Companies associated with a Russian espionage network have resumed purchasing machinery from a German toolmaker, just months after the manufacturer was cautioned about sales to the same smuggling operation.

An investigation by the Financial Times revealed that Heller Tools, a Dinklage-based company established in the 19th century, sold $1.2 million worth of drills and other tools to entities linked to the Serniya smuggling network.

The U.S. Department of Justice has stated that the Serniya network was created under the guidance of Russian intelligence services to bypass EU and U.S. sanctions and procure equipment for the Russian defense industry.

This case highlights the challenges the EU faces in curbing Russia’s acquisition of essential goods from within Europe.

Russian records indicate that Heller reported $860,000 in sales to Trading House Treydtuls, a Moscow company connected to the Serniya network, from the start of the full-scale invasion of Ukraine until June 2023. The FT initially reported on this purchasing network in May 2023.

Customs records show that Heller ceased exports to Treydtuls in June 2023, shortly after the FT inquired about its dealings with Treydtuls. However, by September, Heller had begun selling goods to another Russian firm, Tireks. This company, which purchased an additional $300,000 of goods from Heller, was established in June by a former employee of Treydtuls.

Heller stated that it complies with “all legal requirements,” reiterating a statement it first made to the FT last year.

“When exporting to countries, we generally check whether customers are on sanctions lists or behave in accordance with the law,” said Henning Warrink, Heller’s chief executive. “If we are aware that companies are on sanctions lists or violating legal requirements, we will immediately terminate the business relationship or not establish one and will not deliver any goods there.”

The construction tools sold by Heller, such as saws and drills for steel or masonry, were not included on EU export control lists until December 2023, after the sales to Tireks. They were added because they could “contribute in particular to the enhancement of Russian industrial capacities.”

Olena Bilousova, a sanctions expert at the Kyiv School of Economics Institute, emphasized that Western companies should consider their moral responsibilities. “Don’t sell things to Russians that can be used for the war effort — even if they are not export-controlled.”

The FT previously discovered Treydtuls’ links to Russian company Robin Trade, which U.S. investigators identified as a front for Serniya Engineering, the core company in the network. Both Robin Trade and Treydtuls were owned by Alexey Zibyrov.

Serniya Engineering and Robin Trade were sanctioned by the EU following Russia’s full-scale invasion of Ukraine in 2022. Clients of the Serniya network include the defense ministry, the state-owned defense conglomerate Rostec, and Rosatom, the state atomic energy giant. Treydtuls and Tireks have not been sanctioned.

Artem Klimenko, a former shareholder and employee of Treydtuls, owns Tireks. Klimenko stated that he had no connection to the Serniya network and that Zibyrov was merely a silent partner in Treydtuls.

He told the FT that he started Tireks to make a “clean slate” after being informed that Zibyrov’s other telecom equipment businesses had become “toxic.” The tools “were sold only through specialized DIY networks and exclusively for peaceful purposes,” Klimenko said.

Zibyrov added, “Klimenko has nothing to do with the telecommunications equipment business. His business is solely related to construction tools and accessories for personal use.”

However, Klimenko took over as CEO of a Russian import company from Zibyrov shortly after Robin Trade was sanctioned in 2022. This other company, Finch Impex, has since imported $2.2 million worth of goods, primarily from Taiwan and China.

The Finch Impex imports include parts for oscilloscopes and spectrum analyzers. Ukraine’s allies have listed this laboratory equipment as high-priority export-controlled items.

Klimenko told the FT that he “does not want to appear in further transactions in these areas of activity.”

Officials have likened efforts to crack down on Russian companies to a game of cat and mouse. An EU official working on sanctions emphasized the importance of stopping the flow of goods from European companies and improving their due diligence. “Member states should really step up their implementation,” the official said. “Authorities and companies should do their homework.”

In 2022, the U.S. Department of Justice indicted five individuals connected to Serniya for conspiring to obtain military-grade and dual-use technologies for Russian defense firms.

One of the accused, Vadim Konoshchenok, allegedly an FSB colonel, was apprehended by Estonian border guards while trying to enter Russia.

The U.S. Department of Justice reported that Konoshchenok was “stopped at the Estonian border with 35 different types of semiconductors… as well as thousands of U.S.-made 6.5mm bullets, which are used in military sniper rifles.”

Konoshchenok, who has since been extradited to the U.S., pleaded not guilty to charges of violating U.S. sanctions and export controls.