China dragged Taiwan into russian sanctions evasion scandal

An investigation led by Ukrainian activist Vadym Labas has uncovered a complex network of fake companies and rebranding schemes used by russian entities to bypass international sanctions.

The scheme, centered on servomotors used in guided missile systems and Shahed drones, implicates Chinese manufacturers and fake intermediaries, falsely tied to Taiwanese firms.

Labas detailed the findings in a recent post, highlighting how Chinese firms KST Digital Technology Limited and others supply components to russia through intermediaries that disguise the origins of the goods.

“The servomotors passing through these channels are critical for Russian guided munitions, yet sanctions enforcement has not yet caught up to these methods,” Labas stated.

The servomotors, initially manufactured by KST Digital Technology Limited, are rerouted through a nonexistent Chinese company, Kaiffeng Zhendaqian Technology Co., Ltd. (KZT), which exists only in documentation. From there, the goods are passed through additional companies such as UNIHUI INTERNATIONAL LIMITED, where they are rebranded as products of Taiwanese firm TRC—a name used without authorization.

Once rebranded, the components are exported to russia’s defense procurement arms, including sanctioned entities such as the Tactical Missiles Corporation (KTRV) via intermediary firms like Omni Trade and Dymir Trade.

“This dual rebranding and falsification scheme is unprecedented in its sophistication,” Labas explained. “It’s not just about avoiding detection but also increasing the cost of components—a price russia seems willing to pay.”

Initial reports implicated Taiwanese firm TRC in supplying servomotors to russia. However, further analysis revealed that TRC’s name was falsely used in the scheme. Labas apologized for earlier claims against TRC, clarifying, “Taiwan has been unjustly implicated. The actual culprits are Chinese manufacturers exploiting TRC’s name for camouflage.”

Labas commended Taiwanese citizens and expatriates for their cooperation in exposing the scheme, emphasizing Taiwan’s strong support for Ukraine. He also pointed to the need for formal diplomatic relations between Ukraine and Taiwan. “Taiwanese volunteers have fought and died for Ukraine, yet official ties remain nonexistent,” he noted.

The components in question are vital to russia’s Unifitsirovannyi Modul Planirovaniya i Korrektsii (UMPK) kits, which convert unguided bombs into guided munitions. Reports suggest russia is using approximately 60 guided bombs daily in Ukraine, with these weapons responsible for significant battlefield damage.

“The use of these components accounts for an estimated 20% of russia’s combat advantage,” Labas said, citing Ukrainian military assessments.

The findings underscore gaps in the enforcement of existing sanctions, particularly against Chinese firms involved in dual-use technologies. KST Digital Technology Limited, a key supplier, has avoided sanctions despite documented links to russia’s military-industrial complex.

Labas urged greater scrutiny of dual-use technology exports and stronger coordination between Western nations to close loopholes. “Sanctions are only as effective as their enforcement,” he warned.

Source: Defence Blog