Siemens retreats from Russian energy after Crimean scandal

Germany's Siemens tried to distance itself from a Crimean sanctions scandal on July 21, halting deliveries of power equipment to Russian state-controlled customers and reviewing supply deals.

The industrial group said it now had credible evidence that all four gas turbines it delivered a year ago for a project in southern Russia had been illegally moved to Crimea, confirming a series of Reuters reports over the past weeks.

The move is embarrassing for Russia which stands accused of disregarding EU sanctions and of flouting its original agreement with Siemens and it risks making European companies more cautious about doing business there. The Kremlin declined to comment, saying it was a matter for the companies involved. 

Siemens said it had not yet found proof that it had violated sanctions itself, reiterating that the turbines had been locally modified and unlawfully moved to Crimea against its will and in breach of contractual agreements.

Crimea is subject to EU sanctions on energy equipment since Russia annexed the Black Sea peninsula in 2014. Russian President Vladimir Putin has promised to provide the region with a stable energy supply.

"This development constitutes a blatant breach of Siemens' delivery contracts, trust and EU regulations," Siemens said. 

Siemens said it would "take immediate and decisive action" if it discovered further indications that export control regulations had been violated.

It said it would now divest its minority stake in joint venture Interautomatika (IA), which sources have told Reuters was involved in the installation and commissioning of the turbines in Crimea, and suspend its two representatives on IA's supervisory board. Siemens has a 45.7 percent stake in the...