The supply chain for the hundreds of Russian drones that are ominously hovering over the Ukrainian battlefield is flexible and circumvents sanctions; it frequently passes via a run-down office above a market in Hong Kong and, on occasion, a yellow stucco home in a suburban Florida neighbourhood.
According to Ukrainian commanders, the “Sea Eagle” Orlan 10 UAV is a cunning, relatively low-tech, and inexpensive killer that has been used to aim many of the up to 20,000 artillery shells that Russia has fired daily on Ukrainian positions in 2022, killing up to 100 soldiers per day.
The inquiry represents the first time a supply line for American technology has been tracked all the way to a Russian manufacturer, whose weapon system is utilised in Ukraine, using Russian customs declarations and bank information.
The Special Technology Centre was the first target of U.S. sanctions after President Barack Obama claimed it collaborated with Russian military intelligence to attempt to influence the 2016 U.S. presidential election. The Special Technology Centre previously produced a variety of surveillance devices for the Russian government but now focuses on drones for the military.
Any American citizen, resident, or U.S. firm was prohibited from giving anything that might wind up with the Special Technology Centre under the penalties, which went into effect in 2017.
The U.S. government tightened such prohibitions in March of this year by prohibiting the sale of any American products to any military end users, effectively prohibiting the sale of high-tech products like microchips, communications, and navigation systems to Russia.
None of that has prevented the Orlan drone’s production.
An inquiry for comments sent in writing to the Special Technology Centre was not answered.
However, a prominent scientist who is also a shareholder claimed in an interview with Reuters that there was a “strong demand” for the company’s drones.
Inquiries from Reuters regarding the effects of sanctions and its connection to the Special Technology Centre were not answered by the Russian Ministry of Defence.
The U.S. Department of Commerce, which enforces restrictions on the sale of US technology, declined to comment on whether it was aware of the Special Technology Centre or the US components feeding Russia’s drone programme.In a statement to Reuters, a Commerce spokesperson said the department cannot comment on the existence or non-existence of investigations. The spokesperson added: “We will not hesitate to use all the tools at our disposal to obstruct the efforts of those who seek to support Putin’s war machine.”
A Hong Kong-based exporter named Asia Pacific Links Ltd. has been one of the most significant providers to Russia’s drone programme. According to Russian customs and banking records, Asia Pacific Links Ltd. delivered millions of dollars in parts, though never directly.
American-made microchips make up a large portion of the components.
According to those customs documents, the majority of Asia Pacific’s shipments to Russia were sent to a single importer in St. Petersburg with connections to the Special Technology Centre.
The import business, SMT iLogic, has multiple links and shares an address with the manufacturer of drones.
According to his LinkedIn profile and other online sources, Anton Trofimov, the owner of Asia Pacific, is a Russian expatriate who graduated from a Chinese institution and has other business interests in China as well as a business in Toronto, Canada.
Trofimov resides in a modest Toronto community called East York, according to public data.
Email and LinkedIn enquiries went unanswered from him.
The person who answered the door introduced herself as Trofimov’s wife and offered to relay a message instructing him to get in touch with Reuters.
Never did he.
The office of Asia Pacific is located in a run-down and cramped building off a side lane and pedestrian market in Hong Kong’s financial sector, far from the neighbourhood.
An employee from Reuters was recently at the Hong Kong office, but nobody was there.
According to the receptionist at the property, the company shares a space with three other tenants that is partitioned off.
It may not seem like it, but business has soared this year.
Asia Pacific experienced a sharp uptick in business between March 1 and September 30, following Russia’s invasion in February. As a result, according to Russian customs records, Asia Pacific became iLogic’s top supplier, exporting parts worth approximately $5.2 million, up from roughly $2.3 million in the same period of 2021.
The records also reveal that many of the components were produced by American IT companies.
According to Russian customs records, parts shipped by Asia Pacific to iLogic in the same period of 2022 included $238,000 in Xilinx components, $1.8 million in Analog Devices (ADI.O) chips, and $641,000 in Texas Instruments (TXN.O) chips.The supplies also included model aircraft engines made by a Japanese company, Saito Seisakusho, that are used in the Orlan 10, as shown in photos of drones recovered in Ukraine. Saito said it was unaware of the shipments.
Analog Devices ignored inquiries sent via email regarding the recent shipments to Russia.
Texas Instruments and AMD (AMD.O), the company that owns Xilinx, declared that their organisations had not authorised or directly transported into Russia for many months and that they were abiding by all export restrictions and U.S. sanctions.
In order to prevent the sale or diversion of AMD products into Russia or other restricted areas, AMD further stated that it requires its authorised distributors to apply end-use screening techniques.
Asia Pacific Links and SMT iLogic are not authorised AMD distributors, according to AMD.
THE DISTRIBUTOR NEXT DOOR
The Special Technology Centre relies on a number of suppliers, but iLogic stands out as being especially important, according to financial data provided by a Russian official and seen by Reuters.
