Gennady Timchenko, who was sanctioned by the US Treasury on Thursday, has sold his shares in oil trader Gunvor in the clearest sign of the likely impact of the latest round of sanctions on Russian companies.
Mr Timchenko, Russia’s sixth richest man according to Forbes, sold his stake to business partner Torbjorn Tornqvist "to ensure with certainty the continued and uninterrupted operations” of the company, Gunvor said.
Gunvor is the world’s fourth-largest oil trader, handling 2.1m barrels a day of oil and products – equivalent to the consumption of France. It also has investments in assets from oil refineries in Belgium and Germany to coal mines in Montana and South Africa. Traders and lawyers had suggested that counterparties would reconsider whether they could trade with the group after Mr Timchenko was sanctioned on Thursday by the US. Yields on Gunvor bonds leapt 3.4 percentage points to 10.91 per cent.
Moreover, the US Treasury claimed Russian President Vladimir Putin had personal investments in the oil trading house. "Putin has investments in Gunvor and may have access to Gunvor funds,” the US said. Gunvor described the US Treasury’s statement as "fundamentally misinformed and outrageous”. "Gunvor categorically denies that Vladimir Putin has or has ever had any ownership or that he is a beneficiary of our business directly or indirectly,” it said. Mr Timchenko sold his 43 per cent stake in the company to Mr Tornqvist on Wednesday, a day before the sanctions were announced. "We had prepared this ownership change as a contingency in the unlikely event that Mr Timchenko would become involved in sanctions; however, the timing and the actions by the US this week were a complete surprise,” Gunvor said. Mr Tornqvist will now have an 87 per cent stake in the group. The remainder is held by employees, Gunvor said.
Gunvor was founded by Mr Timchenko and Mr Tornqvist, now chief executive. According to a bond prospectus last year, the two men "began working together in 1997 drawing on the expertise of [both] in the oil industry, the Russian market and transit logistics”. Although it started out with a focus on Russia, dominating sales of Russian oil abroad, Gunvor has in recent years diversified and now less than a fifth of its trading originates in Russia, it says. It recorded profits of $301m in 2012 on revenues of $93bn, according to the bond prospectus. Mr Timchenko and Mr Putin both spent the 1990s working in St Petersburg and share an interest in judo – Mr Putin became honorary president of a judo studio that Mr Timchenko co-founded. Mr Timchenko has repeatedly denied that any political favour or influence has contributed to his business success. Mr Timchenko’s business interests, through his holding company Volga Resources, stretch well beyond oil trading. He owns 23 per cent of Novatek, Russia’s largest independent gas producer – in which French oil major Total also has a 16 per cent stake. Total declined to comment.
In addition, he owns 37 per cent of Sibur, a major Russian petrochemicals group; a 49 per cent stake in Sovag, a German insurer; an 8 per cent stake in Bank Rossiya, which was also sanctioned by the US on Thursday; as well as shares in construction, consumer goods and real estate companies. Volga Resources described the justification for the US sanctions decision as "far-fetched and deeply flawed” and said it was "analysing the potential ramifications of Gennady Timchenko’s inclusion on this list”.
