siemens in Russia, Dietrich, said a little over a year ago in an interview with Vedomosti Muller. In November last year, Technopromexport stated that "Siemens gas turbine technology" delays the supply of gas turbine equipment for power facilities in Taman.
The contractor even complained to the main department of the Ministry of Internal Affairs of Russia for St. Petersburg and the Leningrad region - it started a pre-investigation check. Nothing is known about its results. "A contractual agreement was reached that the turbines should be delivered exactly to Taman, Krasnodar, and any changes to the destination should take place with our written consent, which was never asked," Enkh quoted Interfax.
Now Siemens filed a lawsuit with the Moscow Arbitration Court against Technopromexport, its sister company operating in the Crimea, the same name LLC and to Siemens Gas Turbine Technology. The requirements of the concern - to recognize the transaction as invalid.
He even asked to arrest the turbines and prohibit their installation. "If Siemens Gas Turbine Technologies Ltd. knew that four gas turbine units are being purchased for their subsequent use in the construction of power plants in Sevastopol and Simferopol (which is prohibited by European Union legislation), the enterprise would obviously not have made such a deal," Forbes quoted Case materials. The suit was left without traffic until August 21. Siemens also promised to initiate criminal prosecution of responsible persons. Which companies did not specify their employees in Russia or employees of Technopromexport. "Technopromexport" itself is in the process of liquidation.
The compliance of the EU sanctions regime is the responsibility of the participating countries, the EC representative said to Vedomosti: the commission "contacts the competent German authorities in this particular case." "Of course, the main demand is from Siemens," Stefan Siebert, Speaker of the German Chancellor, told Vedomosti. "This is the enterprise's task - to ensure that its trading activities do not extend to the regions in which the sanctions regime operates," Siebert said. - Illegal supply of turbines to the Crimea, which contradicts the assurances of high-ranking officials, is an outstanding occurrence. Now the question is being decided as to what this completely unacceptable situation will have consequences for its participants. "
What threatens Siemens
Most likely, the European Commission and the German government will accuse Siemens of violating the sanctions regime, Nikolskaya Zaichenko, partner of Nevsky IP Law, says: "The question is whether Siemens can prove its conscientiousness in the deal with Technopromexport." Formally, most likely, there is nothing to complain about. " But this does not guarantee that, as a result, sanctions will not be applied to Siemens, the expert believes. The liquidation of Technopromexport can serve Siemens poorly. "From a legal point of view, this will become an obstacle to challenge the transaction. There is no company - there are no claims to exhibit and demand to return the equipment, - Zaichenko argues. - For lawyers of the European Commission and Germany, assurances that the agreement was a "bona fide partner" may not be enough, and the liquidation of Technopromexport can only increase the likelihood that sanctions will still apply to Siemens. "
The decision on sanctions will have to be taken by Germany, says Denis Durashkin, a lawyer of BGP Litigation. But, in his opinion, considering the actions of Siemens now and the availability of restrictions on the supply of turbines to the Crimea in the contract itself, it will be difficult to find a legal justification for this. Formally, the turbine was supplied not by Siemens, and therefore there are no legal grounds for making claims from the EU and Germany, says BMS Law Firm partner Denis Frolov.
Penalties for Siemens
In 2008, Siemens paid fines of $ 1.6 billion in Germany and the United States. The company then entered into extrajudicial agreements to settle charges that it bribed officials in a number of countries, including Russia, and falsified accounts and did not have an adequate internal control system. In Russia, it was said in the suit of the US Justice Department, Siemens paid bribes in connection with the project on the development and organization of an automated traffic management system on the Third Transport Ring in Moscow. In addition, according to senior Siemens employees, 80% of the supply of medical equipment to Russia was due to bribes. Unlike Germany and the United States in Russia, then Siemens was not charged, and he did not pay fines.
