Extreme Networks believes that its products were being shipped to “bad actors” in Russia and that an IT distributor was involved.
The networking giant unwittingly supplied equipment used in MMZ Avangard’s office IT systems, a state-owned firm that makes missiles for one of Russia’s most sophisticated weapons, according to a US Securities and Exchange Commission filing by Extreme Networks.
Extreme said that it was supplied with information by Reuters of the sales to the sanctioned company that included emails, business records and interviews with people familiar with the matter.
The company, for its part, told Reuters that its equipment was sold without its knowledge and that MMZ Avangard was an “indirect customer” of another networking business that the company acquired in July 2017.
Extreme Networks acquired Avaya’s networking business for $100 million during that time.
The company pointed CRN to Wednesday’s 8-K filing for comment.
In March, Extreme said it was ceasing operations in Russia, following the path of several other large tech firms, including Apple, Microsoft, Dell, HPE and competitor Cisco Systems.
Extreme’s own review found that between 2017 and 2021, MMZ Avangard gained more than half a million dollars’ worth of Extreme equipment for its IT systems.
The networking equipment in question that was sold to MMZ Avangard through a surrogate buyer known as DEMZ and that it believes an intermediary in Russia was “complicit” in supplying its products via a front company to “bad actors,” according to Reuters.
Extreme Networks called out Russian IT distributor RRC, headquartered in Moscow, as one of the involved partners that supplied gear to MMZ Avangard.
From 2018 through 2021, RRC ordered Extreme products for different partners who made orders on behalf of DEMZ, which transferred Extreme’s products to MMZ Avangard, according to Extreme’s 8-K filing.
The company said that a former employee “perpetuated this scheme” by going to work for the distributor after being terminated by Extreme for performance issues.
RRC, which is owned by parent company BD Enterprise Networking, didn’t respond to CRN’s request for comment prior to publication.
Misappropriated product sales over the five-year period is estimated by Extreme to total about $645,000, representing less than 0.01 percent of the company’s global revenue during that time period.
MMZ Avangard is the maker of the missiles used in recent attacks against Ukraine.