Danfoss has been supplying components to the Russian Navy for years

Through a Russian subsidiary, Danfoss has supplied the Russian navy with heat exchangers for at least eight military vessels between 2015 and 2021, according to the company's own sales material. It is highly unlikely that the sale could have taken place from Denmark, but several experts believe that it is in contravention of UN guidelines.
Through a Russian subsidiary, Danfoss has supplied the Russian navy with heat exchangers for at least eight military vessels between 2015 and 2021, according to the company's own sales material. It is highly unlikely that the sale could have taken place from Denmark, but several experts believe that it is in contravention of UN guidelines.
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In cooperation with the Danish Broadcasting Corporation (DR)
Illustration: Sarah Hartvigsen Juncker
Redaktør: Jonathan Tybjerg |
A Danwatch investigation

Danfoss has been supplying components to the Russian Navy for years

In December 2016, the UN condemned a series of human rights violations in the Crimean peninsula, which Russia had annexed two years earlier.

At the time, Crimea was already subject to EU sanctions, who had also imposed an arms embargo on Russia because of their military aggression.

Yet just six months later, the Danish industrial group Danfoss chose to sell heat exchangers for the state-of-the-art ‘Gennady Dmitriev’ arms carrier, which was launched in June 2021 and will soon join the Russian military’s Black Sea Fleet at Sevastopol in Crimea.

Danwatch, in cooperation with DR, can now reveal this based on extensive research including Russian tender documents, advertising material and product catalogues.

The documents show that Danfoss, through its wholly-owned Russian subsidiary AO Ridan, bid for – and won – two contracts to supply industrial heat exchangers to the Vympel shipyard for two arms carriers – knowing full well that the end customer was the Russian Ministry of Defence.

The previous year, the Russian media and the shipyard itself had announced that the ‘Gennady Dmitriev’ and the other arms carrier were going to the Black Sea Fleet and the Baltic Fleet respectively.

A sales document on Ridan’s website also reveals that – in addition to the two arms carriers – the company has produced and supplied heat exchangers for at least six other military projects for the Russian navy between 2015 and 2021. These include a high-profile corvette-class warship equipped with missile systems and torpedoes, as well as two rescue vessels, an icebreaker, a communications ship and a hydrographic survey vessel.

DOCUMENTATION

Among others, AO Ridan won a tender to supply heat exchangers for an arms vessel to Russia’s naval base in Crimea. Click on the pictures to see the documentation.

It certainly appears to be a breach of the UNGP guidelines as it helps a military power to violate human rights.

Prides itself on its guidelines

When the Universal Declaration of Human Rights celebrated 70 years in 2018, Danfoss CEO Kim Fausing stressed that they have always been “part of the company’s DNA”, which Danfoss continues to cherish.

“Respecting human rights is fundamentally about decency,” he declared.

Danfoss also takes pride in adhering to the UN Guiding Principles on Business and Human Rights (UNGPs), which aim to ensure that companies do not contribute to human rights abuses.

In 2017, when Danfoss’ subsidiary supplied the two arms carriers, one of which was bound for Crimea, the UN had the previous year already condemned the violence, killings and abductions of the people of the occupied peninsula and their deprivation of basic human rights such as freedom of assembly and religion.

According to Jacob Dahl Rendtorff, Professor of Business Ethics at Roskilde University, Danfoss’ military deals are therefore in clear violation of UN guidelines.

“It definitely looks like a violation of the UNGP guidelines because you are helping a military power to violate human rights. If Danfoss had carried out responsible due diligence on the supply chain and the end product, it would have been clear that the end customer was the Russian military and that the heat exchangers were going to be used for an arms carrier in Crimea,” he says.

It is also problematic, according to Jacob Dahl Rendtorff, that Danfoss has supplied another seven ships in the Russian fleet, including the missile-carrying corvette, in addition to the arms carrier in Crimea.

“It’s incredible that this has been allowed to happen at all. Even though you know there’s an arms embargo and sanctions against Russia, you continue to sell to them,” he says.

Danfoss denies sanction violations

Danfoss did not want to be interviewed about the case, but in a written answer to Danwatch and DR Danfoss confirmed that ‘Ridan sold heat exchangers to various shipyards until Russia’s invasion of Ukraine’. Danfoss added that the company has now spent 48 hours investigating the case, which shows that ‘There has been no violation of international sanctions.’

