Rheinmetall in Russia: a dubious deal

Annual profit in Russia

In addition to the information provided by the portal, other statistics raise questions: the company’s annual reports list profits after 2014 in Russia – for example, by the Moscow subsidiary ORR Training Systems LLC. This company was founded in March 2012 with the aim of consolidating the market presence of the simulation area, i.e. the area for training solutions, after landing a large-scale project in Mulino, Russia.

Training center in Mulino, Russia: In 2011, Rheinmetall was expecting high profits from the construction of the center. (Source: IMAGO/Ekaterina Shutukina)

Since 2014, ORR Training Systems LLC has primarily recorded high losses, which can be attributed to the sanctions imposed as a result of the annexation of Crimea. But in 2019, the annual report suddenly shows a positive annual result of 1,000 euros and then 35,000 euros in 2020.

According to the Russian database, there was still a connection between ORR Training Systems LLC and another subsidiary, Rheinmetall Ltd. Moscow and Garrison Company. According to the Russian business portal Audit-It, for example, Garrison was the management company of the ORR training system until last year.

Rheinmetall argued with the license agreement

What is the truth behind the connection with Garrison after 2014, why does ORR Training Systems LLC still exist after Mulino’s involvement – and where are the profits coming from? In the request, Rheinmetall said: “The connections you identified were the result of a constellation of agreements in 2012, but they were overtaken by events and are now obsolete. In 2012, for example, a software license agreement with a ten-year term was agreed based on business considerations, which is why The company officially still exists.”

Since the export ban came into force in 2014, however, he is no longer involved in military business. “It is a shell company with no operational business,” the spokesperson said.

According to legal expert Stefan Gisthardt, whether this argument is reasonable can only be answered in general terms. This requires detailed information in the license agreement, he explained. If no specific right of termination is granted, the term of the Agreement shall apply. In case of early (special) termination, compensation payments may be agreed if they are agreed.

Spare parts trade in Russia

The second subsidiary mentioned, Rheinmetall Ltd. Moscow, has recorded profits in Russia since 2014: from 2013 to 2019 it has consistently generated positive annual profits, totaling more than 200,000 euros.

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