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Leica supplies binoculars and rifle scopes to Russia after invasion of Ukraine, despite withdrawal announcement

After Russia invaded Ukraine, German camera manufacturer Leica Camera AG announced that it would stop shipping its goods into the country and close its company store in Moscow. Contrary to its promise, the company not only continued its deliveries, but also began exporting laser rangefinder binoculars and night vision scopes. Laser rangefinders and levels from the Swiss company Leica Geosystems are also making their way into Russia, albeit through third countries. The equipment may have military applications, such as the correction of artillery fire.

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Leica Camera Russia

March 16, 2022, the industry magazine Macfilos, citing a press release from Leica Camera AG, announced that the company was winding down its activities in Russia and would soon close its only store in the country. Multiple organizations that track the position of international companies after the start of Russia’s full-scale invasion of Ukraine – such as the Yale School of Management – wrote about the firm’s intended departure from the country. The company's real actions, however, appear to contradict its press release.

Leica is one of the niche manufacturers of luxury cameras and optics – the firm also manufactures scopes, binoculars and glasses under the Mykita brand. The company's revenue in the financial year 2021-22 increased by 16%, totaling €450 million ($486 million). In Russia, Leica Camera has its own subsidiary, LLC “Leica Camera Russia,” along with its own branded store in GUM, a large department store facing Red Square and the Kremlin.

According to Russia’s State Register of Legal Entities (USRLE, also EGRUL), instead of terminating its operations in Russia, LLC “Leica Camera Russia” only changed its name to LLC “Vechernaya Zvezda” on April 6, 2023. The founders of the company remained the same. 99% of the Russian firm is owned by Leica Camera Austria GmbH, while another 1% is owned by AHK Vermögensverwaltung GmbH. The firm is headed by German citizen Klaus Hauer, who had previously worked in Volkswagen’s Russian office.

Austrian neutrality and night vision sights

Along with Hungary and Switzerland, Austria remains one of the few European countries to refuse military assistance to Ukraine. On January 30, 2023, Austrian Defense Minister Claudia Tanner announced that her country would not provide defense assistance to Ukraine “to prevent a further escalation.” Unlike the country’s defense minister, Austrian businessmen do not fear escalation. The neutrality of Austria’s politicians did not affect the position of Leica's Austrian management. When the Russian subsidiary imported collimator sights and laser rangefinder binoculars from Leica's German factory, the company's management – at the very least – did nothing to impede these deals.

Leica’s Russian branch was supposed to become the ambassador of German quality in the country’s optics market – at least according to the company’s corporate announcements. But after the war began, the company seemed to have changed its specialization from high-end cameras to dual-use goods. While Leica Camera Russia filed only one declaration for rangefinder binoculars in 2020 and 2021, the numbers took a different turn in 2022, as the company completed only one declaration for the import of cameras, and filed three declarations for night vision devices.

After the start of full-scale invasion and after the crimes of the Russian army in Bucha became known to the press, Leica Camera Russia filed three declarations for the import of binoculars and scopes on July 6, November 18, and December 15, 2022. These declarations are obtained for the customs clearance of an initial shipment of any good – subsequent shipments are usually cleared under the first declaration to save money. For example, the declaration for binoculars with laser rangefinder EEU N RU D-DE.RA04.B.66670/22 dated July 6, 2022, has a validity of five years, and can be used to import the good until July 2027.

The company began supplying binoculars and scopes shortly after Russia invaded Ukraine

In addition to supplying for its own subsidiary, Leica Camera also cooperated with other Russian customers. According to customs data aggregator ImportGenius, German Leica Camera AG supplied optical equipment to the Kovrov Mechanical Plant, which produces gas centrifuges for uranium enrichment, until December 2019. Another of the company's customers was the S. A. Zverev Krasnogorsk plant, which manufactures Zenit-M cameras, heavily based on the German Leica M typ 240 model. Aside from amateur photography equipment, the Krasnogorsk plant produces military optics ranging from aerospace cameras to fire control systems for Mi-35 helicopters. The last delivery to the Krasnogorsk plant was made in December 2021. Leica did not violate international sanctions, as the European Union had only banned exports of binoculars and night-vision scopes to Russia only a year after the war began – on February 25, 2023.

