Tuesday, December 06, 2022

Cash, the key to Russian and Venezuelan oligarchs

MIAMI ( Associated Press) — It was a settlement that brought together oligarchs from some of the United States’ main adversaries.

“The key is cash,” the oil broker wrote in a text message, offering a deep discount on a shipment of Venezuelan crude to an aide who claimed to be a figure for the owner of Russia’s largest aluminum company. “As soon as they have the cash ready, we can get to work.”

The messages were included in a 49-page indictment that closed Wednesday in federal court in New York, accusing seven of alleged conspiracy to buy sensitive US military technology, smuggle oil and refining tens of millions of dollars worth of oil. was imposed. Names of wealthy Russian merchants.

The frank conversations between the defendants read like a guide on how to get around Washington’s sanctions, which include shell companies in Hong Kong, large cash deliveries, ghost oil tankers, and the use of cryptocurrencies to hide illegal transactions in the country.

The case also highlights how insiders in Russia and its ally Venezuela, both kept out of the Western financial system, are making common reason to protect their vast fortunes.

At the center of the alleged conspiracy are two Russians: Yuri Orekhov, who worked for a US-sanctioned publicly traded aluminum company, and Artem Us, the son of a wealthy Kremlin-affiliated governor.

Both are partners in an industrial equipment and raw material sales company based in Hamburg, Germany. According to prosecutors, the company was a means to circumvent US sanctions imposed against the Russian elite following the invasion of the Crimean peninsula in 2014. Both were arrested in Germany and Italy respectively, with charges filed in the United States including conspiracy. Sanctions violations, money laundering and bank fraud.

On the other end of the deal was Juan Fernando Serrano, CEO of a commodity trading startup called Tracius, with offices in Dubai, Italy and his native Spain. His whereabouts are unknown.

In their electronic communication last year, all parties claimed to have links with powerful people.

“This is our parent company,” Orehkov wrote to Serrano, adding a link to the aluminum firm’s website and a link to its owner’s Wikipedia page. “This is also approved. That’s why we work with this company.”

Not wanting to move on, Serrano replied that his partner was also affected by the sanctions.

“He is one of Venezuela’s influential people. Very close to the Vice President,” he said, adding a link that showed search results of a Venezuelan lawyer and businessman the United States charged with alleged money laundering and bribery. claimed in the allegation.

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None of the alleged accomplices was made an accused in the process nor was he identified by name in the court document. Also, it was unclear what kind of relationship, if any, exists between Serrano and his Venezuelan adviser.

But the description of the Russian billionaire is in line with Oleg Deripaska, who was charged last month in another sanctions case in New York. Some of the proceeds she reportedly remitted to the United States went to an Uzbek Olympian who gave birth there.

Venezuela’s media tycoon is Ral Gorin, who spoke on condition of anonymity because the investigation remains open, according to a person close to US security forces. Gorin is still in Venezuela and is on the United States Immigration and Customs Enforcement Service (ICE) most wanted list of people for allegedly plotting a plan to extort $1,200 million from state oil company Venezuela, PDVSA.

A US attorney for Deripaska did not immediately respond to a request for comment. For his part, Gorin did not want to make a statement, but he dismissed other criminal charges against him on the grounds that they were politically motivated.

Although Washington’s sanctions on Venezuelan oil only apply to Americans, many foreigners and people doing business in the country avoid dealing with the OPEC nation for fear of being punished.

That’s why Venezuelan oil is being sold at huge discounts — about 40% off market value — according to the indictment. But these conditions require some unorthodox maneuvering.

For example, instead of transferring money immediately through Western banks, payments follow a more roundabout way.

In one of the transactions cited in the indictment this year – the purchase of an oil tanker loaded with Venezuelan crude for $33 million – alleged co-conspirators spoke of making payments from a Dubai-based shell company to fictitious accounts from Melissa Trade. Somewhere. , Australia and England. To conceal the operation, documents describing the cargo as “whole green peas” and “paddy rice” were allegedly falsified.

But as is often the case with covert transactions, cash seems to be the main option.

“Your guys can go directly to PDVSA with one of my employees and pay them directly. There are 550,000 barrels (…) to load on Monday,” Serrano wrote to Orekhov in a message in November 2021.

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The entry of millions of cash into a bank in Moscow, AvroFinance Mosnarbank, owned by PDVSA, was also discussed. It was an important conduit for trade with Russia until it was approved by Washington in 2019. Both defendants also considered a possible mirror transaction, whereby cash deposited in a bank in Panama would be paid at a branch of the entity later that day. In Caracas, the capital of Venezuela.

But Orekhov’s preferred payment method appears to be Tether, a cryptocurrency that claims to be pegged to more stable currencies like the US dollar.

“It’s faster than a wire transfer,” Orekhov said of a potential purchase of 500,000 barrels of oil worth $17 million. “That’s what everyone does now. It’s comfortable and fast.”

But not only financial transactions present a challenge. Crude oil delivery also carries risks as most traders and insurers do not want to do business with Venezuela or other approved entities. In recent years, the US government has seized several tankers that were supposed to carry oil from Iran to the South American nation.

To hide the oil’s origins, Orekhov and Serrano ordered a Vietnamese tanker they were using to turn off the mandatory tracking system to avoid being loaded into “Disneyland”, a code reference to Venezuela. .

Although the indictment did not identify the ship by name, internal PDVSA shipping documents seen by the Associated Press show it was Melozie, a two-decade-old tanker operated by a Hanoi-based company, Thank Long. gas company.

Tracking tanker data collected by Marine Traffic shows that Meloji “turned off” as empty and drifted off the Venezuelan front near Trinidad and Tobago on December 31, 2021. About four months later, on 18 April, he resumed broadcasting fully loaded and left for Asia.

According to satellite images, on 9 June, the ship transferred its cargo at sea to Harmony Star, a storage vessel off the coast of Malaysia. According to an investigation by the New York-based group United Against Nuclear Iran, the same ship was identified as part of a larger oil smuggling network to help Iran closely track crude oil shipments from sanctioned countries. tracks from.


Goodman is on Twitter: @APJoshGoodman

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