FirstFT: Russian spy network smuggles sensitive EU tech despite sanctions

A Financial Times investigation has revealed that a Russian spy network managed to smuggle sensitive technology from EU companies to fuel Vladimir Putin’s war on Ukraine despite a US-led crackdown.

The “Serniya network”, accused by the US Department of Justice of working on “highly sensitive and classified procurement activities” on behalf of Russia’s FSB spy agency, managed to obtain machine tools from Germany and Finland despite US sanctions imposed in March 2022.

Other clients of the network — set up to procure goods ranging from microchips to ammunition — include the Kremlin’s Foreign Intelligence Service, known as the SVR; the state-owned defence conglomerate Rostec; Russia’s Ministry of Defence; and Rosatom, the state atomic energy company in charge of the country’s nuclear arsenal.

The FT found that a Moscow-registered company, controlled by the same person that controls a Serniya network entity described by the US as “engaged in proliferation activities at the direction of Russian intelligence services”, has continued to buy items from companies inside the EU, acquiring $900,000 of materials including microchips since the Ukraine war started.

Here’s what else is happening today:

• Interest rates: The US Federal Reserve is expected to deliver another quarter-point rise, bring rates to a target range of 5-5.25 per cent, the highest level since mid-2007.

• Results: Airbus, Aston Martin Lagonda, BNP Paribas, Enel, Estée Lauder, Kraft Heinz, Lufthansa, Ørsted, Porsche and Qualcomm report. See the full list in our Week Ahead newsletter.

• Economic data: The UK publishes revisions to its 2022 gross domestic product figures in the Blue Book, the EU and Italy have March unemployment numbers and S&P Global releases its services purchasing managers’ index for the US.

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Five more top stories

1. Britain’s financial regulator is set to propose sweeping changes to the country’s listing regime today, including scrapping rules that force a shareholder vote on transactions between UK-listed companies and “related parties”. Read more on the Financial Conduct Authority’s plans.

2. US regional bank shares continued to slide despite the rescue of First Republic, with PacWest shares closing down 27.8 per cent yesterday after being briefly halted for volatility and Western Alliance falling 15.1 per cent. Both banks have drawn scrutiny because of their similarities to Silicon Valley Bank and First Republic.

3. Shares in the education sector fell sharply after Chegg warned that interest in ChatGPT was starting to hurt its sales. The edtech company’s shares plunged by half yesterday, and the revenue warning rattled other companies including Pearson, Duolingo and Udemy.

4. Harvey Schwartz has been holding extensive reviews at Carlyle Group after taking over as chief executive in a bid to present himself as a keen listener, in contrast with his reputation as a corporate bruiser at Goldman Sachs. But few think the listening sessions will last for much longer.

5. Refurbished iPhones are boosting Apple’s share of the Indian market, accounting for 11 per cent of secondary smartphone sales in the country last year, up from 3 per cent in 2021. Market intelligence group Counterpoint Research said this made the iPhone the “fastest-growing refurbished brand in India”.

The Big Read

In recent weeks, more than a dozen politicians, activists, judges, trade unionists and a leading independent editor have been arrested in Tunisia, in what Amnesty International has called “a politically motivated witch hunt”. Here’s how President Kais Saied, who staged a power grab in 2021, is dismantling the country’s young democracy.

We’re also reading . . . 

Chart of the day

European investment in China’s car sector hit a record high of €6.2bn last year as companies tried to claw back market share from ascendant Chinese electric-vehicle makers.

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Take a break from the news

Linton Kwesi Johnson “came to poetry through politics” amid global winds of change, including the civil rights movement and colonial wars in sub-Saharan Africa. The Jamaican-born poet and activist talks about Britain’s imperialist mentality and his five-decade journey in poetry in an interview with the FT.

Additional contributions by Gordon Smith and Emily Goldberg