Rosneft Distraction

I got another notification in my Google Alerts yesterday about the Rosneft “privatization” scheme. According to the Russian press, the money for the purchase of the 19.5% stake in Rosneft came from Russian bank VTB:

But this just raises more questions, as Russia’s former deputy Finance Minister Sergei Aleksashenko points out.

First, Aleksashenko points out, despite the Russian government’s claims to the contrary, the money from the “sale” did not reach the federal budget last year. Of course, we already knew this based on both the statements of Glencore and Qatar, and on the filings I shared in my last post on this subject.

But a government official lying about something in Russia is nothing new, and you can’t fire them for it. So there cannot be “any political continuation of this story”.

Then there is still confusion about how the money is supposed to be transferred to the federal budget. Technically, the money should be paid to Rosneftegas, then paid to the budget as a dividend on profits earned from the sale. But that would not equal the full 692 billion roubles. And it would not show up on the books until this year or even next year.

But nobody in Russia cares about any of this, Aleksashenko says. Rosneftegas won’t be audited, and won’t be investigated. And these are all just “technical details” anyway. The main question that nobody seems to be able to answer is “who is the real buyer of the 19.5% stake in Rosneft?”

“The official version of a parity partnership of Glencore and QIA (Qatar investment fund) does not maintain the minimum checks on plausibility. Indeed if the partnership is created on the principle of 50/50, then why do the financial contributions of the participants differ by an order? The Qatar foundation paid 2.5 billion euros, and Glencore only 300 million [euros]?”

And then there is the question of why Glencore got a contract for gas deliveries, and Qatar didn’t. “Where is the equality there?” Aleksashenko asks.

Note: this is not entirely true. As I wrote last week, the deal on the gas deliveries was with QHG Trading LLP (which is equally split between a QIA subsidiary and Glencore Energy UK).

“Continuing on. We still do not know who Intesa’s partner is and who lent the buyer [Qatar] 2.5 billion euros.”

Then Aleksashenko casts doubt on the ability of the “borrowers” [Qatar & Glencore] to repay the loan. He also notes that the terms of the loan from Intesa are still a mystery.

But this is also not quite true. The paperwork for the three loans (possibly only two?) has been uploaded on the website of Companies House in the UK, but I am having difficulty making any sense of them. The numbers don’t match what we were told, and the participants are still murky. Who is QHG Cayman, for example. And Intesa is still listed as the lender.

Even so, Aleksashenko writes, if the “borrowers” (QHG Investment & QHG Holding) cannot repay the loans, then the “lender” (technically still Intesa) will own the shares.

“And that, it seems, is the essence of the transaction.”

He then reminds his readers that the initial proposal was for Rosneft to “buy” its own shares from Rosneftegas and then sell the same shares to an outside buyer at some later date. But this idea was allegedly rejected by Russian President Vladimir Putin.

But, Alexsashenko continues, that it seems likely that Sechin’s original plan was implemented, but “with modifications”. And he alleges that VTB’s role here was to distract from this fact.

Rosneft Mysteries

Yesterday Reuters had a headline that caught my eye: “Rosneft signs 5-year oil supply deal with QHG Trading”.

Of course, I had questions. So I went digging. It turned out that this was the deal that had been agreed to last month with Glencore as part of Rosneft’s “privatization” scheme. But more than that, filings with Companies House in the UK revealed that Glencore had set up a complex structure just prior to the deal’s announcement in early December.

This is perhaps not so strange if you had read Glencore’s statement from early December about the proposed partnership with the Qatar Investment Authority.

In the press release, Glencore stated that they had put together a “limited liability structure fully ring-fenced and non-recourse to Glencore…”

So what does the structure look like?

On 5 December 2016 Glencore registered three LLPs (Limited Liability Partnerships) in the UK. They are as follows:

QHG Investment is split equally between QHG Holding & Qatar registered Qatar Holding LLC (a subsidiary of Qatar Investment Authority). The structure had initially been divided between Glencore UK Limited and Glencore Energy UK Limited. QHG Holding replaced Glencore UK on 28 December, and Qatar Holding did not sign on until 30 December, replacing Glencore Energy UK.

