What Everyone Needs to Know about The "Ghost Fleet" of Glencore
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What Everyone Needs to Know about The “Ghost Fleet” of Glencore

by | published December 20th, 2019

A couple days ago, I introduced to you a major story that I have been following for over two years. I detailed the release of one of the biggest information leaks in history, which led to increased scrutiny on one of the biggest mining companies in the world.

In today’s column, we continue the story…

“It’s All in the Shipping”

In its early days, Glencore was known as Marc Rich & Co AG.

To put it mildly, Rich had a shady reputation, notably for buying oil from Iran during the 1979 Teheran hostage crisis.

And as a contact with detailed personal exposure put it to me, “Marc Rich knew how to deliver on time and in massive amounts. You know how hard it is to get tankers of oil in and out of a sanctioned country? Marc Rich knew how to do it. It is all in the shipping.”

In February 2001, Glencore had just begun paying kickbacks to the Iraqi government for oil shipments in a breach of the UN’s Oil for Food program, according to the 2005 “Volcker Report.” For its part, Glencore denied any knowledge that its agents paid up to $25 million in kickbacks.

On February 2, 2001, and February 28, 2001, two Iraqi oil shipments bound for the U.S. were diverted to Singapore and Croatia, where Glencore stood to make up to $7 million in extra profit (once again, Glencore denied any intention to breach UN Oil for Food rules).

Between these two diverted shipments, on February 20, 2001, Bermuda law firm Conyers Dill & Pearman lodged an application to register SwissMarine. Glencore declined to say why it decided to launch a shipping venture at that time. Glencore and Restis Group, one of the 10 biggest ship-owning businesses in Greece, teamed with four former Cargill commodities traders in the new company.

By 2004, SwissMarine was grossing $1 billion a year in freight revenue.

How to Secretly Beat U.S. Sanctions

The Volcker Report detailed the strict instructions Glencore gave to its bankers to never divulge its connection with Iraq oil sales. Glencore imposed similar levels of secrecy on its new shipping company, and held its stake in SwissMarine through a Swiss company, Sidhalu SA. Appleby Bermuda provided three SwissMarine directors to represent Sidhalu.

In November 2012, multiple sources in the shipping market were saying that Dimitris Cambis, a Greek professor with no previous shipping experience, had just bought eight ageing supertankers through a web of front companies for $204 million.

On February 27, 2013, Reuters journalist Jonathan Saul reported in London that “officials involved with sanctions” had shown him shipping documents which indicated that some of Cambis’ tankers were being used to ship Iranian oil to China to beat U.S. sanctions.

Two days later in New York, another Reuters reporter, Louis Charbonneau, broke another story: “Glencore bartered with firm linked to Iran nuclear program.” He said he had been shown a report by a Western intelligence agency which revealed that since 2011 Glencore had a barter deal with Iran Aluminium Company (Iralco) to exchange thousands of tons of alumina in exchange for processed aluminium.

The report said that from mid-2012 Iralco had been supplying aluminium to Iran Centrifuge Technology Co (TESA), which was on the UN sanctions list and had been making uranium enrichment gas centrifuges for the nuclear program.

These weren’t just rumors; I have personally reviewed the underlying documents at issue.

Meanwhile, Glencore told Charbonneau the trade was legal, and it had no knowledge of the link to Iralco until the EU banned alumina sales in December 2012. At that time, the company declared, it “ceased transactions.”

On March 13, 2013, the U.S. Treasury blacklisted Cambis, 14 of his companies, and his eight tankers, for helping Iran avoid oil sanctions.

This far, the story consisted of two still separate elements: Glencore’s deals in aluminium, and Cambis’ tankers.

I can now personally attest to the fact that both of these revelations are based on Western intelligence reports.

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Putting the Pieces Together

Matters began coming together on May 1, 2013.

The U.S. interest group United Against Nuclear Iran (UANI) announced that it had been provided documents revealing that Victor Restis, his shipping firm EST, and the failing Greek bank FB Bank (which Restis controlled) had been part of the Iranian tanker scheme.

In a later court filing, UANI would be more specific, claiming that “by at least mid-2010, Restis was conspiring with Cambis to devise a web of business entities and relationships to buy crude oil from Iran and sell it to Chinese buyers” (and I have two sources who have confirmed this relationship).

