A couple of stray thoughts regarding the Gunvor story.
First, virtually all of the oil trade (and the global commodities trade generally) is done in dollars. Gunvor needs dollar financing to carry out its trading. Anything done in dollars puts the provider of the dollar finance in the crosshairs of a panoply of US regulators.
Case in point is RBS, which paid $100 million in settlements to the Fed and the New York Department of Financial Services for violating sanctions on Iran, Burma, Sudan, and Cuba. One law firm concluded:
A lesson that foreign financial institutions and other multinational companies should draw from these cases is that they continue to face significant risk if they engage in any business related to parties or countries (particularly Iran, Cuba and Sudan) that are restricted under US economic sanctions provisions, even if their activities may have appeared to be lawful at the time. Such activities create risk when they have even a minimal nexus with the United States, including clearing financial transactions in US dollars, furnishing financial services through institutions in the United States, processing payments through foreign branches of US financial institutions, or knowingly relying on services provided by US persons anywhere in the world to facilitate, participate in, approve, or support restricted transactions.
Foreign persons providing a variety of financial services, including banking, money remittance, insurance, reinsurance, investment, foreign exchange, mortgages and secured transaction/letter of credit services, should recognize the inherent US enforcement risk in concealing or intentionally omitting identifying information from payment messages involving a sanctioned country, entity or person, when the transaction has some nexus to the United States or US persons (including US dollar exchange). Deceptive activity also formed the basis for part of the recent settlement against Weatherford International Ltd. (see our advisory on Weatherford). [Emphasis added.]
To reiterate. A “minimal nexus” with the US puts a foreign financial institution at risk when it deals with a sanctioned entity.
Here is an Economist piece on how the US uses merely touching a dollar as a basis for aggressive prosecution. Here is the Telegraph screeching about how the US has extracted billions of dollars in settlements from British banks for engaging in transactions in dollars.
The basic issue is that any transactions done in US dollars, even between foreign entities, have a US bank involved at some point to process the dollar transactions. You do a deal in dollars with a US-sanctioned entity, you are at huge risk of prosecution.
The implication is that even if Gunvor deals only with non-US banks, as long as it deals in dollars, if the firm becomes a sanctioned entity anyone who is on the other side of the dollar transaction is at risk. FUD is most acute with any transaction that touches the dollar. And you can’t engage in the international oil trade (or commodities trade generally) without dealing in dollars.
Second, a somewhat related issue. Let’s say that Törnqvist really did buy out Timchenko’s shares. Let’s say he didn’t pay with a note. Where can Timchenko stash the cash? Paying in Euros or CHF could perhaps avoid the problems discussed above, but even so, what western financial institution wants to take Timchenko’s money? Even Sberbank might have some reservations.