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By John Helmer, Moscow

Money laundering is one of those things that is usually accompanied by a lot more gossip than conviction. Exactly what gets washed and for whose benefit are difficult to pin down, usually because those who do it are smarter than your average washerwoman. Still, if the Swiss money police are on the case, that’s so unusual, there’s bound to be more than the customary ladies’ chatter. For Gunvor, the Geneva-based oil trader which has been the foundation of Gennady Timchenko’s (image right) fortune, the police make a novel experience. And one such experience might become a precedent for others – or at least that’s what the washerwomen on the bank of Lake Geneva were surmising before their picture was taken.

What is being reported authoritatively this week is that there was a Swiss police search of the Gunvor offices overlooking Lake Geneva in January. Either before, or not long after, the Swiss federal prosecutor opened a formal investigation of suspected money laundering by person or persons unknown. At least one Swiss bank account is reported to have been frozen as part of the ongoing investigation. This has happened at Bank Clariden Leu, a Zurich-based private institution which was part of the Credit Suisse holding until April of this year, when it merged and ceded its name to the Credit Suisse brand.

Reporting by Agathe Duparc of Le Monde identifies Gunvor’s operations in the central African state of Congo (Brazzaville) as the target of the suspicion, the office search, and the criminal investigation. The object of the exercise is reportedly to determine whether bribes were asked by, and paid to Congolese officials to make oil export allocations to Gunvor; and whether a corrupt scheme of oil pricing resulted which enriched the Congolese, their go-betweens, the oil trader and its employees. The scheme, according to Duparc’s report, involved four cargoes of Congolese crude traded by Gunvor in 2010; eleven cargoes in 2011; and three so far this year. According to Duparc, the volume makes a substantial percentage of the total oil the Congolese sold in these time periods. The total turnover value to Gunvor was reportedly $2 billion.

That’s a big number in Brazzaville. In Geneva it’s a drop in the bucket. According to the news releases Gunvor makes from time to time, reporting its turnover, in 2008 Timchenko and his associates sold $65 billion worth of oil. In 2009, the figure fell to $53 billion on account of the dwindling oil price. In 2010, there was a recovery to $68.6 billion, and then in 2011, $87.3 billion. Fudging the timing of the $2 billion in turnover just a little, if it was generated by Gunvor in 2010 and 2011, when the group was turning over a worldwide total of $155.9 billion, the suspicious Congolese trades amounted to just 1.3% of the aggregate.

The illegality of the Congolese trading schemes has been well-known and documented for several years. Essentially, the schemes involved the sale of the crude to a group of insider companies at a low price, and their resale to international traders at closer to market price, with the difference transferred to front companies in Caribbean havens. For the internationals to get seats at this feeding trough also required bribes, the cost of which came out of the margin between the second and final trading prices of the oil as it moved from wellhead to tanker, and then into the oil-consuming market. Here’s a summary of the evidence from court proceedings, principally in the UK, but also involving investigations by the World Bank and International Monetary Fund, in 2006 and 2007. This was a time when Gunvor was little more than a gleam in Timchenko’s eye.

It is possible that such a tiny business number would have been placed in the responsibility of an insignificant company employee in Brazzaville, who did his business with relatively little scrutiny from Timchenko’s office overlooking Lake Geneva. From that vantage point, would the Brazzaville names and trades have been more than a footnote in the logs the Gunvor bookkeepers compiled in their cubicles on a floor well below Timchenko’s?

Following the press reports this week, five months after the office search, Gunvor issued a release acknowledging it has “been notified by Swiss authorities that they are conducting an investigation into the activities of a former employee in the Republic of Congo (Congo-Brazzaville). Gunvor itself is not the object of the current investigation. Gunvor is fully cooperating with Swiss authorities on the investigation, and Gunvor is also conducting a thorough internal investigation into these allegations.”

According to headquarters, it’s well nigh impossible that the company would countenance whatever had been happening in faraway Brazzaville, if they had known. “Gunvor has rigorous regulatory corporate protocols and a strict compliance program. The compliance program is led by a Compliance Director, who provides oversight and training for all Gunvor trading centers worldwide. In addition, Gunvor has retained outside compliance experts Blaine&Maney to assist the company in maintaining and implementing high compliance standards. The employee, who served as a business developer in Central Africa, is no longer employed by Gunvor.”

The same thing is attributed in the Le Monde report to Adrian Bachmann, a lawyer representing Gunvor. According to Duparc’s report, Bachmann claimed that if malpractice had taken place, it was the act of a rogue employee, who has been fired. Bachman is collaborating with the Swiss prosecutor’s office.

Taking into account how insignificant the alleged corruption would be in the bigger Gunvor scheme of things, and how little the company leadership would know about such things, the company’s spokesman in Moscow, Anton Kurevin, was asked to name the Gunvor Compliance Director identified in the company press release, and say where is he located. Gurevin was also asked to clarify who in the Swiss government has confirmed, as the press release relates, that Gunvor is not the target or object of investigation. And finally, Kurevin was asked to clarify company procedure. “When there are contacts with high-level Russian government officials, or high officials of any government, does Gunvor HQ give advance approval as required by what the Gunvor press release describes as ‘rigorous regulatory corporate protocols and a strict compliance program.’ ”

Kurevin is the credible but not the loquacious sort. He replied: “The investigation is conducted by the prosecutor’s office of the Swiss Confederation. We do not comment on details of the investigation while it goes on.”

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