A record of iLogic’s own bank transactions and payments, reviewed by Reuters, shows that the company essentially only performs work for the drone manufacturer.
According to customs data, iLogic has brought nearly $70 million worth of largely electrical goods into Russia since 2017.
Additionally, according to financial records investigated by iStories and Reuters, the Special Technology Centre business accounts for up to 80% of the company’s revenue.
In turn, those same financial records show the Special Technology Centre’s biggest customer is Russia’s Ministry of Defence, which paid it nearly 6 billion rubles ($99 million) between February and August of this year. The examined records list all transfers to and from the company’s bank accounts during that period.
Reached by phone, Alexey Terentyev, a top scientist and major shareholder at the Special Technology Centre, said the war has forced it to focus on making drones.
“Due to the high demand for Orlans, we do not have the resources to do something else now. The demand for it is much bigger than we can produce,” he said.
He claimed that although U.S. sanctions had caused the company issues, it had always been able to find a supplier worldwide.
One of the most powerful nations in the world put sanctions on us, Terentyev claimed.
“We should be proud of this.”
Terentyev steadfastly refused to say whether iLogic was one of those vendors.
He responded, “You question me about a company I don’t know,” when asked about iLogic.
When informed that Russian corporate records named him as one of iLogic’s founders, he responded that if his name appeared in the documents, it was “likely correct” that he was a shareholder.
Yes, he replied, “I do recall something.
However, he was unable to recall what iLogic did.
I no longer feel a connection to this business,” he said.
In a brief telephone interview, Roman Agafonnikov, chief executive officer of the Special Technology Centre, said he didn’t know anything about iLogic.
Another person who has supplied Russia’s drone programme resides on the coast of southeast Florida, behind a nature reserve, in a stylish suburban home.
Igor Kazhdan, a 41-year-old dual citizen of the United States and Russia, is the owner of IK Tech, which sold more than 90% of the $2.2 million worth of electronics it imported into Russia between 2018 and 2021.
Between October 2020 and October 2021, according to Russian customs records, IK Tech sold iLogic roughly 1,000 American-made circuit boards, even though federal law forbade the direct or indirect delivery of any such technology to the Special Technology Centre.
FLORIDA
The boards, which are worth roughly $274,000, were produced by Gumstix in California.
The California-based corporation told Reuters that it would look into the shipments and that it is “extremely disturbed” to learn about them.
It added, “We will take all reasonable action to address any recognised diversion of products from legitimate end use,” after stating that it has no customers in Russia and no items or services intended for Russia.
A Gumstix board that is nearly identical to the boards provided by IK Tech can be seen in photos of the inside of a captured drone that were taken by Ukrainian authorities and obtained by Reuters.
The board is a part of the Orlan 10’s control system, according to a list of components discovered on another drone provided to RUSI and Reuters by the Ukrainian government.
Kazhdan’s activities drew the attention of U.S. authorities. Just two weeks before Russian tanks rolled into Ukraine and Orlan drones started buzzing overhead, federal agents arrested Kazhdan. He was later indicted on 13 counts of smuggling and evading export controls when selling electronic components to Russia between December 2021 and February 2022.
The charges stemmed from the sale of advanced amplifiers manufactured by the American company Qorvo that needed an export permit for Russia.
If U.S. authorities knew where the products were going in the end is unclear from the court records.
According to Ukrainian officials, the radio communication circuits of Orlan drones contained Qorvo amplifiers, which are frequently found in radar, communications, and radio equipment.
The “declared destination” of the parts mentioned in the case, according to a statement from Qorvo to Reuters, was a distributor in Florida.
“Qorvo has never done business with IK Tech or Igor Kazhdan, and the Company’s products were exported and used without our knowledge,” the statement continued.
After Kazhdan admitted to two crimes in November 2022, a federal judge gave him a three-year probationary period, a $200 fine, and an order to forfeit nearly $7,000 in addition to three years of probation.
Kazhdan was subject to a 40-year prison sentence if found guilty on all counts.
When it was suggested to Kazhdan that he may have been supporting Russia’s drone programme, he indicated the scale of his shipments to Russia was small compared to other enterprises while standing outside his Dania Beach, Florida, home and sporting a scruffy beard.
“I just don’t think that whatever this is, it’s a big deal that you should be writing this story,” Kazhdan said. “This is just comical.”
Beyond that, he would not speak about the case or his shipments to Russia.
Kazhdan informed the Southern Florida District judge at his sentence hearing in November 2022 that he began conducting business with Russia after connecting with importers at a satellite conference in 2016.
He claimed that shortly after, the importers persuaded him to forego the reporting and licencing obligations.
The American Justice Department declined to comment on the situation.
((This piece was reported from London by Stephen Grey, New York and Florida by Maurice Tamman, and Toronto by Anna Mehler Paperny; Additional reporting from Hong Kong by James Pomfret; Editing by Janet McBride)))