Leica Camera Russia's financial statements [which are available to The Insider] raise a number of questions that an experienced auditor or tax inspector would help answer. For the second year in a row, the company is spending more on servicing commercial operations and its own management than it gets from sales. In 2022, with commercial expenses of 73.5 million roubles (approximately $923,000), and management expenses of 30.2 million roubles ($379,000), the sales revenues amounted to only 79 million roubles ($992,000). A cost structure like this is typical when a firm enters a developing market, and rather atypical when operating in a country engaged in an aggressive war. Leica's losses in Russia increased from 10.3 million roubles in 2021 ($129,000) to 29.3 million roubles ($368,000) in 2022.

It is possible that the head of the Russian branch influenced a corporate decision to break the firm’s public promise, and continue operating the loss-generating business. In addition to running Leica Camera Russia, Klaus Hauer runs a related personal business – Mr. Hauer is the general director and sole founder of LLC “Reis” on Moscow’s Volzhsky Boulevard, a small store selling photographic equipment.

Swiss rangefinders and Chinese middlemen

Like Austria, Switzerland has declared its neutral position in the Russian-Ukrainian war. But despite its official neutrality, Swiss equipment, including laser rangefinders and tachymeters, continues to find its way into Russia. Swiss surveying instruments are used to measure distances and angles to distant objects, and can be used to correct artillery fire. For example, the Leica TS07 R500 total station, when used with a reflector, can survey areas up to 10 km (6.2 miles) away.

Leica surveying equipment is manufactured by the Swiss company Leica Geosystems AG. In Russia, the firm operates through its subsidiary, LLC “Hexagon Geosystems Rus.” Leica Geosystems AG (based in Switzerland) owns 95% of Hexagon, while Leica Geosystems Holdings B.V. (based in the Netherlands) owns the remaining 5%. Unlike the German Leica Camera, the Swiss company did not make any loud statements, simply winding down its Russian business after the war began. The last import declarations were made in March 2022, and at the end of 2022, the company's inventory was valued at 4,000 roubles ($50) – a year earlier, it was worth 563.88 million ($7 million).

The supplied devices can be used to correct artillery fire

However, there are still a number of companies in Russia that call themselves official dealers of Leica surveying instruments: Geooptik, Geospektr, Rusgeokom, Profpribor and CPI. Many of these firms’ websites indicate that they have Leica equipment in stock. Between May 2022 and April 2023, Russian importers processed a total of 24 declarations for products from Leica Geosystems AG, importing them through Chinese and Turkish middlemen. A number of these companies have previously acted as suppliers to Russia’s Ministry of Defense and law enforcement agencies.

For example, the catalog on the Rusgeokom store's website lists 16 Leica total stations, five of which are in stock. According to customs data, in August 2022, this firm purchased Leica Geosystems AG equipment through Chinese intermediary Shanghai Merrypal Import Export Co. Ltd. Rusgeokom is a major supplier to law enforcement agencies and Russia’s Ministry of Defense. The company has been awarded over 114 state contracts worth 280.524 million roubles ($3.5 million), three of which were concluded with the Ministry of Defense for the supply of geodetic instruments (contracts dated August 7, 2017 for 699,422 roubles, dated July 19, 2017 for 9.092 million roubles, dated July 17, 2017 for 64.9 million roubles).

Another client of the Chinese importer Shanghai Merrypal is the Geotekhnologii LLC, headquartered in Khabarovsk in Russia’s Far East. Although the firm’s customs data contains no information on the brand and manufacturer of the products it imports, the catalog on the firm's website shows Leica surveying instruments. Of the 83 government contracts involving Geotekhnologii, some were intended for Russia’s law enforcement agencies, such as the Federal Protective Service's (FSO) Armaments Department.

Another importer of Leica Geosystems’ products, Rusgeotorg LLC, purchases equipment through the Israeli company GMX System Ltd. Rusgeotorg is owned by Egor Vladimirovich Vyalkov, who was a former founder of the GCM Company LLC. This company has been awarded 45 state contracts worth 30.05 million rubles ($376,000) with Russia’s law enforcement agencies, including a delivery for the Main Military Construction Directorate No. 9.

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