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Story Publication logo August 4, 2023

U.S. Company Haas Appears to Still Indirectly Supply Russian Arms Industry With Technology

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American machine tools giant Haas Automation faced allegations in March it sold technology to the Russian arms industry via a former distributor. Haas denied the story and said it halted sales when Russia invaded Ukraine in 2022. But research shows Haas may still be supplying the Russian arms industry indirectly. Special correspondent Simon Ostrovsky reports with support from the Pulitzer Center.

As a nonprofit journalism organization, we depend on your support to fund coverage of global conflicts. Help us continue funding the hard costs of in-depth coverage of the Ukraine invasion—including travel, hostile environment safety training, and the increased security expenses that arise from reporting in war zones.

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Geoff Bennett: Back in March, "NewsHour" revealed allegations that American machine tools giant Haas Automation sold millions of dollars' worth of its technology to the Russian arms industry via its former distributor Abamet.

Haas denied the story and claimed it had halted sales to Russia as soon as Moscow sent troops into Ukraine in early 2022. But, according to new research, Haas may still be supplying the Russian arms industry indirectly.

With support from the Pulitzer Center, special correspondent Simon Ostrovsky reports from Kyiv.

As a nonprofit journalism organization, we depend on your support to fund coverage of global conflicts. Help us continue funding the hard costs of in-depth coverage of the Ukraine invasion—including travel, hostile environment safety training, and the increased security expenses that arise from reporting in war zones.

Simon Ostrovsky: This is the Novosibirsk instrument building plan, known as NPZ in Russian. It manufactures high-end optics used by the Russian military for everything from targeting systems for Russia's weapons to night vision for its infantry.

NPZ doesn't want you to know where it gets its high-tech equipment from, which is why they have pasted their own logo over the logo of the manufacturer of this machine tool, seen in a promotional video released in April. But they have missed a spot. Zoom in here, and you can see the distinctive red H above the control panel identifying it as a computer numerical control machine tool made by Haas Automation of Oxnard, California.

NPZ isn't alone in being partial to Haas machine tools. They're used throughout the Russian military industrial complex, because they can be programmed to mill, cut or shave metal into almost any shape necessary. For years, Haas sold machine tools in Russia via its official distributor, Abamet Management LTD.

Even though sanctions have been in place against the Russian defense industry for almost a decade as a result of the annexation of Crimea, only after the full-scale invasion of Ukraine last year did Haas officially sever its relationship with Abamet and made — quote — "no direct or indirect shipments or sales to Russia" since March 3, 2022.

But the organization that originally exposed Haas' dealings in Russia says even that may not be true.

Denys Hutyk is an adviser at the Economic Security Council of Ukraine, or ESCU. He told "NewsHour" spare parts needed to maintain the Haas machines already being used in Russia continue to flow into the country via a mysterious firm in China called Suzhou Sup Bestech Machine Tools Co., LTD. that doesn't seem to have a website or phone number, and was set up just two weeks after Haas officially pulled out of Russia.

Denys Hutyk, Economic Security Council of Ukraine: Since the moment when Russia received the last direct shipment of Haas products from Oxnard, California, and since October 2022, this Chinese company supplied or conducted around 200 shipments of Haas products to Abamet, and all those shipments are worth about $600,000.

Simon Ostrovsky: Customs records reviewed by "NewsHour" show that Haas-branded spare parts were being shipped to Russia as recently as April of this year, more than a year after Haas says it halted any sales or shipments to the country.

Many of the spare parts appear to be made specifically for a Haas model VF-2YT machine tool, one of which, according to Russian state procurement records, is owned by the NPZ plant in Novosibirsk, 2,000 miles east of Moscow.

Further procurement records show the NPZ plant is one of Abamet's clients, meaning it's possible the spare parts sold via China were special-ordered to maintain the Haas machine at NPZ, whose owner, Rostec, has been subject to U.S. sanctions since 2015.

NPZ didn't always obscure the logos on its equipment. In this promotional video it released seven years ago, several Haas machines are featured to highlight how modern the factory is, including the VF-2YT, which is capable of shaping materials as tough as steel.

Then, in 2018, NPZ announced on Russia's official state procurement marketplace that it needed a replacement engine for the VF-2YT, illustrating how reliant Russia's arms industry was on after-sales support. In that instance, the Fischer Spindle group of Switzerland supplied the motor.