QHG Holding is split between Glencore Energy UK, Qatar Holding LLC, and an entity called QHG Cayman Ltd. (more about this later). Again the pattern repeats, and Qatar did not sign on until 30 December, this time replacing Glencore UK.

And finally, QHG Trading is split equally between Glencore Energy UK and Qatar Holding LLC. And Qatar again replaces Glencore UK on 30 December.

Now here is where it gets interesting. On 3 January 2017, three charges are registered. QHG Investment registers two “fixed charges” from “Intesa Sanpaolo S.P.A., London Branch”.

 Unfortunately there is no paperwork to show exactly what the deals entail, but according to Companies House, one of the charges:

  • Contains fixed charge.
  • Contains floating charge.
  • Floating charge covers all the property or undertaking of the company.
  • Contains negative pledge.

And the other charge:

  • Contains fixed charge.
  • Contains negative pledge.

QHG Holding also registers a “fixed charge” from “Intesa Sanpaolo S.P.A., London Branch” on 3 January 2017:

  • Contains fixed charge.
  • Contains negative pledge.

A quick look at “Intesa Sanpaolo S.P.A., London Branch” shows no such charges, but that doesn’t necessarily mean anything. But it does raise more questions about where exactly the money for the transaction came from, and where it went, or if it even existed at all. Meanwhile, Reuters reported on 3 January that Intesa said they were underwriting “a loan for up to 5.2 billion euros ($5.4 billion)…”.

According to the Russian business daily RBC, Rosneft was supposed to conclude the privatization deal by 15 December 2016.

“On the same day, Rosneftegas transferred funds from the transaction to the federal budget. However, Glencore only confirmed the completion of the settlements on 3 January 2017 [the same date as the charges mentioned above, -ed.] and Rosneftegas on 4 January. In [its] January report the state holding company reported “the end of all corporate and technical procedures of closing and settlement”, associated with the transaction. Rosneftegas specified that it came to… more than 50 documents and agreements signed in “more than five” jurisdictions.”

RBC also reported that QHG Investment LLP holds a 100% stake in QHG Shares PTE which was registered in Singapore on 8 December 2016. The authorized capital of QHG Shares PTE is divided into 201 ordinary shares & totals €10,243 billion. QHG Shares PTE holds the 19.5% stake of Rosneft that Russia “privatized”.

And another mystery remains: who is the beneficial owner of QHG Caymen Ltd.?  RBC couldn’t find it, and neither can I.

$50 Million Tax Free

In the middle of the unfolding Khodorkovsky drama, a story emerged that another Russian businessman was facing troubles with the government in Moscow. Nikolai Bogachyov had agreed to sell a stake in a project to develop the South Tambey field on the Yamal-Nenetsk peninsula to a consortium of three foreign companies: Spanish Repsol, Shell, and Petro Canada. Bogachyov held the production license for the field, which was estimated to contain reserves of 1.2 trillion cubic metres of gas.

The Russian state-owned natural gas company Gazprom sued, claiming that South Tambey had been theirs to begin with, and was given up in a shady deal by the company’s former leadership. The dispute was finally resolved in an out-of-court settlement in the middle of 2005.

Nikolai Bogachyov’s background is typical of the Soviet nomenklatura. Born in 1955, he lived in New York as a child while his father, Vladimir, worked at the UN as a journalist for TASS (a typical cover for the KGB at the time) from 1959 to 1964. Vladimir returned to the United States at least once after that assignment. He reportedly had an affair with the Communist artist, Alice Neel, in 1969.

The elder Bogachyov was later involved in the formation of Zhirinovsky’s Liberal Democrat Party of Russia (LDRP) in the early 1990s, but soon split off to form his own party, according to a 1994 article in the Washington Post.

Nikolai Bogachyov claimed he walked away with $20 million in exchange for his cooperation with Gazprom in 2005. He had allegedly previously demanded $50 million. Either of these amounts were mere pocket change when discussing the long-term potential of a field like South Tambey.

Whatever really happened behind the scenes is still unclear, but it most likely did not take place as reported. Filings with Companies House in the UK indicate that Bogachyov did walk away with nearly $50 million, tax-free.

Over a period of about 18 months, Bogachyov gave up his shares in exchange for a series “loans”. He first took a loan of $15 million from Switzerland-based commodities trader Glencore, using his shares in Yamal LNG as a guarantee.

