The owners of the Daugavpils company "SMD Baltic" condemn Russia's invasion of Ukraine, but through a company registered in Belarus and the use of sanctions evasion methods, they help supply Russian drone manufacturers with components, Re:Baltica claims.
Microchip manufacturer "SMD Baltic" is one of the companies visited by Latvian ministers during their trips to Latgale. The company, founded seven years ago, is an important player in the special economic zone of Latgale. Almost 150 people work there, and the turnover of the last year was close to 20 million euros, making it an apparent success story in an economically deprived area.
SMD Baltic was founded in 2017 by three citizens of Belarus, Siarhei Khvalko, Maksim Bohush, and Siarhei Sayavets, and Latvian citizen Dmitrijs Radkevičs.
About 300 kilometers further east in Belarus is an industrial park created in partnership with China. In 2021, the company "SMD Bai" (СМД Бай), a sister company of the Latvian operation, started producing electronic circuit boards at the park.
When Russia attacked Ukraine, SMD Baltic said it would no longer accept orders from Russia and Ukraine – a pledge that is on its website to this day. Meanwhile, SMD Bai changed its name to 'Mikrmount'.
Mikrmount is owned by Khvaļko, Bohush, and Radkevičs, as well as Pavel Levin, the sales manager of the Latvian factory.
Since last year, the St. Petersburg group of companies Geoskan, which produces drones, has become an important customer of Mikrmount. 10 percent of the company belongs to a foundation, which is headed by the daughter of the Russian president, Katrina Tikhonova. The company is subject to U.S. and Ukrainian sanctions as a drone manufacturer for its use in attacks on Ukraine.
Customs data obtained by Buro Media show that from June 2023 to July 2024, Mikrmount supplied electronic components worth 1.2 million US dollars to its Russian partner. Among them are programmable controllers with a memory function, which are needed by the military industry, so their export to Russia has been banned by the US and EU countries.
Mikrmount has also supplied electronics to the Yekaterinburg company "Reglab" (Реглаб), which is part of a group of companies that have closely cooperated with a Russian tank manufacturer "Uralvagonzavod".
Direct sales to Russia from Latvia ended in the fall of 2022 when sanctions outlawed the exports of such crucial materials.
However, Re:Baltica suggests that a Smolensk-registered intermediary called "Novaya elektronnaya kompaniya" ("Новая электронная компания", NEK) linked to the owners of SMD has been buying western microchips via companies in China, Turkey and Kazakhstan for import into Russia.
From 2016 to 2023, NEK was owned by Belarusian businessmen Khvaļko, Bohush and Sayevets, but then it passed into the hands of Russian citizen Vitaly Privolnev. He previously managed the day-to-day operations of the company. Essentially, the trio transferred ownership to a trustee, it is suggested.
When contacted, the owners of SMD Baltic either declined to respond or re-stated that they oppose the war without going into details about the specifics of their business arrangements. Nevertheless, booming business at their Belarusian operation allows them to live comfortable lives in various parts of southern Europe while the bombardment of Ukraine by Russia continues, says Re:Baltica.
The full investigation can be read here.
