The trading giant’s lucrative deals with allies of Vladimir Putin
When Vladimir Putin awarded Glencore’s billionaire boss the Order of Friendship it was seen as the Kremlin’s stamp of approval on an audacious $10 billion investment in Russia’s state oil producer.
Ivan Glasenberg was given the medal in 2017 for his contribution to “strengthening cooperation with Russia”, according to the official citation, after Glencore made headlines orchestrating a massive investment in Rosneft.
Now an investigation by SourceMaterial can reveal that as it negotiated its investment and supply agreement with the oil giant, Glencore was striking other deals that would benefit friends of the president, including an oligarch nicknamed ‘Putin’s Banker’ and a Ukrainian politician later touted as the leader of a future Russian puppet government in Kyiv.
Documents examined by SourceMaterial show that in 2016, Glencore provided advanced cash to two Russian refineries, to be repaid with oil products with an estimated value of $800 million according to prices at the time.
One of the refineries, Novoshaktinsk in Russia, was part-owend by Viktor Medvedchuck, a pro-Putin Ukrainian politician.
Putin is the godfather to one of Medvedchuk’s children. The oligarch was detained last night by Ukrainian intelligence services having allegedly fled house arrest. He had been awaiting trial for treason and looting national resources when he fled house arrest in Kyiv on 28 February, four days after the Russian invasion. He has been under US and Canadian sanctions since 2014—though there is no suggestion that Glencore broke rules by dealing with entities linked to him.
The second refinery, Afipsky, inland from Novorossiysk on Russia’s Black Sea coast, is linked to Vladimir Kogan, a financier who died in 2019 and has been credited with introducing the future president to the Tambov crime gang when Putin was mayor of St Petersburg.
Loan security documents relating to the deals lodged at Companies House indicate that the arrangements remain active. Glencore, however, says it has no ongoing business relationship with either refinery and that both deals were commercially motivated transactions carried out through an “open market process”.
The first deal came in April 2016 when Glencore agreed to pay Novoshakhtinsk upfront for 270,000 tonnes of vacuum gasoil, used to make petrol and diesel.
Glencore made the payments via Exmor Group, a Dubai-based intermediary set up by a former Glencore trader and previously used as a middleman in Glencore’s politically sensitive purchase of Kurdish oil.
The Swiss arm of Sberbank, the sanctioned state-controlled Russian lender, underwrote the deal by taking on some of Glencore’s risk. A similarly structured deal followed in November.
A recent investigation by Radio Free Europe and the Organized Crime and Corruption Reporting Project found that in 2014, Medvedchuk and one of his political allies, Taras Kozak, were granted a 42 per cent stake in the companies that own the refinery for a nominal sum.
Through Cypriot intermediaries, Medvedchuk and Kozak paid just $40,000 for the holding—a tiny fraction of what they would later earn from it in dividends, the investigation found.
Later that year, the Russian government handed the Novoshakhtinsk trading arm a further sweetheart deal, granting it a potentially valuable oil field for just $1,000, RFE and OCCRP reported. The tender raised eyebrows because it stipulated that crude from the field should be refined 2,000 miles away in Rostov—the home region of Novoshakhtinsk.
Medvedchuk’s Novoshakhtinsk investment came in the tumult following Ukraine’s Maidan protests that swept the pro-Kremlin president, Viktor Yanukovych, from power. Later in 2014 the oligarch was sanctioned by the US and Canada for his alleged role in undermining Ukrainian sovereignty.
Putin responded with the annexation of Crimea and by supporting separatists in the pro-Russian breakaway republics of Luhansk and Donetsk, across the border just four miles from Novoshakhtinsk. Following Russia’s invasion of Ukraine in February, Medvedchuk, whose fortune is estimated at $620 million, was reportedly a leading candidate to head a puppet government if Putin’s forces succeeded in taking Kyiv.
In 2016, Medvedchuk and Kozak took outright control of the entity that owned the oilfield and in 2018 raised their stake in the main refinery business to 93 per cent, corporate records show.
Last year the refinery was sanctioned by the Ukrainian government, which accused it of supplying the Luhansk and Donetsk separatists.
Shortly afterwards, the refinery switched to new shareholders, including a former head of the Russian National Guard in Moscow—though its trading arm appears to remain under the control of Medvedchuk and Kozak through Aleksandr Martyenko, identified by Radio Free Europe as a driver for a Medvedchuk business associate.
‘Mutually beneficial relationship’
In September 2016, Glencore struck another Sberbank-backed deal, this time for 1.1 million tonnes of naphtha—a solvent used for paint and petrochemicals—from a company called NefteGazIndustriya.
NefteGazIndustriya is the trading division of the Afipsky refinery and was owned at the time by Vladimir Kogan, a longstanding Putin associate who acquired it in 2010 from Oleg Deripaska, the aluminium magnate who is another key Glencore partner.
Kogan’s relationship with the Russian president stretches back to the early 1990s when Putin was deputy mayor of St Petersburg.
In what would later be seen as a blueprint for his presidency, Putin deployed a network of former KGB associates and oligarchs to gain a stranglehold on important sectors of the city’s economy, Catherine Belton wrote in her 2020 book, Putin’s People. That meant first cutting a deal with the Tambovs, one of the criminal fraternities that filled the power vacuum there after the collapse of communism—and it was Kogan who provided the introduction, according to an account of the period.
“There was clearly a mutually beneficial relationship between Putin and Kogan. As deputy mayor, Putin was the de facto arbiter of economic life in St. Petersburg”, said Robert Hovrath, a lecturer in Russian politics at La Trobe University in Melbourne, Australia. “Thanks to his patronage, Kogan’s Promstroibank became a major force in the city’s economic life.”
Putin was reported to have held an account at Kogan’s Promstroibank and to have held a 1 per cent stake in it—leading the Russian press to nickname him ‘Putin’s banker’. Promstroibank was acquired by VTB, one of Russia’s largest banks, in 2005.
The Novoshakhtinsk and Afipsky refineries both featured in a 2016 investigation by City of London police, who suspected that money from them was being laundered offshore for the benefit of a corporation in the British Virgin Islands and its sister entity in Moscow.
While the investigation ended without charges and was later criticised by a judge, the broker that executed the trades ended its relationship with both oil traders and the BVI company.
Glencore has come under intense pressure over its dealings in Russia since the February invasion. On 28 March, the chief economic adviser to Ukraine’s President Volodymyr Zelensky wrote to the company’s chief executive, Gary Nagle, saying:
“The Ukrainian government is shocked that your firm continues to trade Russian oil and export fossil fuels from Russia. Today, I’m writing to ask Glencore for your support. This is a moment in which your actions will be judged by history. On behalf of President Zelensky, and the Ukrainian people, in this existential moment for our nation, we’re asking you to terminate your business dealings with the Russian fossil fuel industry, to cut off the cashflow which is financing the mass murder of innocent people.”
Two days later Glencore issued a fresh statement on the Ukrainian war: it would continue to meet its pre-existing contractual obligations, subject to sanctions and, having reviewed its ownership of stakes in Rosneft and EN+, decided “there is no realistic way to exit these stakes in the current environment”.
A spokesman for Glencore told SourceMaterial:
“Following an open market tender process, Glencore entered into a pre-payment and off-take agreement with NefteGazlndustriya LLC (NGI), this arrangement was fully discharged and consequently terminated at the end of 2017.
“Glencore’s commercial relationship with Novoshakhtinsk, entered into following an open market process, ended in 2017. Glencore has no current commercial relationship with either NGI or Novoshakhtinsk.”