Siemens is to withdraw from the Interautimatika joint venture, in which it holds a 46 per cent stake, after ‘credible’ evidence emerged that its equipment was illegally diverted to a power project in the Crimea, in contravention of sanctions against Russia.
The sanctions were imposed after Russia’s annexation of the Crimea.
Siemens announced that it will also halt deliveries of power generation equipment to Russian state-controlled customers for the "time being".
The four gas turbines in question had been delivered for a project in Taman, southern Russia in 2016. However, Siemens said the equipment had since been locally modified and sent to faciliate a gas-fired power project in Crimea which it said breached EU sanctions.
The German company said it would continue to pursue criminal charges "against the responsible individuals" at TPE, a partner in the joint venture.
The Reuters news agency reported on Friday that the Kremlin had declined to comment, saying it was a matter for Siemens and its Russian partners. However, the affair threatens to strain relations between Germany and Russia. Last week, a spokesman for German Chancellor Angela Merkel said the the delivery to Crimea was "remarkable and completely unacceptable".
Germany's ambassador to Russia, Rudiger von Fritsch, said: "There are all grounds to believe that if what has happened is true, Siemens was seriously deceived, and it was a violation of a contract, a serious blow to trust and a very serious blow to investments in Russia."
On Friday, Siemens announced that it had also terminated a licence granted to a Russian company to manufacture equipment for power plants. It said it was "reviewing all potential collaboration between its subsidiaries and other entities around the world with regard to deliveries to Russia".
Siemens added that new gas power projects in Russia would only be carried out through companies it controls, ensuring "Siemens-controlled delivery and installation" overseen by its own personnel.
Siemens investigates ‘rumours’ of gas turbine delivery contravening sanctions