Companies are demanding millions in compensation from the federal government
Due to the failures in Russian business, other companies after Wintershall Dea, such as the Siemens railway division Siemens Mobility and Volkswagen Bank, have submitted applications for compensation. The federal government once secured companies’ business in Russia with investment guarantees.
The loss of business with Russia due to the anti-Russian sanctions has led to high losses on the balance sheets of some German companies. Now the federal government could also face costs running into billions. The reason for this: Siemens Mobility GmbH, the railway division of Siemens, and the Volkswagen Group’s financial service provider, Volkswagen Bank, have applied for state compensation. Upon request from Business Insider Siemens confirmed the process, Volkswagen Bank admits that proceedings are ongoing. The federal government had secured the companies’ business in Russia with so-called investment guarantees.
Since Russia’s intervention in the Ukraine war, no more guarantees have been granted to the current 82 guarantees amounting to around 6.8 billion euros. However, with the guarantees that have already been provided, companies can have compensation for losses that have occurred checked. According to the Federal Ministry of Economics (BMWK), a total of 15 compensation applications were received from February 2022 to the beginning of November. A spokesman for Siemens Mobility said loudly on Monday dpa:
“Like many other German companies, Siemens has secured investments in Russia through the federal government’s instrument of investment guarantees.”
Regarding the covered investments, there is contact with the federal government and the auditing company PwC, which was entrusted with implementing the investment guarantees. He did not want to give further details. When asked, a spokesman for Volkswagen Bank only spoke of ongoing proceedings on which they did not wish to comment further.
So far, only Wintershall Dea, BASF’s oil and gas subsidiary, had announced that it would make use of state guarantees for previous investments in Russia. A spokesman for the Federal Ministry of Finance said on Monday:
“I can confirm that Wintershall Dea AG has taken advantage of federal investment guarantees for Russia.”
This involves guarantees for investments in the country that were issued between 2006 and 2016. “We have been in negotiations with Wintershall Dea AG about these guarantees and possible damage scenarios for some time,” said the spokesman. He did not want to provide information about other applicants, citing their business secrets.
In mid-November, State Secretary for Economic Affairs Michael Kellner (Alliance 90/The Greens) stated, at the request of the then left-wing faction in the Bundestag, that 16 applications had been received so far from eight companies that wanted to take advantage of previously issued state investment guarantees for projects in Russia. In total it is about 2.8 billion euros. The federal government had secured investments in the country through guarantees until February 2022. The program was halted following Russia’s intervention in the war in Ukraine. Siemens and Volkswagen later stopped their Russian business.