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A Russian drone is displayed as part of an open-air exhibition of destroyed military equipment in Kyiv.SERGEI SUPINSKY/AFP/Getty Images
Millions of dollars of Canadian technology has been shipped through a sprawling network of Hong Kong-based shell companies to feed Russia’s war machine, according to an investigation by a human-rights watchdog.
The Washington-based Committee for Freedom in Hong Kong Foundation (CFHK), in collaboration with the Raoul Wallenberg Centre for Human Rights, combed through Ukrainian battlefield forensics, Hong Kong public records and three years of Russian customs data.
The 49-page report maps out where Canadian electronic and aerospace parts appear in Russian weapons in Ukraine, who moves them and how Canada’s sanctions and enforcement measures have failed to stop the flow of technology to Moscow’s military.
It says Hong Kong has become the gateway for Russia to obtain Canadian technological components for its war against Ukraine.
“Canadian technology has repeatedly surfaced in Russian weapons recovered on the battlefield, with supply chains running through Hong Kong,” the report said. “Our analysis found that these battlefield components were part of a much larger flow of Canadian goods to Russia.”
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The CFHK report said that Hong Kong-based SBF Group, run by a Russian couple, moved millions of dollars of technology to Russian buyers, acting as a front company to get around Western sanctions. Other Hong Kong companies allegedly supplying Russia with Canadian components are Kim Ocean Ltd., Asia Pacific Links Ltd. and PremierElectric HK Ltd., which has links to Belarus.
Among the shipments it identified – since Russia’s full-scale military assault on Ukraine in February, 2022 – were 59 consignments of Canadian-made network and signals-distribution hardware, 17 shipments of global navigation satellite antennas, 1,300 shipments of power converters and 26 shipments of microelectronics and engine parts.
The hardware was found in Iranian Shahed and Mohajer drones that the Russian military has been deploying against Ukraine, CFHK said. Some may have also been used in Russian-made Orlan-10 drones, while other components were discovered in land-based weapons.
Beyond battlefield evidence, CFHK said it identified 153 shipments since February, 2022, of Canadian-origin dual-use technology through Hong Kong, worth US$2.5-million, including fibre modules, KVM extenders − to control computers from a far distance − and high-reliability connectors.
“Canada’s role in the supply chain is not marginal. The technology cannot be manufactured in Russia at scale,” the report said. “Without faster and broader sanctions designations as well as active enforcement and imposition of meaningful costs for both shippers and suppliers, Canadian innovation will continue to bolster Russia’s war effort.”
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The Globe and Mail is not naming the domestic companies identified in the report because CFHK said there is “little evidence these Canadian companies acted knowingly,” noting the “purpose of the transshipments networks is to obscure the final destination.”
Nonetheless, the report said Canadian technology has become entwined in Russia’s war effort and the main transit point is through shell companies in Hong Kong.
The report looked only at technology from Canada and not supplies from other countries.
Samuel Bickett, a Hong Kong lawyer who authored the CFHK report, said Ottawa should put the onus on Canadian companies to make sure their components do not end up in weapons of rogue countries.
“What these manufacturers should be doing is sending teams abroad to all their distributors to find out where these things are actually going,” he said. “And the Canadian government, whether it’s for Russia or others, has done next to nothing on enforcement of its sanctions laws.”
CFHK criticized Canada’s sanctions and enforcement measures, saying there needs to be a much greater focus on third-country procurement networks in places such as Hong Kong.
Canada has not sanctioned any of the illicit traders in Hong Kong, unlike the United States and Britain, the report said. Canada exporters still face little pressure to track what happens with their goods once they leave the country, it added.
“Canada is a leader on sanctions implementation within the G7, but they usually don’t go beyond the announcements,” said Brandon Silver, director of policy and projects at the Raoul Wallenberg Centre. “If you want to counter Russia’s illegal and unjustified aggression against Ukraine and the atrocities there, then you need to be targeting the bad actors that facilitate all of this.”
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Canadian banks have only been required since August, 2024, to report suspected sanctions evasions to the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), Ottawa’s financial intelligence and anti-money-laundering agency.
And it wasn’t until May of this year that the RCMP made its first arrest under Canada’s Russian sanctions regulations. Russian-born Canadian Anton Trofimov, with homes in Toronto and Hong Kong, was arrested for allegedly violating Canadian sanctions laws. Prosecutors alleged restricted microelectronics shipments in that case were linked to components used in Russian drones.
In January, a U.S. federal court gave prison sentences to Canadian nationals Nikolay Goltsev and Kristina Puzyreva for running a sanctions-evasion scheme that supplied Russia’s military with sensitive electronics. U.S. prosecutors say the Montreal couple, along with a New York associate, used front companies to acquire U.S. semiconductors, which they routed through Hong Kong and other jurisdictions to conceal their delivery to Russia.
CFHK is urging Ottawa to impose sanctions on the Hong Kong and Russian providers named in its findings, issue a ministerial direction designating Hong Kong as a high-risk jurisdiction, prosecute domestic violators and penalize manufacturers for due diligence failures.
“It can no longer be sufficient for technology manufacturers to claim ignorance of how their products are being reshipped by distributors,” the report concluded. “RCMP should dedicate resources to investigate Canadian nationals and companies potentially involved in evasion, and the Public Prosecution Service should pursue prosecutions whenever possible.”