Today, NPZ uses its Haas machines to shape the casings for its various sites and scopes. The finished casings look like this and are collected in this wooden box, before being painted, finished and fitted to army equipment like this.

Man (through interpreter): These instruments are supplied to the Russian army, fitted to tanks, armored vehicles and small arms in Russian factories, and also exported.

Simon Ostrovsky: The applications are endless. And so, seemingly, is the list of Russian defense firms that use Haas equipment bought over the years.

This is RPBK (ph). They make flight control systems for attack helicopters. This is NII-Vektor, which makes electronic surveillance systems for the army and navy. And this is Electro Pregoran Penza (ph) having its Haas machines disinfected during the COVID pandemic. They make communication systems for the Russian military.

The list goes on. That's why Ukrainians have been pushing U.S. enforcement agencies, like the Office of Foreign Asset Controls, or OFAC, to act more aggressively against American companies whose products continue to flow to the Russian arms industry.

Vladyslav Vlasyuk, Adviser to President Volodymyr Zelenskyy: I think that, most certainly, the OFAC does have very powerful tools at its disposal to make sure the enforcement of sanctions.

So, I think that you just have to unleash anything you have.

Simon Ostrovsky: Vladyslav Vlasyuk is an adviser to the office of Ukrainian President Volodymyr Zelenskyy and co-chair of a U.S.-Ukrainian working group on Russian sanctions.

He told "NewsHour" Russia has managed to ramp up production, despite the unprecedented sanctions imposed by America and its allies.

Vladyslav Vlasyuk: They are partners. We have been dealing with sanctions matters. Quite disappointed about our recent findings. They have been doing a lot of pushing up — putting a lot of efforts into stopping this.

And now we tell them that this has not stopped. And I think you know that the rate of production as we consider is just doubled. And I think that this is quite obvious now that much more has to be done.

Simon Ostrovsky: The Biden administration says it's acted forcefully to restrict the Russian arms industry's access to technology it needs to sustain its war machine, like setting sanctions on Russian companies and export controls on American firms.

But what have the agencies that set the rules done to enforce them? Four months after "NewsHour" exposed the allegations that Haas was violating those rules, the U.S. Treasury and the Department of Commerce wouldn't say whether they're investigating the company or planning to levy a fine.

We reached out to Haas to inform the company that its equipment continued to be shipped to Russia via the Chinese intermediary company. They didn't agree to an interview, but said in an e-mail response that they had no records of sales to the entity and that any sales to Russia were being made by third parties, in contravention of Haas policy.

Man: "If that company is selling genuine Haas parts, it does not appear to have acquired those parts from Haas. Haas voluntarily terminated its relationship with its sole distributor for Russia and Belarus, Abamet Management, on March 3, 2022. Haas has not conducted any sales or shipments of parts to Abamet or anyone else in Russia since that date."

Simon Ostrovsky: Haas has repeatedly told us it — quote — "voluntarily" stopped doing business in Russia last year after the full-scale invasion of Ukraine, but sectoral sanctions have been in place against the Russian arms industry since 2014.

And Abamet sales of millions of dollars worth of Haas equipment to Russian defense firms between 2014 and 2022 plainly helped Moscow rearm ahead of its unprovoked aggression.

Woman: Oh, my God.

Man: I don't need any of this.

Simon Ostrovsky: Haas' past sales in Russia aren't the first time its dealings with the country have landed the company in hot water. Haas owns America's only Formula 1 racing team, which was prominently featured in the popular Netflix series "Drive to Survive."

Haas drew criticism for a sponsorship deal with Russian fertilizer giant Uralkali, whose owner, Dmitry Mazepin, is known to be close to Russian President Vladimir Putin. The deal meant putting the Russian flag on Haas race cars and putting Mazepin's son Nikita in the driver's seat.

Nikita Mazepin, Driver: You know what? Actually, everyone calls me Maz.

Man: Maz.

Nikita Mazepin: Yes.

Simon Ostrovsky: Haas only canceled the sponsorship and fired Nikita Mazepin and after Russia's full-scale invasion last year, and both father and son were subsequently slapped with personal E.U. and U.K. sanctions.

But officials at the Department of Commerce and the Treasury have yet to give any sign that they plan to go after American manufacturers that may have violated the sanctions regime on Russia, nor is there any sign that they plan to add Haas former distributor, Abamet, to their list of officially sanctioned entities.

For the "PBS NewsHour," I'm Simon Ostrovsky in Kyiv.


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