Russian Billionaire Cut Stakes Beyond Gunvor Before Sanctions

Gennady Timchenko, the billionaire co-founder of Gunvor Group Ltd., sold a stake in a company linked to one of the oil trader’s suppliers a day before he was hit with U.S. sanctions.

Timchenko sold a 49.88 percent holding in Finnish company International Petroleum Products Oy on March 19, according to a statement issued on April 14 by Volga Group, Timchenko’s investment vehicle. A company related to IPP was Gunvor’s fourth-largest supplier in 2012, accounting for 3.3 percent of Gunvor’s total cost of sales, according to a bond prospectus issued last year by the Geneva-based oil trader.

The sale shows Timchenko, who holds Russian and Finnish passports, got rid of holdings in addition to his 44 percent shareholding in Gunvor to counter the threat of sanctions against associates of President Vladimir Putin in response to the annexation of Crimea. The sanctions prohibit Timchenko, 61, from entering the U.S., freeze any assets he owns there and prohibit him and any companies he controls from doing business with U.S. firms.

The stake in IPP Oy was sold “to business partners” of Timchenko, Volga said in the statement. A Volga spokesman declined to provide further details. Seth Pietras, a Gunvor spokesman, said the interest was not sold to anyone related to Gunvor.

The Finnish company is related to International Petroleum Products BV Geneva branch, which supplied Gunvor. IPP Oil Products (Cyprus) is the holding company for both the Finnish and Geneva companies. The document also showed that Gunvor and IPP shared current and former directors.

Timchenko owned a 50 percent stake in the Cyprus holding company according to the prospectus. He no longer has that holding, according to Volga.

Ukraine Crisis

Timchenko sold a 44 percent stake in Gunvor on March 19, according to Gunvor and Volga. The U.S. announced sanctions against Timchenko and 19 others on March 20 in response to Russia annexing Crimea and the crisis in Ukraine.

“Timchenko’s activities in the energy sector have been directly linked to Putin,” the U.S. Treasury Department said in a statement March 20. “Putin has investments in Gunvor and may have access to Gunvor funds.”

Gunvor has denied the allegations and said it does not and never has had any links to Putin.

Timchenko, whose net worth is $7.6 billion according to the Bloomberg Billionaires Index, co-founded Gunvor with partner Torbjorn Tornqvist in 2000 to trade Russian crude oil. The company now handles about 2 million metric tons of crude oil per day, or about 3 percent of the world’s oil, according to its website. Russian crude and products now account for less than 20 percent of Gunvor’s trading, Tornqvist said in an interview March 21.

Directors Left

Gunvor said that Tornqvist, who now owns 87 percent of Gunvor’s equity and 100 percent of its voting shares, had joined the board of directors of Gunvor Group Ltd. in an April 4 statement published on the website of the Singapore Stock Exchange. Sven Anders Olsson, Menikos Yiannakou and Emilios Kallenos left the board of directors, Gunvor said in the statement.

Christina Hadjigeorgiou, a Gunvor board member since May 2010, remains on the board, Pietras, the Gunvor spokesman said by telephone.

Hadjigeorgiou “serves on the board of directors of, and is general manager of, IPP Oil Products Cyprus,” Gunvor said in its 2013 bond prospectus.

Hadjigeorgiou worked for PricewaterhouseCoopers from 1995 until 2010, Gunvor said in the prospectus. PricewaterhouseCoopers is Gunvor’s auditor.

Hadjigeorgiou did not respond to a phone call seeking comment.

Volga Group

Olsson is also a board member of IPP Oil Products (Cyprus) Limited, Gunvor said in the prospectus. Olsson is a board member of Volga Group, which is controlled by Timchenko, Volga said on its website.

Kallenos and Yiannakou, who both departed Gunvor’s board, according to the April 4 statement, also previously worked at PricewaterhouseCoopers, according to the Gunvor bond prospectus.

Through Volga Group, Timchenko also has stake in OAO Novatek, Russia’s largest independent gas producer, and chemical maker OAO Sibur.

Timchenko said his companies were in talks to shift from U.S. dollars to ruble, euro and yuan for export contracts in an interview with the “News on Saturday” program on state-run Rossiya channel April 12.

Gunvor, the world’s fourth-largest independent oil trader, reported a profit of $301 million on revenue of $93 billion in 2012.

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