Exclusive: How EU firms skirt sanctions to do business in Crimea

Wed Sep 21, 2016 7:35am EDT
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By Anton Zverev, Gleb Stolyarov and Olga Sichkar

SIMFEROPOL, Crimea/MOSCOW (Reuters) - Products for sale in the Crimean stores of two European retailers are being shipped there from Russia via a ferry and port that are subject to EU sanctions, people involved in the transportation said, suggesting companies are finding ways around the punitive economic regime facing Moscow since 2014.

Products carrying the brands of Germany's Metro AG and Auchan [AUCH.UL] of France are visibly for sale on the shelves of the retailers' Crimean subsidiaries.

People involved in transporting the goods say they arrived via a ferry that serves the Crimean port of Kerch. European companies are banned from doing business with the ferry and the port under EU sanctions imposed on Russia after it annexed Crimea from Ukraine.

Both retailers said they were not violating the sanctions because the stores are operated by their Russian subsidiaries, which are not subject to the EU sanctions.

A representative of the Kerch port referred questions about Metro and Auchan to the ferry operator, saying the port only controls shipping, not cargo. A representative of the ferry operator said it does not have contracts with Metro or Auchan and does not know if they use the ferry.

Legal experts said the transfer of goods to Crimea may fall in a gray area of the sanctions regime because the relationship between parent companies and sub-contractors is often hard to define.

In emailed comments in response to questions, Metro and Auchan did not contest that their goods were being shipped via the Kerch ferry and port to their subsidiaries' stores in Crimea.

A spokesman for Metro said Metro stores in Crimea are operated by independent Russian entities and staff that are not subject to EU sanctions.   Continued...

People enter a Metro cash and carry store in Simferopol, Crimea, July 4, 2016. REUTERS/Anton Zverev