Manufacturers urged to 'raise red flag' in Russia sanctions-busting probe

Manufacturers urged to ‘raise red flag’ in Russia sanctions-busting probe

Posted by Admin April 30, 2024 Bussiness

UK manufacturing exporters who see leaps in sales to countries friendly with Russia should “raise a red flag”, a sanctions expert has told MPs.

Tom Keatinge, director of the Centre for Finance and Security at the Royal United Services Institute, said in evidence to an inquiry on the effectiveness of sanctions against Russia that UK companies seeing such spikes should not be going “to the pub” to celebrate.

He was speaking generally amid work by Sky News that identified a surge in sales of UK-made cars to Russia’s neighbours, most notably Azerbaijan, with luxury vehicles seen in Moscow showrooms this year.

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Analysis showed that the UK exported £273m of vehicles to Azerbaijan last year, a 1,860% increase compared with the five-year period preceding Russia’s invasion of Ukraine.

Separate data highlighted an unprecedented increase in car exports to Russia from Azerbaijan.

The UK car industry’s lobby group, the SMMT, has insisted that British carmakers are not selling cars to Russia and are in full compliance with the sanctions regime.

Mr Keatinge told the Treasury select committee’s inquiry that manufacturing exporters should be more proactive in policing their sales, rather than the onus being placed on banks to flag concerns about their corporate clients’ activities.

He explained that was especially prevalent in the United States, which issued an executive order to that effect in December.

Mr Keatinge said of manufacturers’ responsibilities: “You should have had it drilled into you by now that if suddenly sales are rising to Kazakstan, or suddenly sales are rising to Armenia, that is not a reason to go to the pub and celebrate, that is a reason to question why your sales are rising.

“This is where I think the nub of our failing at the moment is.”

He called for a review of the sanctions regime to ensure penalties against Russia were effective and not just harming UK business unnecessarily, with the expertise of the private sector being utilised more effectively.

“If luxury cars are finding their way to Russia which obviously has been a popular story from Ed Conway at Sky News in recent weeks, we accept that we need to investigate those stories, but that’s not going to be our priority.

“That was said to us explicitly by a customs agency in a European member state. We are focused on the critical high priority items because those are the items that Russia needs to resource its military.

“I don’t think we should be saying no business with the Eurasian economic area. That seems to me to be counterproductive but I do think we need to be making it much, much clearer to manufacturers and exporters in the UK that if you start to see an increase in trade with those countries then that is a reason to – in the context in the banking world – file a suspicious transaction report, raise a red flag and say can somebody help me here, because I’m feeling uncomfortable about an expansion of sales that we’re witnessing.”