Hong Kong shell companies facilitate Russian sanctions evasion, NYT reports

At least four shell companies operating out of Hong Kong are facilitating the shipment of restricted military technology to Russia, according to an investigation by the New York Times published July 25.

Western nations imposed extensive sanctions against Russia after its full-scale invasion of Ukraine in 2022. Sanctioned items, such as microchips produced in the United States, continue to flow into Russia via third-party countries.

The four companies are located on the seventh floor of 135 Bonham Strand, an address near near Hong Kong's financial district, the NYT reported. These companies are owned by oligarchs with ties to the Russian defense industry, and they have funneled millions of chips and sensors to sanctioned defense tech firms in Russia.

Approximately $4 billion worth of sanctioned chips have entered Russia since the launch of the full-scale war, according to a NYT analysis.

Such electronics have been found in Russian weapons, including the Kh-101 cruise missile that struck the Okhmatdyt children's hospital on July 8.

Moscow's sanctions evasion pipeline allowed it to import nearly the same amount of chips during the last quarter of 2023 as it did in the last quarter of 2021, the NYT found.

China, Russia's main economic backer against Western sanctions, plays a key role, exporting so-called dual-use goods into Russia to feed the Kremlin's war machine.

China's Foreign Affairs Ministry said it has not supplied military equipment to either Russia or Ukraine.

"What the United States should do is reflect on its responsibility for the Ukraine crisis rather than shirking responsibility to China," the ministry said in a statement to the NYT.

The U.S. continues to ship chips to China for production and assembly due to limited domestic manufacturing capabilities.

The NYT investigation coincides with Foreign Minister Dmytro Kuleba's first visit to China since the 2022 invasion. Kuleba held lengthy talks with his Chinese counterpart Wang Yi in Guangzhou on July 24, after which he said Beijing reaffirmed its commitment to Ukraine's territorial integrity.

The Chinese delegation also again reiterated its promise not to supply Russia with weapons, according to President Volodymyr Zelensky.