Exclusive: U.S. sanctions curb Microsoft sales to hundreds of Russian firms

Two of Microsoft's official distributors in Russia have imposed restrictions on Microsoft software sales to more than 200 Russian companies following new US sanctions, according to reports distributed by distributors.

While US sanctions were aimed at regulating it, Russian distributors are showing that the more stringent restrictions that entered into force on November 28 are beginning to rage.

The new measures reduce the duration of loans that can be offered to Russian financial companies subject to sanctions on 14 days of 30 days and 60 days from 90 days for Russian energy companies on a list of US sanctions.

Previously, the restrictions related mainly to Western banks that lent to Russian companies, but with such short financing periods, large parts of companies that provide goods and services to Russian customers were afraid to also fall under the rules.

It is common in Russia that suppliers wait weeks or even months before they are paid after submitting their accounts for goods and services.

Some Western companies have been informed by lawyers that the US Treasury Department could, in theory, consider this as a financing in violation of sanctions, according to several people involved in the discussions.

One of Microsoft's two distributors, a Russian company named Merlion, said in its notification to partners that all sanctioned Microsoft licensing buyers must pay in tight deadlines, or even pay in advance in some cases.

The second distributor, RRC, said in his notification, as seen by Reuters, that "serious restrictions have been introduced" on orders from Microsoft by companies subject to US sanctions.

Merlion and the RRC called rules stemming from the new US sanction package - promulgated on August 2 for Russian involvement in Ukraine and cyber attacks - as the reason for further restrictions.

Merlion nor RRC answered questions from Reuters.

Microsoft said in a statement to Reuters: "Microsoft has a strong commitment to comply with legal requirements and has strong processes around the world to ensure that our partners also meet the requirements."

In response to questions from Reuters, a spokesperson from the US Treasury Department, which oversees enforcement of sanctions, referred to the published guidelines

The FACA (Foreign Abets Supervision Bureau) guidelines of the Treasury determine that US companies may enter into transactions with companies on the sanction list, provided that the payment conditions do not exceed the permitted duration of the loan.

"In the event that an American person is of the opinion that he / she can not receive full payment by the end of the relevant payment term, the US person must contact OFAC to determine whether a license or other authorization is required" .

"SECTORAL SANCTIONS"

The United States can impose a fine of $ 250,000 on offenders or double the amount of the transaction if it is larger. If offenders are found guilty of a deliberate offense, they can receive a fine of up to $ 1 million, or 20 years in prison, or both.

Microsoft did not answer Reuters' questions about whether it had initiated the restrictions introduced by two of its Russian distributors.

Microsoft mentions nine other official distributors of its main software products in Russia in the same category of partner companies as RRC and Merlion. A Softline declined to comment on whether it had introduced stricter payment rules. The others have not responded to Reuters requests for comments.

Reuters reported in October that software produced by Microsoft had been taken over by government agencies and companies in Russia and Crimea, despite sanctions that prevented US companies from doing business with them.

This case, and a number of similar reports reported by Reuters, revealed discrepancies between sanctions and their application.

The US government keeps two lists of companies that are subject to sanctions. Entities located in the United States are banned in virtually all forms of trade with companies included in the Nationalized Nationality Nationals (SDN) list of Washington.

A second list known as the sectoral penalty identification list (SSI) comprises 224 companies, mainly Russian companies, and their subsidiaries in the banking, energy and defense sectors, with financial constraints.

Among them are large Russian companies such as the oil giant Rosneft, natural gas producer Novatek and Sberbank, Russia's biggest money lender.

Although the credit rules for financial and energy companies have been tightened, the restrictions on the financing of Russian defense producers remained unchanged at 30 days, although new sanctions have tightened the penalties for violations.