Leica continues to deny presence in Russia despite ongoing availability of its dual-use products

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Earlier this year, The Insider reported that Leica Camera, despite announcing its withdrawal from the Russian market, re-registered under a new name – Vechernyaya Zvezda LLC (Evening Star LLC). The ownership and directorship of the company remained unchanged. Leica Camera Austria GmbH owns a 99% stake valued at 33,589,982.25 roubles ($370,800), while AHK Vermögensverwaltung GmbH owns a 1% stake valued at 339,292.75 roubles ($3,750). Austrian citizen Klaus Hauer continues to hold the position of company director. As of June 5, 2023, the company was active with no official notification of liquidation registered. After the invasion of Ukraine on February 24, 2022, the Russian branch of Leica Camera issued declarations of conformity for binoculars and scopes.

In response to The Insider's inquiry, Leica provided an explanation for the company's renaming in Russia. The firm claimed that closing a legal entity in Russia cannot be done quickly, requiring the presence of a general director to carry out the process. The decision to rename the company Vechernyaya Zvezda (or “Evening Star” in Russian) was made to indicate the winding down of Leica's operations in the country.

Leica asserts that the issuance of new declarations was necessary to continue operations in other EAEU countries. The company emphasizes that sales in Russia have been halted, and any Leica products found for sale in the country are claimed to have been smuggled in. Despite the claim, The Insider found that Leica-manufactured binoculars, scopes, and rangefinders remain readily available on the Russian market.

The company's reply read as follows:

“With the beginning of the Russia-Ukraine-Conflict any delivery of Leica products to Russia (or Belarus) have been stopped immediately. The decisions to exit the Russian market and to dissolve Leica Camera Russia are valid and remain unchanged. Liquidation and dissolution are a long-term process that can take several months. The change of the company’s name was chosen as one initial step for the dissolution of the company. It was supposed to be an additional clear sign of Leica Camera's withdrawal from Russia, in particular the name chosen: Vechernaya. Accordingly, the company’s purpose is ever since limited to the liquidation and dissolution.

The company’s shareholding structure has not changed. The company is still in majority held by Leica Camera Austria GmbH, which itself belongs to Leica Camera Group. The decision to use Leica Camera Austria as intermediary shareholder was once taken due to Leica Camera Austria’s experience in the Central Asian sales region. [...]

The management remained the same, in particular because Russian law requires a 'General Director' to carry out the dissolution of a company. This management is assigned to carry out the dissolution of the company.”

According to Leica Camera Russia LLC’s statements, as published on Russia's Federal Tax Service website, the trade stock of the firm’s Russian subsidiary was valued at 168.75 million Russian roubles as of December 31, 2021. By December 31, 2022, the inventory had decreased to 104.59 million Russian roubles, while the cost of sales for that period totaled 163.62 million Russian roubles. In other words, Leica Camera Russia had to replenish its inventory by 99.64 million Russian roubles during 2022.

Leica Camera's response to The Insider states that all of these deliveries were made in the first three months of 2022:

“The cost of sales was generated in calendar year 2022 almost completely in the first three months. The product group is wholesale trade of photographic and optical goods.

With the beginning of the Russia-Ukraine-Conflict any delivery of Leica products to Russia (or Belarus) have been stopped immediately. In accordance therewith, as of April 2022 Leica Camera Russia made no further turnover.”

The tax records available do not allow detailing expenses and revenues by month. If we are to believe the April 2022 cease turnover claim, Leica Camera Russia LLC's cost of sales in 2022 would look disproportionate. For the whole of 2021, this figure was 260 million roubles, and for the three months of 2022 that amounts to 163 million rubles. However, this disproportion can be explained by the panic of the first days of the war in Russia’s retail market. According to an audit report (available to The Insider), supplies from the Austrian Leica Camera AG to its Russian subsidiary in 2022 decreased six-fold, while the cost of sales of the Russian company decreased much less. The same audit report confirms that at some point in 2022, Leica Camera Russia LLC did indeed cease its sales in Russia.

At the same time, the Russian company received six new declarations of conformity for its products. This document is necessary to sell goods, it confirms that certain products comply with the technical regulations of the Eurasian Customs Union. If the goods are produced outside the Customs Union, the importing company receives such a declaration. Leica Camera Russia LLC received three such declarations for collimating sights and night vision devices produced by Leica Camera AG.

• RU D-DE.RA04.B.66670 by 06.07.2022 for “binoculars with a rangefinder Leica model 4058”
• RU D-DE.RA08.V.29610/22 of 18.11.2022 for “collimating sight Leica model 3661”
• RU D-DE.RA08.V.96727/22 of 15.12.2022 for “binoculars with rangefinder Leica model 6931”

Leica has obtained documents for importing wristwatch straps and analog cameras. The most recent declaration, RU D-DE.RA01.B.71275/23, for importing paper bags was registered on 09.02.2023, nearly a year after the company announced its intention to leave the Russian market.

In response to The Insider, Leica Camera clarified that these declarations are obtained for operations in other countries within the Eurasian Customs Union, rather than specifically for Russia:

“These are EAC declarations, which are necessary for the Eurasian Customs Union. Therefore, we still need the EAC approval for other countries, even though doing business in Russia or any shipments to Russia have been stopped ever since Russia started the war against Ukraine.

Please note that there has not been any delivery of Leica products to Russia (or Belarus) after the Russia-Ukraine-Conflict began, nor has anybody been authorized to do so.

