Oil trading giant Gunvor handed its chief executive a $1bn dividend to fund a deal that helped the company distance itself from US sanctions against Russia.
Torbjörn Törnqvist agreed to buy a 43% stake in the company, the fourth largest oil trader in the world, from co-founder Gennady Timchenko in 2014 for an undisclosed fee.
Timchenko’s exit was designed to quell any concerns about his role in the company, as he was due to be named in a list of people with alleged links to the Kremlin sanctioned by the US after Russia’s invasion of Crimea.
But the sheer size of Gunvor, which pulled in revenues of $64bn (£44bn) last year despite rock-bottom oil prices, meant Törnqvist could not fund the deal in one go.
The payment of a $1bn dividend, only part of which was used to fund the deal, allowed Törnqvist to settle his remaining debt to Timchenko.
The transaction initially gave Törnqvist a stake of more than 86% but while he took his dividend in cash, employees taking part in the firm’s share plan took theirs in shares.
This is understood to be part of a long-term plan to dilute Törnqvist’s shareholding over time so that he owns less than 70% of the company.
Gunvor said the deal, revealed in the Financial Times, was done in full compliance with the US sanctions regime and disputed a US Treasury statement that Putin has investments in Gunvor and may have access to Gunvor funds. “The idea that there’s some secret Putin ownership is ridiculous.”
Industry sources said if Gunvor was in breach of US rules on businesses with links to the Kremlin it would already be facing sanctions.
