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EXCLUSIVE Kyiv urges Seoul to tighten controls on DN Solutions' CNC equipment reaching Russian military
DN Solutions' headquarters in Changwon, South Gyeongsang Province / Courtesy of DN Solutions
By Park Jae-hyuk
Ukraine sanctions chief criticizes Korean firm's lax oversight of Chinese distributors
DN Solutions, Korea's leading machine tools manufacturer, has drawn criticism from the Ukrainian government for alleged negligence in preventing Chinese distributors from re-exporting its computer numerical control (CNC) equipment to Russia for military use.
Describing Korea as a partner in preventing sanctions circumvention, Ukraine also called for cooperation between the two governments on the matter.
"In the field of high-tech exports, responsibility is increasingly defined not only by direct contractual relationships but also by the strength of a company's internal oversight of its distribution channels," Vladyslav Vlasiuk, sanctions commissioner for Ukrainian President Volodymyr Zelenskyy, told The Korea Times in a recent written interview.
"When equipment repeatedly ends up in a sanctioned jurisdiction — even indirectly — this reasonably warrants an internal review," he said.
Vladyslav Vlasiuk, sanctions commissioner for Ukrainian President Volodymyr Zelenskyy, briefs diplomats from Korea and other countries on strengthening sanctions against Russia's shadow tanker fleet, Jan. 13. Courtesy of Ukrainian presidential office
His remarks followed a recent investigation by the Economic Security Council of Ukraine (ESCU) into Russia's imports of Korean, Japanese and Taiwanese CNC machines via China.
ESCU, established in 2021 to counter threats to Ukraine's economic security, and various anti-Russia civic groups have repeatedly expressed concerns about Russia's imports of Western and Asian equipment for use in drones and other weapons since its invasion of Ukraine began in February 2022.
According to ESCU, $19 million worth of CNC machines manufactured by DN Solutions and its Chinese subsidiary were supplied to Russia in 2023 and in the first quarter of 2024 by Silver Technology and other Chinese distributors.
The findings differed from the case of Hyundai WIA, another Korean machine tools maker, which said CNC machines used by the Russian military had been sold a decade ago and apparently resold on the secondhand market.
"In this particular case, there are factual indicators that merit closer examination — notably, the confirmed presence of DN Solutions-branded machines at Russian industrial sites after Feb. 24, 2022. Available customs and procurement records indicate these were deliveries of new equipment, made under contracts dated 2023 and 2024," Vlasiuk said.
"While this does not, in itself, suggest deliberate wrongdoing, it may highlight shortcomings in oversight, particularly where intermediary channels are involved. In this context, further review — both internally by the company and externally by relevant authorities — may be appropriate," he added.
DN Solutions said it has complied with Korean laws that ban unauthorized exports of super-precision machines, which are categorized as strategic items. In June 2022, DN Solutions CEO Kim Won-jong declared a "voluntary export implementation," emphasizing the importance of adhering to export controls to avoid domestic and international sanctions.
"After the Russia-Ukraine war, we have not exported our products to Russia," a DN Solutions spokesperson said. "It is virtually impossible to trace secondhand transactions of our products that were sold in other countries before the war."
Agiya Zagrebelska, policy director of the Economic Security Council of Ukraine (ESCU) / Courtesy of ESCU
However, ESCU said that access to public information and commercial databases allows the company to know that its products have been supplied to Russia.
The institute also cited evidence suggesting continued supply of DN Solutions' CNC equipment to Russia, pointing to Russian importers' receipt of declarations of conformity for the Korean firm's products from May 2024 to February 2025.
"Whether DN Solutions had direct contract with Russian buyers is no longer the central question — the issue is whether it exercised sufficient control over the distribution of its products. In such a scenario, exposure to regulatory action is a realistic outcome," ESCU Policy Director Agiya Zagrebelska, former anti-monopoly commissioner of Ukraine, told The Korea Times via email.
"Korean regulators should also evaluate DN Solutions' partnership with intermediaries like Silver Technology and determine whether that cooperation should continue," she said.
In response, DN Solutions claimed that it had already quit doing business with the Chinese companies as soon as it became aware of their re-exports to Russia.
"We have informed dealers and agencies that selling our equipment to Russia and circumvention of export controls are strictly prohibited," the company spokesperson said. "We have also notified them that any violation of this policy is not just a breach of contract but also subject to strict sanctions by authorities."
Vlasiuk stressed the need for Ukraine and Korea to share information on risk indicators and conduct regular reviews of national control lists.
"We also see merit in jointly examining the role of certain intermediaries in third countries that may act as transit points," the sanctions commissioner said. "A timely and coordinated response to these signals serves our shared interests — especially in light of the evolving strategic challenges in Northeast Asia."
The Ministry of Trade, Industry and Energy, which oversees Korea's exports of strategic items, said it has been closely monitoring exporters in collaboration with the Korea Customs Service and other governments.
"Although we have checked their end-user certificates, there remain difficulties in preventing companies from circumventing regulations through re-exports," said Park Sung-joon, head of the ministry's trade controls policy division.
"However, we punish companies if we discover emails and call logs proving their contacts with Russia."
DN Solutions CEO Kim Won-jong introduces the company during a press conference in Seoul, April 25. Courtesy of DN Solutions
DN Solutions recently withdrew its plan to list on the benchmark KOSPI bourse this month. The company reportedly failed to attract foreign institutional investors for its initial public offering, although it cited uncertainty in domestic and international financial markets as the reason for the withdrawal.
At a press conference held prior to the decision, the machine tools maker expressed optimism that demand for its products will rise in Ukraine after a potential ceasefire, citing interest from construction equipment firms planning to participate in postwar reconstruction.