By Dan Christensen, FloridaBulldog.org
U.S. Rep. Ted Deutch asked the Treasury Department Wednesday if it has investigated Pompano Beach-based Kalashnikov USA to determine whether federal sanctions were violated “through illicit business relations” with Russian firearms giant Concern Kalashnikov.
“Has the Office of Foreign Assets Control [OFAC] initiated an investigation into the nature of the business relationship between Kalashnikov USA and Kalashnikov Russia, including any connections between the executives, directors and employees of Kalashnikov USA and its parent, RWC Group LLC, and Kalashnikov Russia?” Deutch asked in a letter to OFAC director John E. Smith. “I appreciate your attention to this serious national security matter.”
Florida Bulldog reported in February that Gov. Rick Scott’s administration offered Kalashnikov USA $162,000 in state tax breaks in 2015 to induce the manufacturer of Russian-style assault rifles to relocate from Pennsylvania to South Florida.
No taxpayer money was ever paid because the company didn’t meet job-creation requirements, but the state’s offer was made more than a year after President Obama imposed economic sanctions against Concern Kalashnikov and other Russian arms makers in response to the conflict in Ukraine. The July 2014 sanctions froze Concern Kalashnikov’s U.S. assets and generally prohibited transactions with it “by U.S. persons or within the United States.”
Prior to the sanctions, Kalashnikov USA/RWC was Concern Kalashnikov’s exclusive U.S. dealer, according to Sputnik News, the Russian government-controlled news agency. A five-year agreement signed in January 2014 anticipated Kalashnikov would export up to 200,000 units a year to the U.S. and Canada, Sputnik said.
A Miami federal grand jury late last month subpoenaed records about the Kalashnikov USA incentives deal from Scott’s Department of Economic Opportunity (DEO), Pompano Beach and the Greater Fort Lauderdale Alliance, Broward County’s public-private development arm. A prosecutor’s letter accompanying the subpoenas said they were part of “an official investigation of a suspected federal offense.” The offense was not specified.
A tax incentives offer
Florida Bulldog reported last week that DEO was aware when it offered RWC/Kalashnikov the tax incentives in 2015 that the company was doing business with blacklisted Kalashnikov Concern. State records released under Florida’s public records law noted the company’s “exclusive license to manufacture and distribute products designed and under the brands of Concern Kalashnikov.” License deals with blacklisted companies are problematic, one sanctions expert said.
According to Deutch, Kalashnikov USA also “planned to assemble its weapons with parts and components imported from Kalashnikov Russia’s factory located in Russia.”
Florida’s use of taxpayer dollars to import an out-of-state assault rifle maker tied to Russia’s most recognizable weapons brand has become a focus of controversy and protests in the wake of the Valentine’s Day mass shooting at Parkland’s Marjory Stoneman Douglas High School. Seventeen students, teachers and coaches died in the rampage by gunman Nikolas Cruz.
In his letter, Deutch said “connections between a U.S. weapons manufacturer and a sanctions Russian company are even more alarming” in light of reports about Russia’s alleged attempts to “illegally fund the National Rifle Association.”
Deutch also raised concerns that Kalashnikov USA “may have used shell companies to hide its continued relationship with Kalashnikov Russia.” Bloomberg Businessweek recently reported those shell companies connect “Kalashnikov USA to Russian oligarchs tied to [Russian] President Vladimir Putin and appears designed to avoid U.S. sanctions.”
“Of particular concern,” wrote Deutch, “is the relationship between RWC Group manager and Kalashnikov USA Senior Vice President Michael Tiraturian and Kalashnikov Russia CEO and majority shareholder Alexey Krivoruchko. Mr. Krivoruchko, the CEO of a company sanctioned by the United States, has extensive and well-documented ties to the inner circle of…Putin.”
Kalashnikov USA did not respond to a request for comment, nor did its public relations spokeswoman, Laura Burgess. Previously, the company said it severed all ties with the Russian company after sanctions were imposed.
Term-limited Gov. Scott, a Republican, this week announced that he is running against Democratic incumbent Sen. Bill Nelson. The campaign is predicted to be expensive and nasty.
Rep. Deutch, a Democrat whose district includes Marjory Stoneman Douglas High and firearms maker Kalashnikov USA, injected politics into the sanctions matter in a press release that blamed Scott for approving the offer of tax incentives to the company.
“It is shameful that the State of Florida and Governor Rick Scott appeared to bend over backward to recruit a gun company with questionable ties to Russian oligarchs, especially as nearly 70 percent of Floridians support a ban on assault-style rifles,” Deutch said. “This case deserves a full investigation to determine whether federal laws were broken to protect Kalashnikov’s profits.”