Frozen accounts, fake parts, failed deliveries: Russian courts reveal the impact sanctions are having on the Kremlin’s defense industry

One of the key smuggling operations involved a company registered in the British Virgin Islands (BVI). ARP Investment Limited supplied integrated circuits to the St. Petersburg-based company Northern Star LLC (ООО «Северная звезда»). This is spelled out explicitly in court documents:

“Deliveries of sanctioned foreign goods for the needs of the Ministry of Defense of the Russian Federation were carried out by Northern Star LLC from the foreign manufacturers OSAUHING LYUMIVEST, SHENZHEN SIERYCUS TECHNOLOGY CO (China), and were processed to bypass sanctions through ARP Investments Limited (BVI).”

The issue arose when ARP did not receive payment for the components — namely “monolithic integrated circuits of various configurations” — and filed a 65 million ruble lawsuit ($830,000).

The British Virgin Islands are typically used by wealthy corruption-linked figures. But for routine trade and procurement operations or sanctions evasion, such a choice is unusual. As a British Overseas Territory, the BVI is a risky place from which to facilitate black-market chip imports to Russia, as the UK government has access to the islands’ corporate registry and can easily identify a company’s true beneficiaries.