Ukraine's National Bank paid US$520,000 to company of sanctioned Russian oligarch

During 2022-2023, the National Bank of Ukraine paid UAH 19.5 million (about US$520,000) for equipment and parts from the German company Oerlikon Balzers Coating, whose largest shareholder is sanctioned Russian oligarch Viktor Vekselberg.

Source: Ekonomichna Pravda with reference to sources in the customs system. This information was also confirmed by the National Bank itself.

Details: Ekonomichna Pravda reports that on 25 September 2022, the National Bank paid UAH 19.487 million (about USD 520,758) to Oerlikon for an installation to apply chromium nitride to a coinage tool. In August 2023, the NBU paid the same company UAH 13,900 (about USD 370) for ten titanium cathodes. Minting coins in circulation requires proper equipment and cathodes.

Following a request from Ekonomichna Pravda, the National Bank confirmed the purchase. At the same time, they pointed out that the procurement procedure had begun in 2020, and the NBU had reached an agreement to purchase these goods in 2021, when there were no legislative restrictions on cooperation with Russian oligarchs' companies.

"This purchase took place in early 2021. There are no manufacturers of such specialised equipment in Ukraine. Three international participants were allowed to present their bids: INORCOAT (Bulgaria), Teer Coatings Ltd (UK), and Oerlikon Balzers Coating (Germany, Liechtenstein).

Based on the results of the bid evaluation, the contract for the supply of equipment was concluded in February 2021 with the German company Oerlikon Balzers Coating [part of the Oerlikon group - ed.], which "provided the lowest bid", the NBU explained.

According to financial statements, Liwet Holding AG is Oerlikon's largest shareholder, with a stake of 42.7%. Viktor Vekselberg is Liwet Holding AG's largest shareholder, owning 44.46% of the shares.

Customs data shows that the National Bank purchased goods from a company associated with a Russian oligarch for a total of UAH 19.5 million (about US$521,100) following the start of Russia’s full-scale invasion of Ukraine.The final payment for the Oerlikon installation was made after the start of the full-scale invasion, in September 2022, and following the installation and testing of the corresponding equipment.

The National Bank explains that they had no choice but to pay as "the unlawful termination of contractual relations would have led to multimillion-dollar losses for the National Bank of Ukraine, and also would have had a significantly negative impact on the technological process of producing circulating coins in Ukraine."

In 2023, the NBU again purchased goods from Oerlikon, whose largest shareholder is Russian oligarch Vekselberg. The total purchase price came to €288. "This was necessary due to the warranty period of 12 months (until the end of October 2023), during which the use of non-original consumables is prohibited," according to the National Bank.

They emphasise that all purchases from Oerlikon were made in accordance with the Ukrainian legislation in force at the time.

At the same time, the NBU stated that they have revised their internal procurement procedures and strengthened their work in the area of sanctions compliance.

"In addition, the National Bank has updated the standard purchase agreement forms and supplemented it with sanctions clauses and assurances that exclude the cooperation of the National Bank with persons subject to sanctions restrictions and/or associated with supervisory relations with sanctioned persons," the National Bank said in a response.

The National Bank does not plan to make purchases from Oerlikon in 2024 and in the future.

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