Bogachyov then took $20 million from an arm of the Irish-registered emerging markets investment vehicle Ashmore. He again used the same shares as collateral. Using the second loan of $20 million from Ashmore, Bogachyov paid back the $15 million from Glencore. He was now ahead $5 million.

Over the next several months, Bogachyov continued to take loans from Ashmore using the same shares as collateral.

Tambey then transferred these loans to two shell corporations: one in Nassau, Bahamas, and the other in Moscow.  After an appropriate period of time, the two shell corporations were declared insolvent, meaning that the UK company could not pay back the original loan to Ashmore. The UK company then declared insolvency itself, effectively defaulting on the loan. The shares were then transferred to Ashmore, who presumably then transferred them to Gazprom.

But the scam was that both shell companies were associated with Bogachyov. The parent company of the UK-based Tambeygas was the Nassau company Prato Investments Limited. Prato was the recipient of $1,543,096 in loans from Tambeygas. The second company, Moscow-based Ruad Gas Limited received $46,142,618 in loans from Tambeygas. Ruad was also a subsidiary of Prato, and was registered at the same address where Bogachyov’s Yamal Energy Partners was registered.

In the end, Bogachyov walked away with a little under $50 million (less ~$2.3 million in fees), tax-free.

P.S. There is a second part to this story, but I am still trying to untangle it.


A protest took place yesterday in Tbilisi against the proposed Panorama project in the historical old district of the city. I tweeted a few links with the background of the project, but I’d like to bring up another aspect to all of this.


In March 2014, the Georgian Co-Investment Fund brought its proposal for the Panorama development to Tbilisi City Hall.

The following month City Hall rejected the plans saying that the Fund had provided insufficient documentation. The city authorities also indicated that they were unhappy with the location Ivanishvili had chosen for the project, and suggested an alternative.

“The planning and technical-economic research of the project needs more justification. It is also important to make the correct selection of city planning in terms of a comparative study, based on the analysis,” read the report.

City Hall was not opposed to more development for tourism, but the location of Panorama was problematic for both environmental and historical reasons.

The local NGO “Green Alternative” says that “the project will upset the ecological balance in the region. In addition, historic conservationists assert that the development plans will end any chance the city has of being a UNESCO World Heritage site, and Tbilisi will lose money as a result. The old district of Tbilisi was proposed as a World Heritage site in 2007.

The Fund’s CEO, Giorgi Baciashvili, insists that Panorama will boost tourism. But Ivanishvili, who says he’s doing this out of the goodness of his heart, admits that the project is unprofitable. At least at first. He claims that the project could become profitable eventually if others join. But so far Ivanishvili still appears to be the only investor in the estimated $500 million project.

In addition, several plots of land that Ivanishvili owned were sold to the Georgian Co-Investment Fund. The Fund was established by Ivanishvili in 2013, with an initial investment of $1 billion by the billionaire. The amount paid by the Fund to Ivanishvili has not been disclosed.

Meanwhile, Ivanishvili appears to be stacking Tbilisi City Hall with his own people. In January, a new Deputy Mayor was appointed. Grigol Liluashvili previously worked at Ivanishvili’s Cartu Bank, and at another company associated with the Panorama Project.

According to the news portal “Liluashivli…said that “timely” implementation of infrastructure projects would be among his priorities.”

His predecessor had reportedly been sacked due to the fact that he was taking too long to implement infrastructure projects.

A former City Hall employee has recently alleged that he was sacked and then charged with bribery due to his boss’s refusal to approve Ivanishvili’s pet project. This has not been confirmed, but rather denied by others involved.

City Hall’s Irakli Abesadze has also accused Ivanishvili of installing his own people at City Hall to further his own agenda.

“The recent personnel changes have nothing to do with the problems at the capita or improvement of the living standards of citizens. The appointment of Cartu Group employees at the government of Tbilisi serves for contribution of Bidzina Ivanishvili”s personal interests,”- Irakli Abesadze said.

What should be a straight-forward request for the municipal government to follow standard procedures has now turned into another example of the country’s king-maker imposing his will on the local government.

