The owner of ELINC with which the RS concluded a secret contract on the OFAC list

26.07.2024. / 13:38

BANJALUKA – The new largest IT partner of Republika Srpska, the Chinese company ELINC, with which a 57 million mark software procurement contract was secretly concluded in June, is owned by China Electronic Corporation, which has been on the American “black list” for three years, it reveals portal CAPITAL.

Because of this, Republika Srpska, whose leaders and companies associated with them, including President Milorad Dodik and his children, were left without bank accounts after being included in this list, could have serious problems and jeopardize the work of institutions.

It is not known whether the signatories of the IT contract from Srpska knew about this at all or because of this they hid from the public that they were procuring software from a company under sanctions.

It is certain that giving money and access to a Chinese company that is suspected of producing and selling “problematic software and conducting illegal surveillance” can seriously expose the Republic of Srpska and its institutions to danger.

What the OFAC list says

According to the data we found on the website of OFAC, i.e. the US Office for the Control of Foreign Assets of the Ministry of Finance, the new partner to whom we will pay the software 57 million marks, China Electronic Corporation (CEC), was sanctioned at the beginning of June 2021, since it is on special, the so-called Non-SDN list.

These are Non-SDN sanctions that refer to certain companies of the military-industrial complex and any investment or trading of securities with them is prohibited, and all their transactions and operations outside China are closely monitored, with the possibility of stopping them.

Sanctions to parent CEC

On the sanctions list is the state-owned “CEC” of the People’s Republic of China, which is said to be linked to Nanjing Panda Electronics Company Limited, as well as China Electronic Technology Group Corporation. These companies are related by ownership.

The ELINC company, which produces military equipment and software in multiple sources and media, is listed as a CEC affiliate. On the website of the Egyptian Defense Fair, which will be held next year, ELINC will be a participant, and announced as a branch “wholly owned by China Electronics Corporation (CEC), founded in 1989 in Beijing, China”.

“Focused on defense electronics, industrial solutions and cyber security, ELINC provides state-of-the-art products and systems as well as life cycle support covering consulting, development and related services“, it is stated in the description of the business of this company.

What is the Non-SDN Sanction List?

The non-SDN list refers to individuals or entities that are subject to certain sanctions imposed by the Office of Foreign Assets Control, but do not face the full blocks that those on the Specially Designated Nationals (SDN) list do.

Non-SDN sanctions are typically less severe and may include restrictions on certain transactions or activities rather than a complete asset freeze. It is a list of different lists that are not completely blocked, but may include bans on certain transactions, investment restrictions or other regulatory measures.

In the additional description of the frequently asked questions regarding this list, which refers to the military-security industry, it is specifically noted that this may be about their supervision, which the CAPITAL portal previously wrote about.

“OFAC expects to use its discretion to target, in particular, persons whose operations involve or support, or have involved or have supported, surveillance of persons by Chinese technology companies that takes place outside the PRC. Also, the same applies to the development, marketing, sale, or export of Chinese surveillance technology that is, has been, or may be used to monitor religious or ethnic minorities or to otherwise facilitate repression or serious human rights violations.“, it is stated in the note dated June 3, 2021, when sanctions were introduced against these companies.

What did Srpska sign?

At the beginning of June, the Government of RS signed a contract on the procurement of security software from the Chinese ELINC, for which they will pay 57 KM. This contract was immediately classified as confidential, and the Agency for Information and Communication Technologies confirmed the information to the media only when CAPITAL published a text about it.

Serbia secretly concluded a 57 million contract with a Chinese company connected to the military industry

They confirmed that with this software they plan to bring all institutions and institutions under one umbrella, 780 of them. They did not give more details, except that they are planning data centers and hubs, nor did they explain with which personnel they plan to introduce it.

As a reason for procuring software from the Chinese, they cited the results of the analysis that the situation in the IT sector of institutions and institutions in Srpska is desperate and that it is urgently needed to be sorted out, and that the licenses for this software will be taken for ten years.

Let us remind you that the Government of the RS, the President of the RS, the Agency for the State Administration of the RS and others were left without support for the official domains of the official websites due to the introduction of sanctions in October last year, and after that (at the end of December) there was also a hacker attack on IZIS (Integrated Health Information system). A few days later, the data of users of the Tax Administration of the RS were leaked and were offered on the dark web.

The Republika Srpska has so far spent hundreds of millions of marks on procurement of various software, awarding jobs mostly to favored companies, and some of them were also on OFAC’s list of sanctioned legal entities connected to Milorad Dodik’s family.

We are asking for the publication of the secret agreement between Serbia and China

CAPITAL: Andrijana Pisarević