German firm shipped restricted tech to Russia — after EU sanctions kicked in

LONDON — A German-based technology company was able to export restricted tech to Russia even after the European Union imposed a fresh round of sanctions on Vladimir Putin’s regime over his invasion of Ukraine.

An investigation by POLITICO has found that Kontron — which has operations across the EU, Britain and America — used its Slovenian subsidiary to export over €3.5 million in sensitive telecommunications tech to its Russian arm in late 2023.

This is despite several waves of EU sanctions coming into force in 2023, including an 11th round in June of that year aimed at restricting exports of advanced and dual-use technology to Russia.

Export records reviewed by POLITICO show that 11 shipments were sent from Kontron’s Slovenian subsidiary, Kontron d.o.o, to its Russian subsidiary, Iskra Technologies, between July and November 2023 — months after the June sanctions came into force.

The exported technology included a dual-use product which can monitor and intercept communications traffic, known as the SI3000.

The company said that the shipments, which included high-tech and dual-use goods that were banned under EU sanctions following Russia’s invasion of Ukraine, were existing orders permitted because of export licenses granted to it by the Slovenian government. It said it had stopped all fresh shipments following June 2023’s new wave of sanctions.

“After the implementation of the 11th package of sanctions (June 23), we stopped exporting any new goods and only delivered already approved exports in compliance with issued export licences, in accordance with the EU sanctions in force,” a statement issued by the company said.

The EU’s sanctions on dual-use tech are meant to apply to all new and current contracts — even if signed before a set of sanctions comes into force.

But they include some case-by-case exceptions for cyber, emergency and medical tech, with companies expected to get permission from the EU member state they are based in to fulfill those orders. Neither the European Commission nor Germany’s Central Customs Authority have indicated that an investigation into Kontron is underway or will be undertaken.

However, the case has raised fresh questions about Russia’s ability to get its hands on crucial tech even in the face of restrictions, and prompted calls for a tightening of the global sanctions regime.

Roderich Kiesewetter, a CDU member of the German Bundestag and former NATO security official, told POLITICO: “Russia’s lack of Western technology in particular is a serious blow to the Russian war economy. This is why Russia has repeatedly tried to obtain Western technology by circumventing sanctions using sophisticated circumvention systems.”  

He warned that continued Russian access to surveillance and telecoms tech “benefits Putin’s war machine and thus weakens European security.” 

Konstantin von Notz, a Green member of the Bundestag and chair of the Parliamentary Oversight Panel which oversees Germany’s security services, warned against any attempt “to undermine sanctions that have been imposed on Russia for very good reasons.”

He added: “The responsible supervisory authorities at both the European and national levels must continue to monitor this situation very closely — and now follow up on relevant leads with real determination.” Von Notz called for the closure of any loopholes in the EU’s sanctions regime “without delay.”  

Bill Browder, the British-American investor and political campaigner who spearheaded sanctions against Russian human rights abusers, said: “Sanctions mean nothing without enforcement. The West must crack down on those fueling Putin’s war machine and ensure every restriction is upheld to stop dual-use technology from entering Russia.”

‘Decreasing our involvement’ 

Kontron has vowed to step away from its Russia work in recent years. The firm’s 2021 annual report condemned the “great human suffering” caused by Russia’s full-scale invasion of Ukraine and said it had “decided not to invest” in the country any more. It promised it would, in 2022, “continue decreasing our involvement […] on a continuous but optimised basis.” 

The company said it had “significantly” reduced its investment in Russia since the Ukrainian invasion by cutting its number of employees there from almost 600 to 240. 

However, Kontron has an enduring presence in the Russian market through a subsidiary — Iskra Technologies.

Iskra Technologies was itself sanctioned by the European Union in December 2024, and Kontron retains full control of this sanctioned outfit, according to the company’s most recent end-of-year accounts.

These show that Iskra Technologies is still 48.4 percent owned by Kontron through its Slovenian subsidiary Kontron d.o.o, and that it holds de facto control of the company due to a call-option on its shares.