“Our own internal guidelines go beyond the sanctions adopted after Russia’s illegal annexation of Crimea and Sevastopol in 2014, and we will now thoroughly investigate whether our internal controls over our subsidiaries are sufficient,” writes Mikkel Ballegaard Pedersen, Danfoss’ press officer.

Danwatch and DR have also asked specifically about the individual projects for which Ridan, as stated in its sales material from 2021, has supplied heat exchangers.

In a follow-up email, Danfoss confirms that it has sold heat exchangers for project 20360M, which involves the two arms carriers.

correspondence

Read the full response from Danfoss

The sales material from Ridan - now removed from their website - also states that Danfoss has supplied heat exchangers to the company Zvezda in connection with project 20386, which is the above-mentioned missile corvette. Danfoss confirms that Ridan has supplied the products to Zvezda, but will neither confirm nor deny whether the heat exchangers were part of the project.

"We can confirm that, in 2016, Ridan sold heat exchangers to the company Zvezda, but we cannot confirm that they were delivered to this project number."

In another email regarding project 20386 Danfoss wrote:

"I apologise if we were unclear about 20386. The project is from 2016. The project has not yet been completed, and, as with the others, Ridan does not know when or if it will ever be completed."

Danfoss also added that "there is a discrepancy between the data in Ridan's sales material."

Furthermore, Danfoss reported on two other projects:

"Only two ships with our heat exchangers have been completed. One is a rescue vessel, designed for fire fighting in the Caspian Sea, where the shipyard was also located . The other is a hydrographic survey vessel for mapping the seabed."

Danfoss announced in a press release on 1 April this year that it is preparing to exit from Russia and Belarus.

"Our thoughts remain with the Ukrainian people and all others suffering from this war. Our first priority remains the safety of our Ukrainian team and their families."

"After suspending our operations in Russia on 28 February and in Ukraine on 4 March, we have continued to monitor the situation. Given the impact of the sanctions, supply chain disruptions and other logistical challenges, we have decided to make a controlled exit from Russia and Belarus."

In light of the earlier announcement of an exit, Danfoss stated in an email that:

"I can also confirm that Ridan is part of the ongoing sale of our Russian business."

“Yes, Ridan has supplied two ships that are not yet finished and it is unclear if they will be finished as the Vympel shipyard is now under sanctions.”

It is not immediately clear how much Danfoss has earned from selling heat exchangers to the Russian fleet. The tender documents for the two arms carriers state that they have a total value of 1,168,495.70 roubles, equivalent to around £12,240 at the exchange rate at the time.

Responsible for investigating

According to documents from the Ridan website, the heat exchangers for the arms carriers and the missile corvette are part of the central cooling system and for oil cooling of the gearbox lubrication system respectively.

And while heat exchangers are not in themselves a military product, Danfoss is responsible for where they end up. Elin Wrzoncki, Head of Human Rights and Business at the Danish Institute for Human Rights, says:

“It’s important to stress that when we talk about UNGP, a company like Danfoss is not only responsible for investigating human rights violations in relation to who they supply, they must also investigate where the product ends up and what it is used for.”

“In this case, more alarm bells should be ringing because of doing business with Russia’s military, and because that same military has been behind documented violations of international human rights. You can’t just ignore that,” she says.

High profile ships

The arms carriers and the missile corvette, which are equipped with heat exchangers from Ridan, are among the most high-profile new naval projects in the Russian navy. Ships of these classes could play a major military role for Russia, says Anders Puck Nielsen, a military researcher at the Royal Danish Defence College.

“I’ve speculated a lot about that ship,” he says, referring to the arms carrier.

“Most navies have supply ships, as we do in Denmark, but not ones dedicated to weapons. Ours typically carry fuel and supplies and that sort of thing. But Russia is in a situation where, unlike the Americans, they don’t have many naval bases around the world – and that’s where such dedicated arms carriers can play a major role, because they can transfer munitions to other ships, so they don’t have to sail a long way to a base,” he says.

High-tech missile corvettes also play a key role for the Russian navy, which has a clear strategy of focusing on smaller ships of this type, rather than large battleships. Despite their size, they are of great military importance to Russia, says Anders Puck Nielsen.