Matthias Warnig

As the discussion on Nord Stream 2 remains heated in Europe, one person’s name keeps coming up in the discussion. Enough has been written on Matthias Warnig’s alleged past in both books and newspaper articles that I don’t feel it’s particularly valuable to repeat much of it. A quick review of this article from 2014 should be enough to give you a brief background.

For whatever reason, Matthias Warnig remains an integral part of the Russian business community. According to his biography on VTB’s website, he is currently connected to the following companies:

  • Nord Stream AG (Switzerland), Managing Director
  • United Company RUSAL Plc, Chairman of the Board of Directors
  • Gas Project Development Central Asia AG (Switzerland), Chairman of the Administrative Council
  • Rosneft, Vice-Chairman of the Board of Directors
  • Gazprom Schweiz AG (Switzerland), Chairman of the Administrative Council
  • Transneft, Member of the Board of Directors
  • Interatis Consulting AG, Chairman of the Administrative Council
  • Interatis Engineering AG, Chairman of the Administrative Council
  • Interatis AG (Switzerland), Director

Most of these companies are well-known, and their details easily found online. But the company I’d like to focus on today is the last one.

Warnig makes no secret of his connection to Interatis AG. But even if he did, a 2012 article by Forbes Russia reported that the company is controlled by Warnig.

According to his CV on VTB’s website, Warnig claims that his responsibilities at Interatis are: “Managing the company in accordance with the law and internal documents.” A nicely vague statement that reveals nothing, and certainly not the fact that Warnig reportedly holds a stake in the company.

But what does Interatis AG do and what projects is it involved in?

One of Interatis’ interests is a company called Lambert Energy Advisory Limited which is registered the UK. The company went through several name changes before settling on its current one. It was incorporated on 8 September 1999 under the name Addsport Limited. 3 months later, the name was changed to Lambert Oil and Gas Advisory Limited, but only kept that name for one month before changing to its current name.

There are 9 current officers of the company, according to paperwork filed with Companies House. The company is majority owned by Philip Stephen Owen Lambert, and his wife Joanna. Between them, they hold 60.50% of the company.

Interatis AG currently holds a 10.60% stake in Lambert’s company. It also holds 1 single non-voting B share (the purpose of this sole share is still a mystery to me). Interatis is the second largest shareholder in the company after the Lamberts. It became a shareholder in 2009.

Warnig is also the president of Interatis Engineering AG (registered at the same address as Interatis AG in 2010). According to a December 2014 RBK article, Warnig is a beneficiary of Interatis Engineering AG.

But even if these clues were not sufficient evidence, Warnig’s signature does appear on documents filed with Companies House by Lambert’s company in 2010.

Warnig's Signature (2010)
Warnig’s Signature

The remainder of the shares in Lambert’s are divided out between family members of the officers or companies associated with them, including Norway’s Tore Sandvold, and former British Diplomat Sir Jeremy Greenstock.

Another shareholder is Alexander Landia, who says he is a German citizen, but who is originally from Georgia. Landia graduated from Tbilisi State University in the early 1990s, and then immediately went on to join Dresdner Bank, where Warnig worked at the same time. Landia’s 3.91% stake is held through the holding company Varny Business Corp.

But what is Lambert Energy Advisory Limited? Who is Philip Lambert? And why is Matthias Warnig a shareholder?

A 2011 article in the Evening Standard describes Lambert as “the quiet man behind the historic BP-Rosneft deal”. According to the article, Lambert opened his firm with the backing of Kleinwort’s Lord Rockley (who died in late 2011).

Lambert has no website, relying on old connections and word of mouth.

This is apparently enough as an FOI filed by environmentalists in 2014 revealed. Lambert met in July 2013 with then Energy Minister Michael Fallon at the latter’s request. The email exchange setting up the meeting is sadly redacted and only really reveals that a meeting took place, and the agenda. A second member of Lambert’s team also attended the meeting, though that person’s name is also redacted.

The UK Guardian also notes that Lambert gave his expert opinion on shale gas and its impact on the UK’s economy to a House of Lords committee in 2013.

I have found no evidence of any wrong-doing with Lambert or his company, but Matthias Warnig’s connection to it is worth keeping an eye on as Nord Stream 2 gains traction.