Reported by Dalton Bennett, Mary Ilyushina, Lily Kuo and Pei-Lin Wu

It had been a busy year for the employees gathered in June for I Machine Technology’s corporate retreat at a resort on Russia’s Black Sea coast. With war raging in Ukraine, the Russian defense industry was hungry for the advanced manufacturing equipment the Moscow-based supplier specialized in importing.

Dressed in summer linens, chief executive Aleksey Bredikhin welcomed the crowd seated among plates of local delicacies and flutes of prosecco. He paused to recognize several guests who had traveled thousands of miles to join the festivities in Sochi.

“I especially want to welcome our friends from faraway Taiwan,” he said, video footage of the event posted online shows. “For almost a year now, we have been working very hard.”

Since January 2023, I Machine Technology has imported over $20 million of sophisticated equipment called CNC machine tools made in Taiwan, a U.S. strategic partner, according to trade records and Russian tax documents obtained by The Washington Post. The computer-controlled machines are used for the complex and precise manufacturing that is critical in many industries, including weapons production.

The Taiwan-made machines accounted for virtually all of the Russian company’s imports in the first seven months of last year, according to the records, and the company’s sales during that period were overwhelmingly to the Russian defense industry. Bredikhin also sought to make the machines available for a secretive Russian effort to mass-produce the attack drones that have unleashed horrors on the U.S.-backed Ukrainian army, according to an invitation sent to one of the project managers overseeing engine construction for the drone program.

Kevin Wolf, a former senior Commerce Department official who once headed the agency that implements U.S. export controls, said shipments identified by The Post probably violated prohibitions Taiwan and the West imposed last January on the sale of technology to Russia, in response to the Ukraine war. He said the shipments should “absolutely” be an enforcement priority for authorities in Taiwan.

“This is why export controls against Russia were imposed,” he said. “You’ve got tools that are very important for making military items. You’ve got a lot of connection to military end uses and users. You have connections to drones. You’ve got a large dollar amount. This is a classic enforcement priority issue.”

The shipments highlight how, despite a U.S.-led regime of global restrictions that is one of the most expansive in history, Russia’s defense industry has remained robust partly because of regulatory loopholes and lax enforcement. Critical goods have continued to flow directly to Russia, as well as through China and other countries that are not participating in the restrictions — including, in this case, goods that originated on a self-governed island that is allied with the United States.

“On the one hand, we appreciate the efforts taken by our partners so far to disrupt Russian supply chains,” said Vladyslav Vlasiuk, a sanctions expert and adviser to Ukrainian President Volodymyr Zelensky. “At the same time, it is clearly not enough.”

The machines were sent in 63 separate shipments, according to Russian trade data obtained by The Post and export records provided by the Center for Advance Defense Studies, or C4ADS, a Washington-based nonprofit focused on global security.

Read full report: https://www.washingtonpost.com/investigations/2024/02/01/taiwan-russia-sanctions-cnc/