Beyond that, the distribution agreements always contain a provision that clearly defines the contract territory. Sales to countries outside the contract territory are prohibited.

Furthermore, an additional export control declaration was prepared for sales partners in the Central Asian region immediately after the start of the war. Among other things, this declaration refers to the special sanctions and embargo rules applicable to Russia, as well as explicitly to the Dual-Use Ordinance and the Foreign Trade and Payments Act and Ordinance (AWG/AWO). The sales partners must also expressly declare that they will not export the Leica products to Russia or Belarus. This declaration was submitted to the sales partners and signed by their management.”

A single declaration of conformity for imports of binoculars and scopes from Leica's Russian subsidiary was issued back in January 2020. The company called the additional four declarations received by the director of the Russian branch, Klaus Hauer, a “misunderstanding” and explained that the Russian subsidiary received a declaration of conformity for the import of branded paper bags for packaging products in stores for Leica's partner in Kyrgyzstan.

“The import you are referring to was a delivery to Kirghizia dealer (LLC Realcom). The delivery contains paper shopping bags. The former declaration had been expired. Accordingly, a new declaration was necessary for the release of the bags from customs in Kyrgyzstan.”

Leica Camera's position, as expressed in the firm’s response to The Insider, has been corroborated by the legal advisors at EAC Portal. EAC Portal provides support to businesses involved in importing to EAEU countries, including Russia. They pointed out the need to obtain a declaration, but noted that a document obtained in any of the EAEU countries will automatically apply to all other countries of the Customs Union.

“They could’ve gotten it in Kazakhstan, for example, but it may have been more convenient to [get one] in Russia, the price of registration may have been cheaper – it really depends, the declaration is valid in all countries of the Customs Union,” representatives of EAC Portal explained to The Insider.

Despite the termination of supply from the official branch, Leica products continue to enter Russia. On January 1, 2023, a chat room dedicated to the purchase of shooting and hunting equipment featured 67 advertisements for the sale of Leica scopes, binoculars, and rangefinders. The selling companies claim these are new supplies and offer warranties. The available optics include:

• Leica Geovid 10x42 3200 COM rangefinder binoculars;
• LeicaGeovid Pro 32 8x32; Leica Rangemaster CRF 2400-R, CRF 2800.COM, CRF 3500.COM laser rangefinders;
• Leica AMPLUS 6 1-6x24i L-4a, LEICA AMPLUS 6 2.5-15x50i L-Ballistic BDC scopes;
• Leica AMPLUS 6 2.5-15x56i L-Ballistic BDC;
• Leica AMPLUS 6 3-18x44i L-Ballistic BDC MoA;
• Leica FORTIS 6 1-6x24i L-4a;
• Leica FORTIS 6 2-12x50i L-4a;
• Leica MAGNUS 1-6.3x24i L-4a;
• Leica MAGNUS 2.4-16x56i L-4a;
• Leica PRS 5-30x56i PRB.

Leica Camera optics are available for purchase in stock at least eight online stores, asides from the listings mentioned earlier. At one of these stores, The Insider was offered the opportunity to buy Leica binoculars without an official warranty, but with a promise to cover any repairs at the seller's expense if defects are found. The seller openly acknowledges that all the Leica products they offer are «gray» (or «parallel») imports, sourced from countries within the Customs Union like Kazakhstan or Kyrgyzstan, and even from the European Union upon request. The editorial team was assured that any quantity of Leica products could be obtained with full upfront payment, but it would be likely that the factory serial numbers would be struck off.

“We don't give a warranty on goods because it's a third-party manufacturer,” said the seller. “If something happens to the product, call us, we'll solve the issue and get out of the liability. We don't want to ruin the company's reputation. Yes, the ‘Leica’ is not officially delivered. It's all dragged through the mountains and so on. We now have third-party manufacturers that don’t deliver and [really screw up], that’s why the numbers and sights are knocked off. If it's not available in Russia, you can import anything, but the problem is that you have to wait two weeks and prepay 100%. We can get it if you want. If you're ready, then I'll take it, throw in the order, [my] people will get back to me on the price, I’ll get back to you, and if everything suits you, then fine. We can bring in anything, it’s just a question of prepayment.”

Apart from private imports, Leica Camera products are also being supplied through companies that file official declarations. One such example is LLC Torgoviy Dom «Sphinx» (Trading House Sphinx), which received a declaration for importing laser rangefinders Pinmaster II Leica on January 19, 2023 (declaration RU D-DE.RA01.V.21008/23). This company is listed as a supplier for various entities of Russia's Ministry of Internal Affairs and has participated in 38 government procurements totaling over 35 million rubles. It also serves customers like the Armed Forces Department of the Russian Federal Protective Service (FSO).

In addition to scopes, rangefinders, and binoculars, Leica cameras are also being received in Russia. On May 24, 2023, the logistics company Atlas from Vladivostok received a certificate of conformity (EEA RU C-DE.AY46.A.29302/23) for 300 Leica Q2 cameras. The retail price for such cameras in the EU is approximately €5030. Even with a 30% markup deduction by the retailer, the value of this order amounts to around €1.05 million — which is significant even considering Leica's annual worldwide turnover of €450 million.

This example highlights the broader conclusion that effective sanctions pressure requires export controls not only for Russia but also for all countries within the Customs Union. Shipments from EAEU countries can reach recipients in Russia without being closely monitored by producers or customs aggregators.