The Thales Group is one of the most powerful French and European industrial groups. It is named after the ancient Greek philosopher Thales of Miletus, implying wisdom. Yet, they have been struggling to save face in an ugly story related to cooperation with Putin’s Russia.
The company is promoting two pieces of news proactively.
- The first and the most recent is that Thales has formed a new company called S3NS in partnership with Google to offer the French government proven cloud computing services to store some of the country’s most sensitive data.
- The second is about the production of drones that will help monitor some security points.
The news above is supposed to cut through the noise from two other scandals, which dealt a serious blow to the image of the company and of the French state, the largest shareholder of Thales (25.67%).
A block of 24.62% shares belongs to Dassault Aviation, which participates in the ownership of Airbus S.E. The latter has been asking persistently not to spread any more sanctions against Russia. As for the Dassault family, everything is clear – the company’s founding father, Marcel Dassault, was not only the main manufacturer of aircraft for the French armed forces for decades, but also was elected twice to the Senate, directly influencing the defense policy. Therefore, now every negativity in the media space is instantly reflected on the European elites who still feel very embarrassed to be caught in the act of making bloody money on deals with Putin.
Thales is a very large group with a dozen subsidiaries, but for the purposes of this study we will be focus on Thales E-Security, Sofradir and Lynred.
The first scandal, military one
As is widely known, Catherine Thermal Imaging Cameras — one of Thales’ flagship products — were discovered on board Russian tanks, when Russian troops were withdrawn from Bucha in March 2022. According to the company’s website, the main advantage of these thermal imagers is that an enemy vehicle can be attacked at “long enough distances to provide a first-hit advantage.”
During the inspection of Ukrainian civilian vehicles shot by the invaders in Bucha and Gostomel and the inspection of the trophy equipment of the Russian army, activist Pavlo Kashchuk, found out that the French Thales Group’s modern sights were installed on the Russian BMD-4M modernized in 2016, that is, already after the introduction of EU sanctions against Russia. “The most interesting thing is the fire control system, which allows you to shoot accurately regardless of the weather and time of day. The components and technologies of this system were sold to the Russian Federation by the French company Thales. The thermal imaging camera Catherine FC allowed the invaders to see their victims from several kilometers away. Supposedly, a factory in Russian Vologda assembled it under license, i.e., according to French drawings and from components bought in France. This is one of the schemes that allowed Western companies to bypass the embargo and supply the most modern military technologies to the Russian Federation. Of course, not without the participation of the government,” said Pavlo Kashchuk.
By the way, there is another video on Kashchuk’s channel where components from other French companies (Ulis and Safran) are found in a modern Russian thermal imager manufactured after 2019. And now bingo! It turns out that back in 2019, the merger of the “daughter of Thales” Sofradir and Ulis took place, resulting in the formation of a new company – Lynred. The Lynred shareholders have become Thales (50%) and Safran (50%). National and international investigators scrutinize Thales after publication of these data.
According to documents obtained by journalists from the association Disclose, since 2015 France has issued 76 licenses to export military goods such as thermal imaging for tanks, navigation systems and infrared detectors for fighter jets and attack helicopters, with a total value of around €152 million. This figure is also confirmed by Investigate Europe’s analysis and puts France far ahead of its neighbors, confirming the supply of 44% of European weapons to Russia. The very same weapons are currently being used in the war against Ukraine. In total, according to Disclose, the French exports included thermal imagers for more than 1,000 Russian tanks, as well as navigation systems and infrared detectors for fighter jets and attack helicopters.
As for the supply of military technology by the Sofradir company, it is known that while it was still in the status of a subsidiary of Thales, in 2016 alone it delivered 83 infrared detectors (S24) and 258 infrared detectors (S02) to TPK Linkos CJSC, and additionally 138 infrared detectors (S10) for JSC “NPO “GIPO”. “GIPO” is the Russian State Institute of Applied Optics that has been part of the state corporation “RosTekhnologii” since 2008.