Can Siemens be sanctioned in the US? Here the company has a large-scale business. The cumulative net profit of fifty Siemens companies operating here for the year ended September 30, 2016 amounted to 1.28 billion euros. You can talk about a potential violation of the sanctions regime if people, goods, services or technology from the United States were involved, Eric Ferrari, head of the Washington law firm Ferrari & Associates, explained to Vedomosti. "Given the situation with the entry of turbines to the Crimea, in which Siemens was unintentionally, the violation of the sanctions regime (assuming there is some kind of connection with the US) is likely to be considered a violation of civil, not criminal," he said. "However, given the information available at the moment, and in view of the lack of any data on ties with the US, I see no signs of violation of sanctions."
Is there an alternative
The serious consequences for Siemens should not be, Tass quotes the words of the Minister of Industry and Trade of Russia Denis Manturov: "Turbines have a Russian certificate, so colleagues should not be very affected." It's easy to give out the "Russian passport" to the turbines, the person working on the construction of the TPP explains to Vedomosti: "For this, any turbine should be supplied without one attached part, then screwed back to it - this will be called a large-unit assembly."
In Russia, high-capacity combined-cycle plants, in addition to Siemens Gas Turbine Technologies, are not produced. Two years ago, Energy Minister Alexander Novak talked about the possibility of supplying to the Crimea 12 installations with a capacity of 25 MW produced by Perm Motors, but before that it did not come to the end.
What are the joint ventures, from which Siemens can go
The plant "Siemens Gas Turbine Technology" was launched on June 18, 2015. "Power Machines" and Siemens built a new plant, investing 275 million euros on it based on the Interturbo JV set up in 1991. Turbines for the stations in Taman were the first order for the plant. Then, in 2015, the plant won a tender for the supply of gas turbine units for the Groznenskaya TPP Gazprom energoholdinga, said in the materials on the site of public procurement. Interautomatica CJSC was established in 2003. The company is engaged in the development and production of automated process control systems for Russian power plants. Siemens has the largest package: 46%, the industry-wide All-Russia Heat Engineering Institute - 37% and the remaining 17% - from the liquidated Technopromexport.
The decision to build gas stations in the Crimea to cover peak demand was the most logical decision, says Natalia Porokhova, head of the research and forecasting group of ACRA. Gas stations are built much faster than coal ones, they are more flexible, better suited to cover peak demand. Coal plants are generally used to provide basic consumption.
The circle of suppliers of high-capacity gas turbines is very limited, mainly companies from developed countries: Siemens, American GE and British Rolls-Royce, says Porokhova.
Siemens in Russia
In the annual report, Siemens does not separately allocate Russian sales - they are accounted for in the Europe, CIS, Africa and the Middle East. The revenue of Siemens, which was provided by the buyers of this region for the financial year ended September 30, 2016, is 41.8 billion euros. Buyers from these countries provided Siemens orders for 46.2 billion euros. And in Russia, Siemens received an order for maintenance at 1.6 billion euros last year, the report said. Its essence is not disclosed.
According to the concern's report, the net profit of 10 Russian Structures of Siemens for the year ended September 30, 2016 is 85 million euros. The list does not include the share in the parity joint venture with the Sinara Group - LLC Ural Locomotives, which produces electric locomotives and trains "Swallow".
Siemens also supplied RZD with 16 high-speed Sapsan trains running between Moscow and St. Petersburg and 94 high-speed trains Swallow, of which 54 were from Siemens and 44 from Ural Locomotives. The cost of the contract for the supply of Sapsans, taking into account the life-cycle service contract for 30 years, is about 1.1 billion euros, and 54 Swallows with service for 40 years - 910 million euros. Until December 1, 2017 Siemens expects to sign a contract with the Federal Passenger Company ("daughter" of the Russian Railways) to supply another 90 modernized cars of the "Lastochka" train. In addition, the company is interested in manufacturing a train for the Moscow-Kazan VSM. "Ural Locomotives" have already tested the engine on permanent magnets. The estimated cost of production of trains with such engines is not called. In addition, Siemens is a major supplier of medical equipment for Russian clinics and integrated solutions for automation and energy conservation of buildings.