Investing into Russia’s construction industry: Germany’s Knauf branded international sponsor of war

23.11.2023

In 2022 alone, one of the world's largest manufacturers of building materials, Knauf, paid about USD 117 million to the budget of the terrorist state of Russia. In addition, the German company actively promotes mobilization in Russia, sending its employees to the war against Ukraine. This was the reason for the National Agency on Corruption Prevention (NACP) to include Knauf in the list of international sponsors of the war. Overall, since 1993, Knauf has invested more than EUR 1.65 billion in the Russian economy. The company is represented in Russia by 10 subsidiaries, 20 plants, and almost 30 resource centers. The German manufacturer of building materials employs 4,000 people in Russia. Today, Knauf is the largest German investor in the construction industry in Russia. Knauf's management is also closely linked to the Kremlin regime. For example, the company's co-owner, Nikolaus Wilhelm Knauf, had the status of Honorary Consul of the Russian Federation for 23 years (from February 1999 to March 2022), with a representative office with the powers of an Honorary Consulate in Nuremberg. Knauf also has existing facilities for the production of acoustic ceiling panels and suspension systems in the Special Economic Zone "Alabuga" (Tatarstan), on the territory of which the Russian production of the Shahed-136 UAV is organized. After Russia's full-scale invasion of Ukraine, the company officially made it clear that it saw no reason to leave the aggressor's market: "We will remain in Russia as long as the political and commercial situation allows us to do so. We clearly have a responsibility for more than 4,000 employees and their families, as well as for customers and suppliers, many of whom we have had excellent and long-standing relationships with over the years." In October 2022, the German media focused on the fact that Knauf supported the mobilization of its employees into the ranks of the Russian armed forces. It was said that the Russian managers of the Knauf plant in Krasnogorsk, near Moscow, agreed with the authorities on the lists of those who were needed in production and who could be sent to war. Some of those who received a draft notice were allegedly taken to military enlistment offices in a company minibus. Also in February 2023, Knauf took part in the YugBuild exhibition event (Krasnodar Territory, Russia) and presented innovative Russian-made building materials. At the end of November 2023, the company organized the KNAUF BUILD FEST 2023 exhibition event under the slogan "The largest festival of Knauf technologies and solutions for construction and decoration. Six growth zones for true professionals". Thus, Knauf specialists continue to build cities in the aggressor state, while thousands of residential buildings have been destroyed in Ukraine by the aggressor's army funded, among others, by Knauf’s tax contributions. The NACP is the body responsible for promoting the development of a compliance system in the private sector. During compliance procedures, counterparties are subject to integrity checks, including compliance with socially responsible business practices in accordance with OECD standards. The list of "International Sponsors of War" on the War and Sanctions portal is a powerful reputational tool for achieving integrity of supply chains in the international dimension, withdrawal of international business from Russia, and thus reducing the financial and technological capacity of the terrorist country to kill Ukrainians. One of the platform's "levers of pressure" is cooperation with the World-Check database, which is used by banks and insurance companies to assess risks. That is why for global companies, the consequences of being on the list are worse than continuing to do business with the aggressor country.