Siemens AG, scolded by Chancellor Angela Merkel's government in 2014 for courting Russian business at the height of the Crimean crisis, is now backpedaling from its dealings there after four gas-turbines destined for the southwest of the country were illegally transferred to the annexed region.
The Munich-based company has halted deliveries of power-generation equipment to Russian state-owned companies, it said in a statement on Friday. It's also seeking to buy back the turbines and annul the original contract with Technopromexport JSC.
The company's chief executive, Joe Kaeser, was widely criticized for making a trip to Moscow three years ago to meet President Vladimir Putin to drum up contracts. Economy and energy minister Sigmar Gabriel, a Social Democrat who is also vice chancellor, said at the time he "found the scene a bit off-key" given the need for German companies to uphold European values when doing business in Russia.
Siemens' push into Russia dates back to the days of founder Werner von Siemens, who in 1855 sent his brother Carl Heinrich over the border to help establish a telegraph network. Thanks to his endeavors, Heinrich was raised to the ranks of Russian nobility by Nicholas II in 1895. It's now a market teeming with thousands of Siemens employees and worth billions of euros from orders for trains, medical devices and power plants, including supplying high-speed trains linking Moscow to St. Petersburg, and a 1.6 billion-euro long-term maintenance order.
Europe's largest engineering company will also fully divest its minority stake in Russian power-plant controls firm
Interautomatika, and pursue criminal charges against those involved in breaching the contract terms.
Siemens shares declined 0.2 percent to 117.90 euros at 10:15 a.m. in Frankfurt, valuing the company at 100.2 billion euros ($116 billion).
* Bloomberg
