23 – The ARC Electronics Network

ARC Electronics and the Fishenko network is one of the best documented examples of dual-use export busting to the Russian Federation. Alexander Flishenko, as indicted by the US Department of Justice, ran ARC Electronics in Texas and supplied Russia’s military and security services with high-value microelectronics for several years.[1] For years, Fishenko’s network was able to conduct this scheme through a combination of falsifying end-users, not applying for required licenses, and lying about the contents of the packages his network was exporting from the United States to the Russian Federation.[2] Fishenko’s network sold not only items on the dual use list, but also items on the munitions list. One of the primary points of disembarkation was JFK airport in New York. The shipments then went through Finnish intermediaries to a front company in Saint Petersburg for eventual distribution to Russian defense contractors and entities.[3]

Correspondence between Fishenko and his customers reveals insights as to why the Russian military and security services go through all the risk of acquiring American-made products. According to one of his interlocutors, the Russian military end-users procured American-made products because they “figured out that the Chinese... supply crap”. This preference for Western over Chinese goods is seen throughout case studies and research by CNS.[4]