These companies have names like Olax Finance and Rikkon Holding. His office, with a faded 704 on the door, seemed empty. No one answered when I visited last month. Advertisements for air conditioners are hung in the doorways.
But the company is an important link in the chain connecting US research labs to Chinese factories, Russian arms makers and the battlefields of Ukraine – and a sign that the US government and tech giants cannot control where the technology goes.
Since Russia invaded Ukraine in 2022, nearly $4 billion in restricted chips has flowed into Russia from more than 6,000 companies, including the one at 135 Bonham Strand in Hong Kong, according to a Times analysis of Russian customs data, company records, domain registrations and sanctions data. . . The analysis examines nearly 800,000 shipments of restricted electronic goods to Russia since mid-2021.
Even as the West seeks to cut off access to semiconductors through trade restrictions, Russia has created a strong parallel supply chain that imported almost as many critical chips in the last three months of 2023 than in the same period in 2021, according to an analysis of Russian customs data. Dependence on China for many of these chips has also deepened, with transactions historically settled in US dollars now increasingly being executed in renminbi, according to the analysis. Russian President Vladimir Putin’s ability to defy Western trade sanctions is one of the failings of the US-led response to the war in Ukraine. Instead of being economically isolated, Russia has been out of the conflict for more than two years because of its attack on Ukraine. Imports of Russian technology began with US chipmakers selling their products to international distributors. Chip companies are not legally required to trace their goods from there. Russia then turned to international distributors — located in Hong Kong, China, Turkey, India, Serbia and Singapore, according to a Times analysis — to maintain a steady supply of the technology.
Some intermediary companies are part of a network of offshore companies long owned by Russian businessmen. At 135 Bonham Strand, four shell companies are owned by oligarchs with ties to Russia’s military-industrial base, according to a Times analysis.
The speed at which shell companies operate has overwhelmed Western regulators. As soon as one supplier leaves, a new one springs up in its place, sometimes with the same owner. Several companies operate behind the scenes of the United States, including one Russian-related company – which is unintentional – by a retired Latvian-Canadian in a two-story house in the suburbs of Toronto.
A Commerce Department spokesman did not directly address how Russia violated the trade ban and said US export controls meant “Russia is increasingly unable to meet growing wartime demands while shrinking supplies and paying more to get them.” A Treasury Department spokeswoman said the agency has stepped up efforts to punish those who trade with Russia and support the war effort.
The Russian Foreign Ministry did not respond to a request for comment.
China plays an important role. As a leading electronics assembler in the world, it imports many Western components and becomes consumer electronics. Chinese companies can easily channel these supplies to Russia, industry experts say.
In a statement, China’s Foreign Ministry said it does not provide weapons or equipment to any side in the war in Ukraine.
With limited domestic manufacturing capacity, the United States has no choice but to continue shipping chips to China for manufacturing, packaging and assembly.
“In the first few weeks of the war, there was really hope that this would be done,” Emily Kilcrease, a senior fellow at the Center for a New American Security, said of the sanctions. But “we underestimated the difficulty of the US to implement it in such a market.”
Russia from 135 Bonham Strand
In 2008, Alexey Chichenev, a Russian businessman, took control of a company called Saril Overseas based in Hong Kong.
It is one of the entities in a portfolio of shell companies that thrive at 135 Bonham Strand, led by Chichenev, a Russian expatriate in Hong Kong, and his partner, Mikhail Vinogradov.
The company at 135 Bonham Strand uses a Byzantine offshore ownership structure that intersects with holding companies in the British Virgin Islands and Cyprus, according to company registration documents. The company’s shares were transferred like baseball cards between Russian businessmen with addresses in places like Vienna, Tel Aviv, Israel, and Paris, according to Hong Kong company registration records.
The two companies at 135 Bonham Strand, Rikkon and Midicon, are owned separately by Andrey Kozitsyn and Igor Kudryashkin, former directors of Ural Mining and Metallurgical Co., an industrial conglomerate in Russia, according to public records. Ural Mining and Metallurgical Co has ties to Putin, Russian arms manufacturers and organized crime, according to the Treasury Department and publicly available documents.
In 2014, after Russia annexed Crimea, Kozitsyn and Kudryashkin transferred ownership of Rikkon and Midicon to Chichenev and Vinogradov. By 2022, Chichenev and Vinogradov controlled at least 11 companies at 135 Bonham Strand, according to the Hong Kong company registry.
Only two of these companies, Kvantek and Superchip, sold chips to Russia before the war in Ukraine. But when restrictions and sanctions are set, more action is taken, according to an analysis of Russian customs data by the Times.
At least one of the shell companies, Kvantek, has since shut down its website and appears to have ceased operations, according to a Times analysis.
In an interview at the door of his Hong Kong apartment, Chichenev said he did not know who was behind the company and had forgotten how it was transferred to his name. “You see, it’s a friend of mine in Moscow, so he asked me to help him,” he said.
His 135 Bonham Strand companies were closed, he added. “Right now, I’m just enjoying life,” he said. “But before, yes, we had some companies, but now they are all closed.”
Vinogradov did not respond to emailed questions. Colin Cohen, a lawyer based in Hong Kong whose firm, Boase Cohen & Collins, is listed as secretary in many of Bonham Strand’s 135 companies, declined to comment, citing client confidentiality.
The US government remains at least one step away. Since the war began, the Office of Foreign Assets Control, an agency within the Treasury Department that manages the US sanctions program, has designated at least 4,234 Russian individuals and companies for economic sanctions, according to OpenSanctions, a sanctions data provider.
This article first appeared in The New York Times.