“Corvettes are smaller ships designed for coastal defence and to defend naval bases. However, they have compensated for their small size by equipping them with long-range missiles. These are exactly the kind of corvettes we now see in the Black Sea, firing missiles far into Ukraine,” he says.

FACTS

Project 20386 missile corvette

In 2019 Danfoss’ Russian subsidiary, AO Ridan, supplied heat exchangers for use in a purpose-built gearbox in a brand new class of missile-carrying corvette. In the interactive graphic below, you can see some of the weapons it’s equipped with.

korvette_full

100 mm cannon, type A-190. Weighs 15 tonnes and can fire 26.8 kg grenades with a range of up to 20 km. Can fire 80 rounds per minute.

2 x 30 mm AK-630M weapon system. Can fire 10,000 projectiles per minute from a rotating cannon with a range of up to 4 km.

2 x 14.5 mm heavy machine guns. Can fire 600 rounds per minute with a range of up to 4 km.

8 missile cells for vertical firing of Kalibr or Onix cruise/anti-ship missiles.

16 “Redut” type missile cells for the vertical launch of surface-to-air missiles.

Torpedo system with space for a total of 8 torpedoes. Used against either submarines or to disable incoming torpedoes.

Helicopter space below deck for Ka-27M combat helicopter with foldable wings.

background

Danfoss chairman receives Putin medal

Two months before Russia invaded Ukraine, Danfoss' then Chair of the Board, Jørgen Mads Clausen, received the honourable Order of Friendship from Russian President Vladimir Putin. A decree signed by Putin at the Kremlin on 20 December 2021 states that it is awarded to Jørgen Mads Clausen:

"For the great contribution to strengthening friendship and cooperation between the peoples of Russia and Denmark."

Danfoss has been active in Russia since 1993, and on the company's Russian website, Jørgen Mads Clausen subsequently expressed his thanks for the order. In the article, the Russian employees were also acknowledged:

"Jørgen Clausen congratulates all employees of the Danfoss Group in Russia for this award, which is a high recognition of our tireless cooperation to improve the efficiency of various industries' technical systems."

After Russia's invasion of Ukraine, Jørgen Mads Clausen seems to have changed his mind.

According to an article in Ekstra Bladet, in a letter to the Russian ambassador in Denmark, Vladimir Barbin, dated 22 March, he chose to refuse to receive the medal, which is shaped like a five-pointed star and gilded in silver, because of the war in Ukraine, which Danfoss, according to the letter, condemns.

Not supplied from Denmark

The heat exchangers for the Russian fleet’s ships were produced at Danfoss’ subsidiary AO Ridan’s factory, in the Russian region of Nizhny Novgorod. According to the company’s annual report, Danfoss bought Ridan in 2007. Today, the subsidiary has 25 employees, with a turnover of almost £5 million last year.

Because the heat exchangers were sold from a subsidiary in Russia, the deal could go ahead without problems.

But if the heat exchangers were to have been exported from Denmark or another EU country, Danfoss would probably not have obtained an export licence to sell to the Russian military. Because even if the components are not considered military equipment per se, sales would probably have been stopped by the EU’s so-called catch-all rule as the product was to be used in military equipment in a country subject to an EU arms embargo.

Since 2014, the EU has imposed sanctions on Russia, including a ban on trade in military products and so-called dual-use products, which can be used for both civilian and military purposes.

It has not been possible for Danwatch and DR to clarify whether Danfoss’ heat exchangers are covered by the sanctions against Russia, which Danfoss claims they are not.

This will ultimately be up to the authorities to assess. Similarly, it is also a matter of judgement whether Danfoss can be held legally responsible for the sale by a Russian subsidiary.

Elin Wrzoncki points out that, even if Danfoss did not break any sanctions in the sale of heat exchangers to the Russian military project in 2017, it still played a role as companies are responsible for investigating the supply chain and end product.

“When it comes to conflict zones, the UNGP states that companies should scrutinise sales extra carefully because the risk of human rights violations is very high.”

“At the time, there were also a number of sanctions against Russia which should have set alarm bells ringing. While it may not legally violate a sanction for their product to end up on a military ship in Crimea, the sanctions are an important additional factor that should be taken into account when considering whether there may be a risk of a negative impact on human rights,” she says.

Danwatch and DR have asked the Danish Business Authority if they have been in dialogue with Danfoss regarding sales to the Russian military, but the Authority states that they cannot comment on specific cases due to confidentiality.

