Treasury Sanctions Global Russian Military Supply Chain, Kremlin-linked Networks, and Elites with Western Fortunes
Monday, 14 November, 2022, 23:48
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), alongside the U.S. Department of State, sanctioned a transnational network procuring technology that supports the Russian military-industrial complex. OFAC also designated a global network of financial facilitators, enablers, and others associated with two key Kremlin-linked elites whose fortunes are intertwined with the West. In total, today’s actions designated 14 individuals and 28 entities, and identified eight aircraft as blocked property.
“The United States will continue to expose and disrupt the Kremlin’s military supply chains and deny Russia the equipment and technology it needs to wage its illegal war against Ukraine,” said Secretary of the Treasury Janet L. Yellen. “Today’s actions demonstrate Treasury’s steadfast commitment to targeting people around the world aiding Putin’s war effort and the crony elites who bankroll his regime. Together with our broad coalition of partners, we will continue to use our sanctions and export controls to weaken Russia’s military on the battlefield and cut into the revenue Putin is using to fund his brutal invasion.”
TARGETING RUSSIAN MILITARY PROCUREMENT NETWORK
The joint alert highlights that Russia’s defense industry is reliant on imported microelectronics. Today, in coordination with the U.S. Department of State’s designation pursuant to Executive Order (E.O.) 14024 of AO PKK Milandr (Milandr), a Russian microelectronics company that has been described as part of the Russian military research and development structure defense technology firm, OFAC took action to disrupt Milandr’s illicit global microelectronics procurement network.
Consistent with international commitments to sever Russia’s access to key components for its military-industrial complex, the United States will continue to target Russia’s efforts to resupply its weapons and sustain its war of aggression against Ukraine, including any foreign persons who assist Russia in those efforts.
The Armenia-based affiliate of Milandr, Milur Electronics LLC (Milur Electronics), was initiated for the purpose of placing orders from foreign factories, producing integrated microchips, and conducting overseas sales. Milur Electronics has been used as a Milandr front company as a means to conduct Milandr’s business with foreign partners. In fact, Milandr employees have sought to access Milur Electronics’ network themselves to conduct business. Milur Electronics was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Milandr.
Milur SA is the Switzerland-based primary shareholder of Milur Electronics and has been utilized by employees and business associates of Milandr to coordinate financial transfers to Milur Electronics. Two Milur SA officials designated today were involved in the scheme to establish Milur Electronics, Swiss national Jacques Pasche (Pasche) and Estonian and Swiss national Holger Leng (Leng). Treasury additionally designated the General Director of both Milandr itself and Milur Electronics, Russian national Mikhail Ilyich Pavlyuk (Pavlyuk). Pavlyuk, working with Milur SA, initiated the registration process in Armenia for Milur Electronics. Furthermore, Pavlyuk has worked to transfer funds from Milur SA to Milur Electronics, as part of which he siphoned a substantial amount into his personal bank account.
Milur SA was designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Milur Electronics. Pasche and Leng were designated pursuant to E.O.14024 for being leaders, officials, senior executive officers, or members of the board of directors of Milur SA. Pavlyuk was designated pursuant to E.O. 14024 for being or having been a leader, official, senior executive officer, or member of the board of directors of Milur Electronics.
Finally, OFAC designated Sharp Edge Engineering Inc. (Sharp Edge), a Taiwan-based front company used to purchase microelectronic components from Asian companies. Milandr employees have utilized a Sharp Edge account to procure equipment. Sharp Edge was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Milandr.
SULEIMAN KERIMOV’S NETWORK
In June 2022, OFAC issued a Notification of Blocked Property to Heritage Trust, a Delaware-based entity in which Kerimov has a property interest. As of June 30, 2022, Heritage Trust held assets valued at over $1 billion. OFAC’s extensive enforcement investigation revealed that Kerimov used a network of relatives, advisers, and opaque legal entities to invest in the United States and utilized a complex series of legal structures and front persons to obscure his interest in Heritage Trust. In May 2022, Fijian law enforcement executed a seizure warrant freezing the Motor Yacht Amadea, a 348-foot luxury vessel owned by Kerimov.
Today’s action targets a broad network of Kerimov’s family members, associates, and facilitators. These designations should serve as another warning that those who support sanctioned Russian persons risk being sanctioned themselves.
OFAC also designated four France-based real estate companies belonging to Gulnara: Service Immobiliere Antibes SAS, Service Immobiliere et Gestion SAS, VH Antibes SAS, and Villa Lexa Estates SAS. All four companies were designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Gulnara.
Relatedly, OFAC designated Swiss national Laurin Katz (Katz), who serves as president of all four of Gulnara’s France-based companies. Katz was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Gulnara.
Additionally, Alstone Investment AG (Alstone), a Switzerland-based firm formerly known as Swiru Holding AG, was designated pursuant to E.O. 14024 for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Katz.
Beyond Kerimov’s immediate family, OFAC also designated Kerimov’s nephew Nariman Gadzhievich Gadzhiev (Gadzhiev), a Russian national residing in Switzerland. Gadzhiev is a primary financial facilitator for Kerimov. Gadzhiev was designated pursuant to E.O. 14024 for having acted or purported to act for or on behalf of, directly or indirectly, Kerimov.
OFAC also designated United Arab Emirates-based holding company Constellation Advisors Ltd for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly, Gadzhiev.
ALEXANDER-WALTER STUDHALTER NETWORK
OFAC also designated eight entities across six countries associated with Studhalter. These include:
MG International AG (MG International), a Studhalter-owned, Switzerland- and Russia-based management consultancy firm of which Kerimov used to be a shareholder and where Gulnara was previously employed;
Studhalter’s sons, Jeremy Eric Camille Studhalter and Hugo Ange Christophe Studhalter were both designated pursuant to E.O. 14024 for being or having been leaders, officials, senior executive officers, or members of the board of directors of SwissIAG, an entity whose property and interests in property are blocked pursuant to E.O. 14024.
MURAT ALIEV NETWORK
For example, Aliev’s Moscow-based investment firm Limited Liability Company Bonum Capital (LLC Bonum Capital) is located in the same Moscow building as MG International’s Russian branch. Swiss national Inga Rettich (Rettich) is another link between Studhalter and Aliev. Rettich, who manages the family office at SwissIAG, is also a director at Bonum Capital Cyprus Ltd (Bonum Cyprus), an Aliev-owned Cyprus-based holding company.
OFAC also designated the following five companies associated with Aliev:
Bonum Capital Investors Corp (Bonum BVI), a British Virgin Islands-based holding company;
KERIMOV-LINKED LUXURY AVIATION COMPANY
Emperor Aviation was designated pursuant to E.O. 14024 for operating or having operated in the aerospace sector of the Russian Federation economy and for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Gulnara.
OFAC identified eight aircraft as blocked property in which Emperor Aviation, the operator of the luxury planes, has an interest:
9H-AMN, a Bombardier BD-700-1A11 (Manufacturer’s Serial Number (MSN) 9324)
ANDREY GRIGORYEVICH GURYEV’S SWISS HOLDING COMPANIES
Today OFAC designated Chlodwig Enterprises AG (Chlodwig) and Adorabella AG (Adorabella), two Swiss companies that hold assets for trusts that benefit A.G. Guryev and his family.
Chlodwig and Adorabella were designated pursuant to E.O. 14024 for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, A.G. Guryev.
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