[Translation prepared by Business & Human Rights Resource Centre]

27 June 2024

The German-Japanese tool manufacturer DMG Mori is a giant in its industry. The company has thousands of employees worldwide and generates billions in sales. And the company's ultra-modern machines, which are based in Bielefeld and other places, are in demand around the world - this also applies to Russia, which has been struggling with the consequences of sanctions since the war against Ukraine. The arms industry, among others, relies on CNC machines - i.e. very precise, computer-controlled machine tools - such as those from DMG Mori.

This has consequences. Although DMG Mori stated that it had ceased "all business activities" in Russia in spring 2022, the company's machines apparently continued to be traded until a few months ago, according to research by Russian investigative journalists from the online medium "Agenstvo" .

In January of this year, a so-called declaration of conformity was issued for CNC machines from DMG Mori...The document was issued by the Russian company Finval Energo, a supplier of industrial equipment. The DMG Mori site in the central Russian city of Ulyanovsk is stated as the manufacturer of the machines. A declaration of conformity is a mandatory declaration of information, manufacture and certain technical details of a product or machine. A request from the MDR to DMG Mori about the document and the company's situation in Russia was not answered.

The document does not state whether the machines were actually sold. According to research by "Agenstvo", the statement goes back to a contract that Finval signed in November 2023 with the Ulyanovsk Machine Tool Factory, the production headquarters of DMG Mori...

In the fall of 2023, DMG Mori had emphasized that "Russian employees of DMG MORI had unilaterally sold several machines built in Russia to Russian customers." Three companies had been identified that had bought almost all 122 machines manufactured in Russia and resold them to Russian customers, a press release said at the time. The company condemned these "internal Russian sales, which were made without any instructions or knowledge from the authorized DMG Mori management."

The tool company sent out the press release following a report by "Agenstvo" and "Die Zeit" . At the time, it was reported that DMG Mori's Russian subsidiary was generating sales even after the company's official withdrawal from Russia - and that the company's machines were probably still being sold to Russian defense companies...

In the meantime, the situation has changed again. Shortly after the declaration of conformity for the CNC machines was issued...the plant in the Russian city of Ulyanovsk was placed under Russian state control. In DMG Mori's annual report - published in early 2024 - it says with regard to the Russian subsidiary that the company had lost "the possibility of controlling the company". Compensation is being sought from the Federal Republic. This is possible because the Federal Republic had given an investment guarantee for the foreign investment - i.e. the construction of the plant.

A spokesman for the Federal Ministry of Economics confirmed to MDR that DMG Mori's foreign investment was secured. In principle, "the federal government as guarantor is always in contact with guarantee recipients." However, the level of security is a trade secret...