FinCEN: Dubious oil deals with Syria turn fatal
In the Kerch Strait off the Crimean coast, a dangerous undertaking cost 20 people their lives. On January 21, 2019, crews on two tankers were transferring liquified petroleum gas (LPG) from one ship to another at sea. Something went wrong and there was a terrible explosion. Both ships quickly burst into flames.
A search and rescue team tried to locate the burning tankers
to rescue the crews. But they lost valuable time. Both ships had loaded illicit
cargo and switched off their tracking systems to avoid detection by authorities.
In the end, only 14 sailors could be saved. Most of the
victims were Indian and Turkish citizens.
Sailors hired 'under false pretenses'
Crew member Erdogan Cetinok (45), who was killed that day,
had boarded one of the tankers, the Candy, less than a month earlier in
Istanbul. It was his first job with Milenyum Energy SA, which owned both the
ships involved in the Kerch Strait incident. Before his death, he told his
sister that the ship was sailing for Libya.
In reality, it was more likely headed to Syria. It was later
discovered that both the Tanzanian-flagged tankers — the Candy and the Maestro
— as well as the company that owned them were on a US blacklist for violating
sanctions on Syria.
Erdogan Cetinok's sister Hulya said she believes Milenyum's
owners are to blame for the accident and the deaths of the 20 people:
"They were hired under false pretenses. What's left behind are the orphans."
FinCEN Files revelations
Were those behind the disaster in the Kerch Strait part of a
broader network of international players directly violating international
sanctions on Syria by transporting oil and gas products in an out of the
country? Extensive research by a team of more than 400 journalists from 88
countries points in this direction.
Insights into these dubious networks and their forbidden
practices come from documents prepared by compliance officers within banks and
submitted to the Financial Crimes Enforcement Network (FinCEN), a regulatory
unit within the US Treasury Department tasked with fighting money laundering.
Financial institutions are required to file so-called Suspicious Activity
Reports (SARs) when they have reason to believe that transactions may violate
regulations. SARs are not necessarily evidence of wrongdoing. They reflect the
views of watchdogs within banks.
In 2019, a cache of such SARs was leaked to BuzzFeed News,
which shared them with the International Consortium of Investigative
Journalists (ICIJ). Over the course of 16 months, hundreds of investigative
journalists evaluated the secret banking reports and additional documents. The
result is the FinCEN Files— an extensive investigation into the illicit money
flows around the globe.
Circumventing sanctions on Syria
US and EU sanctions targeting the import,purchase and
transport of oil and petroleum products to and from Syria have been in place
since 2011. In August 2015, in an attempt to weaken Syrian President Bashar
al-Assad's support network, the US Department of the Treasury (USDT) announced
new sanctions directly targeting individuals and companies providing energy
products used by the Syrian regime.
Among these newly blacklisted entities was Milenyum Energy.
The company is registered in Panama and operates in Turkey. The USDT maintains
that Milenyum made regular shipments of oil products to the Syrian port of
Baniyas. As a consequence, its oil shipping vessels were blocked.
The company's director, Ufuk Kenar; two of its managers,
Serkan and Erkan Duzgoren; and another employee, Mustafa Aydin; were all
individually sanctioned.
Blue Energy, a company closely linked to Milenyum and
registered in the Caribbean island state of Saint Kitts and Nevis, was also
affected. According to the USDT, Milenyum used its partner Blue Energy to
receive payments for those energy-related shipments.
But despite US and EU sanctions, tankers owned by Milenyum
Energy continued their activities, with their vessels shipping oil products in
and out of Syria just as before. Their forbidden transactions weren’t
discovered until the fatal explosion in the Kerch Strait, which killed Turkish
sailor Cetinok and 19 others.
It turned out that one of Milenyum's sanctioned tankers, the
Green Light, was sailing under a new name: Maestro — the vessel that went up in
flames alongside the Candy.