Do you have information about Danfoss? If so, contact journalists Thomas Gösta Svensson and Mathias Glistrup at danwatch@protonmail.com

FACTS

Here are two of the warships Danfoss has supplied

Project 20360M: Five-storey arms carrier

Modern warships are no use if they run out of ammunition. So when Russia’s submarines and corvettes have fired all their cruise missiles into Ukraine or Syria from their positions in the Mediterranean, Caspian or Black seas, having someone nearby who can bring fresh supplies is worth its weight in gold.

This is where the massive arms carriers under project 20360M, for which a Danfoss subsidiary has supplied components, come into play.

With two cargo holds, a platform for container cargo, a crane capable of lifting 20 tonnes and a helipad, the ships are built to assist in modern warfare. They can carry anything from ordinary ammunition to missiles and torpedoes, and are designed to sail up alongside warships and submarines and replenish the ammunition at sea.

This is critical for a country like Russia, which, unlike the USA, does not have many naval bases around the world, says military analyst Anders Puck Nielsen from the Royal Danish Defence College.

“Dedicated arms carriers can play a vital role there, because they can transfer ammunition to other ships, which therefore don’t have to sail a long way to a base,” he says.

Without the wheelhouse, the ships are about the height of a 5-storey building. When the main ship “Gennady Dmitriev” was to be launched in June 2021 at the Vympel shipyard, the water level in the Volga River had to be raised by several metres to avoid grounding.

The mother ship “Gennady Dmitriev” will serve in the Black Sea Fleet based in Crimea, while the sister ship “Vladimir Pyalov”, still under construction, will form part of the Baltic Fleet.

Danwatch has tried to locate the “Gennady Dmitriev” through open sources. Satellite images show that the ship was definitely berthed at Vympel shipyard in August 2021. Recent Russian tender documents suggest it is still there, but will soon sail to Crimea.

According to tenders issued as late as the beginning of April 2022, welding and pipe work will be carried out at the shipyard itself. But from 10 April 2022 onwards, all work, including painting and insulation, will be carried out in Sevastopol, Crimea.

If the ships are successful, the Ministry of Defence plans to mass-produce the model.

  • Length: 77.8 m
  • Width: 15.8 m
  • Draught: 4 m
  • Weight: approx. 2,200 tonnes
  • Speed: 14 knots (approx. 26 km/h)
  • Range: 3,000 nautical miles (approx. 5,550 km)
  • Crew: 32
  • Planned number: 2 – possible mass production

Project 20386: A modern stealth killer

Expectations for Russia’s latest class of missile-carrying corvettes, for which Danfoss’ subsidiary has supplied heat exchangers, are very high.

The warships, produced under project 20386, are indeed something special. With cutting-edge technology in everything from radar and control systems to advanced robotic systems that allow crew reductions, the corvettes are among the most modern war machines.

They are built in a sleek design, with large glossy surfaces and a specially developed lead coating that makes the ships look like small, harmless fishing boats to enemy radars.

Although corvettes are some of the smallest warships in a modern fleet, they should be taken very seriously. Project 20386 corvettes will be equipped with cannons, turrets and machine guns, as well as dozens of missile cells from which cruise missiles, anti-ship missiles and torpedoes can be launched. There is also landing pad for a helicopter that can be stored below deck.

Additionally, the 20386 corvette is both larger and heavier than ordinary corvettes, which, according to several observers, makes it look more like a lightly equipped frigate.

The ships are a further development of two successful classes of corvette, and if all goes to plan, the Russian Ministry of Defence will order at least 10 of them. So far, at least one of them – the mother ship of the class – is being built. By all accounts, it will be called Derzky, which best translates as Audacious.

The technology of the mother ship is so new that several parts are still under development, which has caused several delays in its construction. While the ship Dristig was previously designated to serve in the Black Sea Fleet in Crimea, according to Aleksei Rakhmanov, head of the state-owned United Shipbuilding Company, it is currently uncertain where the ship will serve.

  • Length: 109 m
  • Width: 13 m
  • Draught: 4.3 m
  • Speed: 30 knots (about 56 km/h)
  • Range: 5,000 nautical miles (approx. 9,300 km)
  • Crew: 80
  • Planned number: 10
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