One of the world’s largest machine tool manufacturers might have been supplying them in Russia up until Putin seized the plant. These machines are needed, among others, by the military industry

In 2022, the German-Japanese company DMG MORI, which used to supply machine tools to Russian arms manufacturers among others, was among the first to announce its withdrawal from Russia. In the fall of 2023, in response to investigations into its activities in Russia, it reiterated that it had stopped production, sales and service in the country back at the beginning of the war. However, documents that have come into the possession of Agentstvo and MDR cast doubt on these statements. They show that sales of machine tools assembled in Russia by one of the world’s largest manufacturers could have continued up until this February, when Vladimir Putin transferred control of the company to the Russian authorities.

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Details. Vladimir Putin signed a decree transferring Ulyanovsk Machine Tool Plant (USZ, DMG MORI’s asset in Russia) into temporary management of the Federal Property Management Agency (Rosimushchestvo) on February 17. Three weeks before that, on January 30, Finval Energo, a major supplier of promotional equipment and a long-time partner of USZ, obtained a declaration of conformity for 20 machine tools manufactured by the plant. Such a document is required in order to sell new equipment in Russia. The declaration received by Finval Energo stated that the delivery was made under a contract that the company signed in November 2023.

• In total, between 2022 and 2024, Finval Energo received documents concerning 42 such machines supplied to it under the contracts from 2022 and 2023. All declarations list USZ as the manufacturer.
• DMG MORI’s Russian subsidiary, DMG Mori Rus, received another five declarations of conformity for an unnamed number of machines of its own production in 2022-2023.
• Other documents show that DMG MORI’s Russian production facility continued not only to sell machine tools, but also to assemble them (or complete their assembly) after February 2022. In attempting to challenge a customs fine in the Arbitration Court of the Ulyanovsk Oblast, the plant admitted that on June 30, 2022, it entered into a foreign trade contract with Trade and Logistics Company K1 (TLC K1). Under it, the plant was receiving production components, including Eaton Romania circuit breakers. Judging by the court documents, they were incorrectly cleared, resulting in a fine, which USZ tried to challenge. At the hearing, representatives of the plant pointed out that they were importing components «for the production of metal-cutting equipment».
• Data from the customs broker ImportGenius indicates that the ultimate shipper of some of these components was the German company Sales Pro GMBH, with which USZ had been working without intermediaries before the war. The last direct shipment from this firm, weighing more than 4.7 tons, arrived from Germany to Russia on March 16-17, 2022. Customs data shows that starting from the fall of 2022, DMG Mori Rus and USZ continued working with Sales Pro GMBH through intermediary companies — the above mentioned Russian TLC K1 and Turkish Dn Makine Elektronik Teknoloji Sanayi Ticaret. Between November 2022 and December 2023, the German firm delivered 20.25 tons of products worth $1.6 million to the Turkish company. However, this data also shows that the final address for these products was not Ankara, but Ulyanovsk. Customs data and the register of the Federal Service for Accreditation (Rosakkreditatsiya) indicate that USZ also issued declarations of conformity for customs clearance of products imported to Russia by the Turkish company.
• The established parallel import scheme relied on trusted personnel. According to SPARK-Interfax data, Nikolai Nesterov, an entrepreneur from Ulyanovsk, was the sole founder of TLC K1 until April 2024, and his son Dmitry Nesterov worked as its director. The sanctions register of the Ukrainian National Agency on Corruption Prevention shows that the Turkish firm Dn Makine Elektronik Teknoloji Sanayi Ticaret was established by Dmytro Nesterov in June 2022, the month when the contract between TLC K1 and HSS was signed. Before the war, Nikolay Nesterov’s other firm Vavs provided logistics services to DMG Mori Rus. After the outbreak of the war, cooperation with DMG MORI subsidiaries probably allowed the family of Ulyanovsk businessmen to make some good money. After signing the contract with HSS, the revenue of TLC K1 grew 85 times — from 5.46 million rubles in 2021 to 469.18 million in 2023.
• The financial statements of USZ may also indicate that DMG MORI’s Russian structures continue to operate. According to SPARK-Interfax data, the inventory value of the company increased from 571 million rubles at the end of 2022 to 947 million rubles at the end of 2023 and almost returned to the pre-war level of 1.02 billion rubles. As the CEO of a consulting audit company explained to Agentstvo (due to the status of our media, we cannot mention her name and surname), the growth in inventory value could be the result of the company’s own production or the purchase of other companies’ products that could not ultimately be sold. Another expert on financial reporting told Agentstvo that large inventories that pass from one year to the next may indicate that there is equipment in the warehouse. At the same time, a large amount on the current account indicates that the company is actively selling.
• Agentstvo did not manage to find out who exactly DMG MORI machine tools could have been supplied to after the war started. According to the state procurement data, before the war their buyers were more than 30 defense companies, from Sukhoi aircraft company to Izhevsk Electromechanical Plant, which produces air defense systems.
• DMG MORI itself said in a statement on October 25, 2023 that not a single piece of machinery had been sold or imported to Russia after February 24, 2022, and that the number of its employees in the country had dropped from nearly 200 to 9. At the same time, the company admitted that it was forced to honor obligations under contracts signed before the war to avoid litigation. The company also reported that 18 machine tools imported earlier were still in its warehouses in Russia.
• There is another mystery in the story of DMG MORI’s departure from Russia. Back in the spring of 2022, Rustam Alyautdinov, former sales director of DMG MORI Rus, founded a new machine tool enterprise, DM Technologies, which is located in the same industrial zone in Ulyanovsk as the USZ. The address of DM Technologies is also the same as that of Service Pro LLC, which used to sell equipment to DMG Mori Rus. The beneficiary of Service Pro is the wife of Maxim Sokolov, who until January was the CEO of DMG MORI’s Russian structures. According to Alyautdinov, this company had already supplied more than a hundred of its machines to customers in Russia and Belarus by October 2023. However, the company’s financial statements do not contain production costs, which may indicate that it simply resells finished products, an independent auditor told Agentstvo on condition of anonymity.
• While preparing this article, Agentstvo sent inquiries to representatives of DMG Mori, Finval Energy and DM Technologies, but at the moment of publication no answers have been received. We managed to reach Alyautdinov, but he would not answer our questions. Dmitry and Nikolai Nesterov did not respond to our phone calls. MDR also sent questions to DMG Mori but received no response.

Context. The fact that DMG MORI continues to produce machine tools in Russia even after the announcement of its withdrawal first came to light last fall. Back then, unrelated investigations into this matter were published by Agentstvo and Die Zeit a few hours apart.

• Russian military plants are in dire need of machine tools. The Washington-based think tank Center for Advanced Defense Studies (C4ADS) has found out that Russia is even buying up used weapons production equipment from China to fill this need. In 2023, Russia imported at least 6.4 billion rubles worth of numerically controlled machine tools and parts for them, iStories reported based on customs data.

Authors: Sergey Panov, with the participation of Andrey Zatirko. Fact check: Ekaterina Reznikova