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Russian firms buy Microsoft software despite sanctions

MOSCOW

Software produced by Microsoft has been acquired by state organisations and firms in Russia and Crimea despite sanctions barring US-based companies from doing business with them, official documents show.

The acquisitions, registered on the Russian state procurement database, show the limitations in the way foreign governments and firms enforce the US sanctions, imposed on Russia over its annexation of the Crimea peninsula from Ukraine in 2014.

Some of the users gave Microsoft fictitious data about their identity, people involved in the transactions said, exploiting a gap in the US company’s ability to keep its products out of their hands.

The products in each case were sold via third parties and Reuters has no evidence that Microsoft sold products directly to entities hit by the sanctions.

“Microsoft has a strong commitment to complying with legal requirements and we have been looking into this matter in recent weeks,” a Microsoft representative said in an emailed response to questions.

“We have robust trade compliance processes around the world to help ensure that our partners comply with all conditions including immediate halting of suspected improper sales by partners, and strong measures to try to prevent banned customers from accessing and using our products and services.”

All state organisations and state firms are obliged to disclose purchases they make on the procurement database. People involved in five of the transactions confirmed the software had been acquired.

The review of the database found state entities in Russia and Crimea that are subject to sanctions have acquired more than 5,000 Microsoft products worth about 60 million rubles ($1.03 million).

The sum is relatively small but such software is vital for many firms and organisations in Russia and Crimea to operate. The database also does not include private companies, so the scale of the problem could be much bigger.

Among entities hit by sanctions that acquired Microsoft products was Almaz-Antey, manufacturer of the BUK surface-to-air missile. Dutch prosecutors say a BUK missile brought down a Malaysian Airlines passenger jet over east Ukraine in July 2014, though Russia denies its forces shot down the plane.

Other Microsoft buyers, the database shows, include Glavgosexpertiza, a state design agency involved in work on a new bridge from Russia to Crimea and the “Krym” health spa in Crimea owned by Russia’s defense ministry.

The arms manufacturer, Almaz-Antey, did not respond to a request for comment. The defense ministry’s health spa in Crimea declined to comment. Glavgosexpertiza said “the company operates within the Russian legal framework”.

One set of US sanctions prohibits the export by a US entity of any goods, services or technology to Crimea.

Other sanctions bar US firms from carrying out transactions with companies or individuals on a list of “specially designated nationals” deemed by Washington to be linked to the Russian government and its activities in Ukraine.

Microsoft did not directly respond to detailed questions about specific users of its products and the compliance procedures it has in place.

The products acquired by organisations hit by sanctions include “Open License Program” services, where the user must provide Microsoft with the company’s full name and address.

Reuters