At least one Russian oligarch thinks US sanctions have teeth

I’m out.
I’m out.
Image: Reuters/Grigory Dukor
We may earn a commission from links on this page.

It was quick, and it was quick by design: After the US announced economic sanctions against Gennady Timchenko, a financier allegedly tied to Russian president Vladimir Putin through the commodity trading firm Gunvor, he announced a “contingency plan” enacted the day before sold his entire stake to his partner, Torbjorn Törnqvist.

Gunvor has been dogged by rumors that the company is in part owned by Putin, perhaps through Timchenko, especially since the firm’s rise as an oil trader thanks to lucrative contracts with Russia’s state-owned oil companies. Today, Gunvor is a global firm based in Geneva and Switzerland and reliant on the international financial system. Apparently, it can’t afford to become entangled in political conflicts between Russia and the United States.

The firm has vociferously denied rumors connecting it to official corruption. It cites a Singapore bond offering underwritten by American banks, including Goldman Sachs, and audited by PriceWaterhouseCoopers, as evidence that its financials are on the up-and-up. Today, however, the US Treasury said “Putin has investments in Gunvor and may have access to Gunvor funds,” although it would not elaborate on the source of this information.

“We further remain confounded that the U.S. Treasury Department would issue blatantly false information about our company,” Seth Thomas Pietras, a Gunvor spokesperson, said in a statement.

The timing of the sale is intriguing, coming a day before sanctions were announced. Stuart Leasor, a spokesman for the private holding vehicle, Volga Group, that held Timchenko’s stock, said the dealmakers hadn’t planned on announcing the sale “quite so soon, but they didn’t expect Mr. Obama to move today.” There was also no information available about the price or structure of the deal between the two partners, but financials released during the firm’s 2013 bond offering reported $13 billion in assets and $574 million in earnings, suggesting Timchenko’s 43.5% stake would be worth several billion dollars.

That’s quite a lot of money for Törnqvist to shell out, especially when the company claims to have generated only $4 billion in total profit over its 14-year existence.

However the deal came about, his spokespeople say Timchenko is fully divested from Gunvor. His current holdings are largely Russian firms, like natural gas producer Novatek, that can operate domestically without worrying too much about US sanctions.

As for the firm, it hopes that it will now be able to operate without fear of political entanglements. ”I’m sure they’ll continue to look at us, but I would love to see their evidence,” a person close to the trading house told Quartz.