Belgian company embroiled in Russian arms scandal

Belgian company embroiled in Russian arms scandal
Credit: Rawpixel/Flickr

New Lachausée, a Belgian ammunition machine-tooling company based in Herstal has been accused of sending offers to Russian arms manufacturers and maintaining trade representatives within the country, an RTBF investigation has uncovered.

The company is 20% owned by the Walloon government, which controls the issuing of export licences for the company.

On 1 April, the decentralised hacking collective Anonymous publically leaked 27 gigabytes of data from Russian vehicle manufacturer Lipetsk Mechanical Plant. The leaked documents include a trove of emails, financial statements, documents, and interactions with New Lachausée.

Dodgy deals

In December 2021, the company sent offers to Russian shell company Lipetsk Mechanical Plant, which is officially involved in the production of tractors and self-propelled vehicles.

In reality, the Lipetsk plant creates vehicle chassis used for Russian S-300 Long Range Air Defence Systems. These systems have seen frequent use in the Russian-Ukrainian war. The Lipetsk plant is not currently under international embargo due to its designation as a regular vehicle plant.

The Anonymous leaks provided evidence that, besides producing vehicles and chassis, the company was in fact serving as a shell company by one of Russia’s largest arms producers – the Kalashnikov Concern (IZhMASh). Kalashnikov produces around 95% of all Russian small arms and ships them to over 27 countries internationally.

The Kalashnikov Concern, manufacturer of the iconic AK-variant and RPG weapons systems found across the former Soviet world, is under international sanctions following Russia’s invasion of Crimea and its funding of proxies in the Donbas before Russia’s full-on invasion in 2022.

Translation: Kalashnikov demonstrates its AK-12 rifle, the main battle rifle used by professional soldiers of the Army of the Russian Federation.

Leaked emails show that Kalashnikov Concern had instructed Lipetsk Mechanical Plant to launch a call for tenders from European companies for the establishment of “new ammunition production lines” using foreign machinery.

Illegal offers?

While other companies quickly drop out of the contention for the tender, New Lachausée sends offers on two separate occasions.

One offer dated 21 October, 2020, was addressed to the Tula Cartridge Works, a company directly owned by state-controlled Russian company Rostec which has been under European sanctions since 2014.

Another offer was made on 3 December, 2021, this time directly offered to the Lipetsk Mechanical Plant (a front for the Kalashnikov Concern).

Editor's note: Documents show that New Lachaussé regularly communicated with a Russian company suspected of helping to build air defence systems on behalf of the Russian army. 

Later telephone and email exchanges show that the 3 December offer was a reiteration of the previous ammunition tooling offer. This heavily suggests that New Lachaussé knew that it was dealing with shell companies on behalf of sanctioned entities.

Interestingly, New Lachaussée conducts its business dealings in Russia through its own company representative in the country, an unusual choice, given the international sanctions in place against the country.

In a comment to RTBF, Yannick Quéau, Director of the Group for Research and Information and Peace and Security (GRIP), questioned why the company would keep a representative in the country if it was not intending to do business.

“Why maintain an agent in Russian and continue to have business dealings with these companies when they have been under embargo since 2014 and New Lachaussée knows very well that they have no chance of succeeding (with deals)?,” Quéau asked.

Potential military use

The tenders from Tula and Lipetsk call for production lines for 7.62mm and 5.56mm ammunition casings. 7.62mm rounds are commonly used by the Army of the Russian Federation.

Tenders offered to New Lachaussée specifically request steel cases, which are commonly used in military contexts, rather than more expensive and higher quality civilian-use brass rounds.

Spent 7.62 mm ammunition casings. These rounds are extensively used by the Russian Army. Credit: Rawpixel

“You have to be extremely careful with this type of equipment producing ammunition for both civilian and military use. Once the material is delivered, it is difficult to control what happens to production,” Quéau states.

This raises several worrying questions: Why is a Belgian company in frequent contact with mysterious shell companies? If the tender for the equipment suggests military use, any sale would contravene international sanctions, entangling the Walloon government. And why did New Lachaussée even make the offers in the first place?

Too polite to say 'No'

New Lachaussée rebuffed any suggestion of malfeasance. In a response to the RTBF investigation, the company’s managing director Ludovic Biemar stated that it had no intention of ever honouring the offers that it made to both the Lipetsk and Tula firms. “Of course, there were exchanges but we refused the request of Lipetsk Mechanical Plant.”

Although the company did later provide proof that its representative had been asked to decline the Lipetsk tender, leaks show that the day after the refusal, an offer was sent regardless.

Biemar passed this off as “A polite way of declining the call for tenders while preserving commercial relations."

A worrying discovery

In a comment to the Brussels Times, Bram Vranken, campaigner and researcher for Flemish peace organisation Vredesactie, states that the results of the investigation are troubling.

“There has been an arms embargo against Russia since 2014. To negotiate a deal with a Russian arms company is already problematic, but any deal would have been illegal,” Vranken said.

The Walloon government has previously come under fire for its arms exports policy. The Belgian Council of State has suspended the regional government’s arms exports to Saudi Arabia three times in recent years. Profits from the Walloon arms trade grew exponentially from supplying Saudi troops in its war against Yemen rebels and civilians.

Vredesactie argues that New Lachaussée's suspicious dealings are symptomatic of a wider problem within Belgium.

“The Walloon government is allergic to any transparency on its arms export policies. There is a severe lack of information on arms export licences and the information which is available often comes two years after the fact,” Vranken said.

Related News

This is not the first time that New Lachaussée has been in the spotlight for dodgy dealings.

In 2005, the company was forced to cancel lucrative deals made with the Tanzania military after the government ruled it to be “not compatible with Belgium's foreign policy and international commitments.”

Above all else, this latest scandal reveals flaws in the Belgian weapons trade, sanctions programs against Russia and notably, the issue of “dual-use” equipment, which is still finding its way into Russia via loopholes and “grey” deals.

A recent publication by investigative journalist cooperative Investigate Europe revealed that, despite international sanctions against Russia, European nations exported more than €346 million of equipment that can be potentially used by the Russian military.

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