Glencore was about to find itself under additional pressure. The Xstrata deal was finalized on May 2. Unfortunately for the Swiss trader, by May 23, Reuters’ Charbonneauhad been provided with another bombshell (once again, the substance of this report I can confirm from an intel source).

He reported that a confidential UN Panel of Experts report had concluded the aluminium swap deals by Glencore and Trafigura (another Swiss-headquartered but global-reaching trading major) could have been a way to get around international sanctions against Teheran over its nuclear program.

On July 19, 2013, Restis sued UANI for $2 billion in defamation damages, claiming its documents were forgeries. Four days later, Restis himself was arrested by Greek police and charged with bank fraud, embezzlement, and money laundering.

Restis’ lawyers said the Iran sanctions claims had been devastating to Restis’ business, leading to the cancellation of a billion-dollar IPO on Nasdaq, while Restis’ shipping company, Enterprises Shipping and Trading SA, had been put on a blacklist of companies said to trade with Iran – triggering difficulties with banks refusing to process its funds.

Glencore now faced both sides of the Iran sanctions story. The aluminium trading on the one hand and the allegations about Restis and the oil tankers on the other, had an obvious overlap – SwissMarine. At minimum, the risk was that SwissMarine could be blacklisted, just as EST had been.

But this was only if the secret of the shareholdings became public knowledge.

The Story gets Even Deeper

In June 2013, before Restis’ arrest, SwissMarine had filed a “Know Your Customer” form with Standard Chartered Bank which listed Restis owning 24.1% of the company.

In October 2013, SwissMarine had to apply to join the Nasdaq OMX Commodities Clearing House in Stockholm, which was critical to the bunkerage and forward freight agreement contacts that SwissMarine used. It also had to set up a bank account.

Copies of SwissMarine’s application to DNB Bank ASA Caymans branch and to Nasdaq were sent to Glencore’s Appleby nominees on the SwissMarine board (and, as it happened, right into the subsequent Paradise Papers breech).

In the DNB form, Restis’ name had been cut from the list of directors. SwissMarine listed Sidhalu SA as the only shareholder with more than 20 percent and made no reference to Glencore or to Restis’ holding. SwissMarine’s Nasdaq application included Restis in the list of directors but listed only Glencore as the ultimate beneficial owner of more than 30%, despite Restis’ contractual right to three of the nine board seats.

Victor Restis, still a SwissMarine director, was in prison in Greece at the time and his name did not appear on the filings. Despite a February 2014 statement from a SwissMarine executive, the deletion was hardly inadvertent.

Rather, it seems that SwissMarine had revised the way it calculated share capital for the Standard Chartered Bank paperwork. It now included the “cash-settled employee shares,” thereby reducing Restis’ stake to 18.15%, which meant it did not have to be declared.

The link between Glencore and Restis was never made public. Meanwhile, the Appleby directors did not appear to be aware that Restis was in prison.

Restis was released on bail on December 3, 2013. He repaid the €15.8 million loans and three years later the charges against Restis, his mother Bella, and 15 others were all dismissed by the Greek Supreme Court.

The UANI defamation case was dismissed in March 2015 after the U.S. Department of Justice intervened to claim that for UANI to disclose its sources and other details that Restis’ lawyers were demanding would threaten U.S. national interests. It fuelled the belief that the information on Restis’ alleged email accounts had come from U.S. intelligence (a point I can at least partially confirm).

“As to Mr. Restis,” Glencore told the Financial Review, “he is one of a number of other shareholders in SwissMarine which is a non-controlled investment of Glencore. Glencore has no other commercial relationship with Mr. Restis.”

Well, the newspaper went on to say that that was not quite accurate. While Restis remains on the SwissMarine board, the Appleby documents show he is also chairman of SwissMarine Services SA, an independent company where Glencore is the largest shareholder, which has a commissionaire agreement with the shipping group.

Glencore evaded both Iraqi and Iranian shipping sanctions or over a decade, using corporate structures which themselves were fraudulent.

But that is hardly the end of the story; a prime Russian connection is yet to come…

Sincerely,


Kent

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