Exclusive: Despite sanctions, Russian corporations acquire Microsoft software

MOSCOW (Reuters) – Software produced via Microsoft Corp has been obtained by means of kingdom groups and companies in Russia and Crimea in spite of sanctions barring U.S-based companies from doing business with them, legitimate documents display.

The acquisitions, registered on the Russian nation procurement database, show the limitations of the way foreign governments and firms implement the U.S. Sanctions, imposed on Russia over its annexation of the Crimea peninsula from Ukraine in 2014.

Some of the customers gave Microsoft fictitious statistics approximately their identity, people concerned in the transactions instructed Reuters, exploiting a gap in the U.S. Agency’s capacity to keep its products out in their fingers.

The merchandise in every case was offered via third events and Reuters has no evidence that Microsoft sold merchandise without delay to entities hit by using the sanctions.

“Microsoft has a robust commitment to complying with prison requirements and we had been looking into this depend in current weeks,” a Microsoft consultant stated in an emailed reaction to questions from Reuters.

“We have robust exchange compliance strategies around the arena to help make sure that our partners comply with all conditions such as immediate halting of suspected improper income via companions, and sturdy measures to attempt to prevent banned clients from having access to and using our services and products.”


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All country businesses and kingdom corporations are obliged to disclose purchases they make on the procurement database. People worried in five of the transactions confirmed to Reuters the software was obtained.

The Reuters evaluate of the database located kingdom entities in Russia and Crimea which might be subject to sanctions have obtained greater than five,000 Microsoft merchandise really worth approximately 60 million rubles ($1.03 million).

The sum is exceedingly small however such software is important for lots corporations and corporations in Russia and Crimea to function. The database additionally does now not consist of non-public organizations, so the dimensions of the trouble might be a good deal bigger.

Among entities hit by using sanctions that received Microsoft products was Almaz-Antey, a manufacturer of the BUK floor-to-air missile. Dutch prosecutors say a BUK missile added down a Malaysian Airlines passenger jet over eastern Ukraine in July 2014, though Russia denies its forces shot down the plane.

Other Microsoft customers, the database shows, consist of Glavgosexpertiza, a country layout organization worried in work on a new bridge from Russia to Crimea and the “Krym” fitness spa in Crimea owned by means of Russia’s protection ministry.

The hands’ producer, Almaz-Antey, did no longer reply to a request for remark. The protection ministry’s health spa in Crimea declined to remark. Glavgosexpertiza said, “the corporation operates inside the Russian criminal framework”.

One set of U.S. Sanctions prohibits the export by way of a U.S. Entity of any items, services or technology to Crimea.

Other sanctions bar U.S companies from wearing out transactions with groups or individuals on a listing of “in particular nationals” deemed with the aid of Washington to be related to the Russian authorities and its sports in Ukraine.

Microsoft did no longer without delay reply to special questions about particular customers of its products and the compliance processes it has in the region.

The merchandise obtained by way of corporations hit with the aid of sanctions include “Open License Program” services, in which the consumer needs to offer Microsoft with the agency’s full call and deal with.

Almaz-Antey, Glavgosexpertiza and the defense ministry spa acquired “Open License Program” products, the database confirmed.

After the sanctions were added, Microsoft took steps to prevent entities hit by way of sanctions acquiring its products, in keeping with 5 resources worried within the software re-promoting trade and a former Microsoft employee in Russia.

But people concerned in transactions say ways can be observed to avoid barriers.

The “More” shipyard, primarily based in Crimea, bought a hundred and fifty Windows Server, SQL Server and Office licenses in June 2016 from OOO Web-Potok, a company registered in Moscow, the procurement database suggests. All the goods had been “Open License Program” services.

The shipyard fell under the general prohibition on transactions by U.S. Companies with entities in Crimea and is now at the “unique exact nationals” list.

“If we sold directly from Microsoft, there would be sanctions,” a shipyard employee, speak on the situation of anonymity because of the sensitivity of the difficulty, said by way of the cellphone. “But there had been no troubles with (shopping for 1/3-celebration from) Russian corporations.”

The shipyard declined to comment. Reuters called smartphone numbers listed for the supplier, OOO Web-Potok, however, the folks who spoke back said they labored for a one of a kind employer.

Another manner to bypass the restrictions on Crimea-based totally entities is for the consumer while registering the product with Microsoft, no longer to offer a Crimean deal with, 3 humans worried in the alternate stated.

They stated addresses in Russia’s Krasnodar place, throughout the Kerch Strait from Crimea, have been usually used instead.

A dealer who worked with a company in the U.S. “mainly certain nationals” listing stated a dealer and a customer ought to stay away from restrictions via registering Microsoft merchandise to a subsidiary or parent company of the give up the user.