All these facts did not matter before February 2022 because they just meant the desire of the French government and the elite to bypass sanctions and embargoes for profit. And the French are almost “clean” from the point of view of jurisprudence. The supply of dual-use goods and technologies to the Russian Federation is prohibited by the EU Council Resolution of 07/31/2014 (No. 833/2014). However, there is one caveat in the resolution – the authorized body of the state can grant a license for the supply of such goods under contracts concluded before 01.08.2014. And in order to use this loophole in the EU Council Resolution, THALES company continued the validity of old contracts with the help of additional agreements. Thales has been making deliveries to Russia all this time.
It is not unlikely that this is only the tip of the iceberg of military cooperation between France and Russia. Yet, even these facts are enough to understand why Emmanuel Macron called Putin so often. Persuading everyone around him to save face for the Russian dictator was helpful for the French military industry. And while the general rhetoric regarding France which is now helping Ukraine with weapons can be softened, it shouldn’t be softened for Thales. Polish MEPs have already demonstrated it, raising the question in March about why French companies so defiantly violate sanctions.
The second scandal is in banking
At last, Thales announced the suspension of cooperation with the Russian Federation last week. In this context, the fact that Thales’ announcement took place on the day of French President Macron’s visit to Ukraine is also quite telling. Macron assured the official Kyiv of Ukraine’s unquestionable support.
According to Oleksandr Dubilet, the initiator of the “Total isolation of Russia” project and the ex-chairman of the Privatbank, the exit of this industrial and banking giant from Russia was made possible thanks to the combined efforts of activists-volunteers who identified and analyzed the models, specifications and probable terms of equipment deliveries to Russia, and the Ministry of Foreign Affairs of Ukraine that raised the issue of Thales’ illegal trade at the interstate level. “Our team of lawyers also has a contribution to this important result for Ukraine. In the spring, we appealed to the French law enforcement agencies against this manufacturer. European companies that violated sanctions should be held responsible,” Dubilet said.
But, Thales wouldn’t be Thales if they didn’t screw up here. The other day, a report of the Russian Alfa-Bank leaked into the internet. It lamented that Thales’ subsidiary E-Security exit from the Russian market will make funds of 100 million banking card users unprotected.
Russia’s majors, Alfa Bank, SberBank, and VTB, relied on Thales’ solutions PayShield 9000 and PayShield 10K “HSM” according to a Le Parisien investigation. However, Thales’ announcement of exit turned out to be hollow. After all, after media reports about the consequences of Thales’ exit, the latter hastened to inform customers that all systems that ensure the security of Russian users’ cards will work, and the exit from the market is obviously canceled… The Russian banks received the following message:
Political manipulations should not and will not affect the level, quality, stability and performance of our goods and services, in particular on the Russian market. We will continue to ensure the full functionality of all of our hardware products.
That’s how it is: not the termination of cooperation, but of “political manipulation”…
Ukrainian blogger and activist Anton Shvets emphasized that “if Thales shut down everything in one moment, the Russian banking system would collapse. The mere fact that Russian banks are operating normally is clear evidence that the Group continues to work for them. 80% of the Russian banking system uses their services, and 100% — in the temporarily occupied territories of Ukraine.”
After February 24, many facts that were discovered confirmed that the 2014 European sanctions have not worked. They had only an effect on the image but were not supported by specific actions of implementation. Thus, it is necessary to make public the cases of violations of sanctions. It will help isolate the aggressor and to minimize Western cooperation with the Russian Federation.
In the cases like Thales, the trophy BMD-4 photos of the published on social networks served as the evidence that triggered further investigations. An equally important aspect in this struggle is informing the authorized bodies of the EU and law enforcement agencies of the relevant countries about violations. Depending on the jurisdiction, liability for violation of the sanction may be administrative or even criminal.
After all, the support of Ukraine’s fight against the aggressor is unprecedented now. Therefore, Ukrainian lawyers, together with the competent state authorities, have a unique chance to eventually punish the violators and to isolate both the aggressor country and the companies that continue to work with Russia.
Russian matryoshka doll. How the Kremlin modernized its army with Western components despite sanctions
Leaky embargo. How Russia circumvents sanctions on arms imports