Connecting the dots between Turkey, Malta and Syria
Information gleaned from the FinCEN Files suggests that
bigger players, such as Petkim — Turkey's premier petrochemical company — may
also have been involved in Milenyum and Blue Energy's illegal operations with
regard to Syria.
Founded in 1965, Petkim Petrochemical Holding began as a
state-owned petrochemical manufacturing company. Petkim was privatized in 2008
when the Turkish state sold its 51% stake in the company to the SOCAR &
Turcas Consortium. In 2012, SOCAR, or the State Oil Company of Azerbaijan
Republic, bought Turcas' shares and is now the majority owner. The remaining
shares are traded on the Istanbul Stock Exchange.
The trail of FinCEN documents pointing towards Petkim begins
in Malta. The files show that in 2016 US Bank BNY Mellon filed a Suspicious
Activity Report relating to a firm called Petrokim, a company based on the
Mediterranean island. Malta is considered a tax haven. According to the US
bank, Petrokim is associated with the Turkish Petkim.
BNY Mellon provided foreign correspondent banking services
to Petrokim, helping it to conduct business abroad. While doing so, the US bank
noted that the company completed 223 cash transactions amounting to more than
$224 million between March 2010 and July 2016. Its report indicated that
suspicious money transactions suggested Petrokim may have violated sanctions on
Syria.
Petrokim – suspected shell company
Furthermore, it described the company as "a shell-like
entity maintaining an address in the high-risk jurisdiction of Malta,"
adding that Petrokim was "using an address that is identical to numerous
entities that were designated SDNs under Iran sanctions." SDNs is the
abbreviation for "Specially Designated Nationals" who are
blacklisted. SDNs can be individuals or companies. Their assets are blocked,
and US persons are generally prohibited from dealing with them.
According to BNY Mellon, both "shell-like"
Petrokim and Turkish oil giant Petkim completed over $90 million in
"suspicious transactions" between March 2010 and January 2016.
Milenyum business partner Blue Energy, which the USDT claims to be involved in
the illicit trade of petroleum products to Syria, was also among the companies
with which Petrokim exchanged payments — over $13 million worth of transactions
between July and December of 2014.
BNY Mellon's listing of Petrokim as an associate of Turkey's
Petkim was confirmed in the ICIJ's 2017 Paradise Papers investigation. Research
conducted for the Paradise Papers showed that Samir Karimov, who served as vice
president of SOCAR Turkey at the time, was also the director and legal
representative of Petrokim. At this time, SOCAR was the majority owner of
Petkim.
The relationship between Petkim and Petrokim was also
confirmed in Petkim's financial records. There Petrokim was listed under
liabilities, as Petkim was behind in payments to its Malta-based associate.
Companies respond to the allegations
Between 2009 and 2017, Petrokim was administered by the law
firm Fenlex, which is also based in Malta. In response to questions from the
ICIJ, Fenlex denied that Petrokim was "involved in trades in breach of the
US (or European) sanctions in force at the time in connection with Syria."
Fenlex further stated that Petrokim "did not transact
with Syrian entities, nor did it tranship any goods to or from Syria."
The oil firm Petkim and its majority shareholder, SOCAR,
refused to comment on the allegations.
BNY Mellon continues to offer correspondence banking
services to Petrokim, despite having filed the Suspicious Activity Report.
An investigation into the 2019 Kerch Strait ship blaze is
ongoing, with Milenyum Energy director Ufuk Kenar and managers Serkan and Erkan
Duzgoren, as well as the captains of the Candy and the Maestro, all on trial.
The next hearing will take place in Istanbul on November 20.
Hulya Cetinok, who lost her brother in the accident off the
Crimean coast, wants to be hopeful for the upcoming trial. But she also has her
doubts after the captains of the ships were released in a previous trial:
"As the relatives of the victims of this disaster, our only expectation is
that justice be served and those responsible get the sentence they deserve."
Comments
Post a Comment