Russian companies with foreign ownership are often majority-owned by a Russian state company, although Kontron declined to say who owns the remaining 51.6 percent of Iskra Technologies’ shares when approached by POLITICO. It said it was a “Russian entity” but that this was not “not related/associated with Russian state/state-owned companies.” 

Kazakhstan shipments 

Since the June 2023 EU sanctions kicked in, Kontron’s Slovenian arm has also made at least 49 shipments of SI3000 surveillance technology and spare parts to its subsidiary in Kazakhstan, export records analyzed by POLITICO show. 

The country, which neighbors Russia, is a key ally of Putin and last year its deputy leader said its companies would not “blindly follow” sanctions against Russia.

Kontron said in a statement that all exports to Kazakhstan were for domestic use.

It said: “Iskratel (now Kontron d.o.o.) has been present on the Kazakhstan market for over 20 years and regularly sells and supports its products/solutions in this vast area on a continuous and large scale. All deliveries to Kazakhstan were made to local customers for projects carried out in Kazakhstan. 

“The equipment was/is intended for the realization of active contracts in Kazakhstan. In addition, Kazakhstan is prohibited from exporting (directly or indirectly) EU equipment of origin or equipment imported from the EU to the Russian Federation. Kontron has also a sanctions directive in place ensuring compliance with sanctions.” 

Import independence drive

The wave of sanctions placed on Russia since its full-scale invasion of Ukraine has forced Moscow to try to become less dependent on imports. Iskra Technologies, the sanctioned Russian subsidiary of Kontron, has played a part in this drive.

In June, Iskra won a Russian industry award for import-independence in telecommunications for a law enforcement project. The next month it invested around half a million dollars to expand its production of broadband routers for Rostelecom, Russia’s state telecom operator.

Four of Iskra’s SI3000 telecom systems are now classed as “Russian-origin telecom equipment” by the Russian government, according to an industry bulletin, as Moscow scrambles to substitute imported technology in the face of the Ukraine sanctions. 

Kontron said in a statement: “These are Russian products and not related to any additional technology transfer or technical support from Kontron d.o.o. after 2022.”

Iskra Technologies was formed as part of a merger with RTSoft — Kontron’s self-described Russian “sister company” — in August 2023.

According to Russian company records, RTSoft held a license to handle sensitive Russian state information from 2016, with the license granted directly by the FSB, Russia’s intelligence agency. Kontron said this license was no longer active as of April 2022, two months after Russia’s invasion of Ukraine, and that the company had “not delivered any equipment or performed any services to the Russian FSB organization.”

In 2020, RTSoft filed a lawsuit against the 18th Central Research Institute of the Russian Ministry of Defence over contracts involving experimental equipment — with legal filings showing RTSoft has been a partner with the institute since at least 2016. According to U.S.-based security research organization CNA, the institute, also known as “Unit 11135,” is tied to the GRU, which focuses on communications intelligence for Russia. The company strongly denied any ongoing work with the Russian defense ministry.

A Kontron spokesperson said: “After 2022, Iskra Technologies, including the merged company AO RT Soft, does not have any contracts and cooperation with the Ministry of Defense of the Russian Federation.”

‘Weak’

Slovenian company documents reviewed by POLITICO show that as of the end of 2023, Kontron d.o.o still had a €3.546 million loan to Iskra Technologies, the Russian subsidiary, due between 2026 and 2027. The Slovenian company also forgave €6.393 million of its loans to its Russian subsidiary in 2022. 

EU sanctions prohibit any EU company from providing financial assistance or making funds available for sanctioned entities. Kontron said that the loans are still active but that they have “checked compliance with the EU sanctions.”

Kiesewetter, the CDU lawmaker, said German authorities should “immediately” investigate the arrangement. “Germany has so far been very weak in reviewing and implementing sanctions and has generally obtained reductions in the sanctions packages within the EU,” he warned.

Olof Gill, a European Commission spokesperson for financial services, said: “We cannot comment on individual cases of sanctions application.  

“EU Member States are responsible for the implementation of EU sanctions as well as identifying breaches and imposing penalties through their national competent authorities.”