04 January 2025 , 11:56
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Hungary has protected two Kremlin-linked oligarchs from European Union (EU) sanctions. These individuals, who control the Riga Electrical Machinery Factory (RER), have been aiding the Russian army in its invasion of Ukraine, according to information obtained by Re:Baltica.
Latvia has repeatedly sought to include Iskander Makhmudov and Andrey Bokarev in EU sanctions packages, including the latest round. However, Hungary opposed these efforts. Adding individuals to the EU sanctions list requires unanimous approval from all member states.
“Our file on them already resembles collected works,” a Latvian diplomatic source told Re:Baltica. “It’s evident that Hungary has business interests tied to them.”
“We cannot comment in detail on specific cases that ultimately were not included in the sanctions list,” said Anita Hipper, the European Commission’s Lead Spokeswoman for Foreign Affairs and Security, in a statement to Re:Baltica. Hungary’s Ministry of Foreign Affairs did not respond to requests for comment.
Re:Baltica’s Hungarian partner, Direkt36 found no assets registered under Bokarev or Makhmudov in Hungary’s company register. However, both oligarchs are known to use complex networks of companies to obscure their ownership. This tactic has also been applied to RER, although Latvia’s business register identifies them as the ultimate beneficiaries.
The two oligarchs partially own the Russian train manufacturer Transmashholding (THM). According to U.S. intelligence, THM has been producing components for infantry combat vehicles since the onset of the war. In Hungary, THM before the war operated joint ventures with Kristóf Szalay-Bobrovniczky, Hungary’s Defense Minister in Viktor Orbán’s government. This summer, THM’s growing influence in Hungary’s railway sector prompted Spain’s intelligence agency to intervene, leading the Spanish government to block the sale of local train manufacturer Talgo to Hungarian investors due to their ties to Russia.
Latvia’s RER also maintains close business links with Russia. As Re:Baltica previously reported, RER — an industrial legacy of Soviet times specializing in train and metro equipment and electric vehicle charging stations — ranked as the fourth-largest Latvian exporter to Russia during the first two years of the war. According to Russian customs data, RER exported $55.8 million worth of goods to Russia over two years, including dual-use items with both civilian and military applications.
Makhmudov, Bokarev, and their Russian company, Transmashholding, are sanctioned by the United States, the United Kingdom, Australia, and New Zealand.
“In 2022, Russian officials engaged Transmash to produce parts for infantry combat vehicles.,” the U.S. Treasury stated. “In addition, Bokarev has personal ties to Russian Defense Minister Sergei Shoigu and other senior Kremlin officials and their families. Bokarev is also linked to organized crime and since 2022 has sought to evade sanctions. Since 2022, Bokarev has worked with assorted Trust and Corporate Service Providers to create shell companies, behavior that can be associated with money laundering.”
The late Russian opposition leader Alexei Navalny called on Western nations to sanction Bokarev and Makhmudov, describing them as “true mafiosi who (…) also supply diesel engines and components for warships.”
According to diplomats speaking with Re:Baltica, Latvia will continue pushing for the inclusion of both oligarchs in the next EU sanctions package. For now, they remain subject to Latvia’s national sanctions, which ban them from entering the country.
Hungary regularly tries to help three other Russian oligarchs – Alisher Usmanov, Dmitry Mazepin and Vyacheslav Kantor – get off the sanctions list.