The family of a sanctioned Ukrainian politician with close ties to Russian President Vladimir Putin has been selling refined oil products to the United States through an intermediary, the latest example of a Kremlin friend finding legal ways around Washington's financial restrictions.
The Novoshakhtinsky oil refinery in Russia, which is owned by the wife of Viktor Medvedchuk, who heads a political council of a pro-Russian political party in Ukraine, has been selling some of its output this year to an arm of ExxonMobil via a Swiss-registered trader, an investigation by Schemes, a joint program of RFE/RL and Ukrainian public broadcaster UA:First.
Medvedchuk, who picked Putin to be the godfather of his daughter, was put under sanctions by the United States in March 2014 following the overthrow of Ukrainian President Viktor Yanukovych for his role in undermining democracy in the country. The United States called Medvedchuk a Putin “proxy” inside Ukraine.
WATCH: The Schemes Investigation (In Ukrainian)
The U.S. sanctions freeze any assets, including cash, that Medvedchuk has within the United States and forbids any U.S. individual or entity from conducting transactions with him.
The Novoshakhtinsky oil refinery, which is located near the Russian city of Rostov, close to the border with Ukraine, has supplied its products to ExxonMobil at least six times in 2020, according to U.S. import data obtained by Schemes. The products are shipped by tanker from the Black Sea to Houston, Texas.
Novoshakhtinsky is majority-owned by Oksana Marchenko, a Ukrainian TV star and Medvedchuk’s wife. Government officials and politicians from the former Soviet Union often put their assets in the name of their wives, children, and other family members to protect or hide them.
The Medvedchuk family purchased several Russian companies, including a controlling stake in the refinery, in early 2018 for an undisclosed sum. Medvedchuk said later he oversees the family business but admitted that he put its ownership in his wife’s name to avoid U.S. sanctions.
“My wife, Oksana Marchenko, is not in business. She owns a business. And I run the business. Why can’t I own a business? Because my lovely Americans imposed sanctions on me,” he said in a 2018 interview with one of his TV channels after the purchase of the refinery.
ExxonMobil does not buy the oil directly from the Medvedchuk family-owned refinery, but rather through NewCoal Trading, a Swiss-based trading firm.
NewCoal is considered to be associated with the family of Russian parliamentarian Gleb Khor, who was born in eastern Ukraine, according to Russian investigative journalist Mikhail Maglov.
Though the value of the contracts with NewCoal are not disclosed, Schemes estimates that ExxonMobil may have purchased about $150 million worth of oil products from Novoshakhtinsky this year based on the volume supplied and market prices.
The United States is importing record amounts of Russian petroleum products after Washington imposed sanctions on Venezuela, impacting energy deliveries from the South American nation.
Russian and Ukrainian officials hit by U.S. sanctions since 2014 have been seeking ways to circumvent the financial restrictions placed on them.
Arkady Rotenberg, a billionaire and childhood friend of Putin sanctioned by the United States, sold an oil and gas drilling business to his son, Igor Rotenberg, to escape the impact of the sanctions.
The Office of Foreign Assets Control (OFAC), the agency of the Treasury Department that enforces sanctions, added Rotenberg’s son to the list in 2016.
Neither Novoshakhtinsky nor Marchenko are sanctioned by the United States.
“OFAC must have reason to believe that [Medvedchuk’s] wife is operating the company on his behalf and legally document that standard in order to block property,” said Brian O’Toole, a fellow at the Washington-based Atlantic Council and a former OFAC senior advisor.
“It's the threshold in the law that underpins OFAC's authorities,” he said.
However, he said OFAC could decide to look into the transactions if the Swiss broker is nothing more than a middleman for the Medvedchuk family to avoid sanctions, O’Toole said.
“This certainly is shady and skirts the boundaries of sanctions intent,” he said of the transactions.
A spokesperson for the U.S. Treasury told RFE/RL in a statement that it takes allegations of sanctions violations seriously but doesn't comment on whether sanctions should apply in individual cases.
ExxonMobil declined to comment on its purchase of petroleum products that originate from Novoshakhtinsky, but told Schemes in a statement that it continues to comply with all applicable sanctions.
“It is the policy of ExxonMobil and its affiliates to comply with all governmental laws, rules, and regulations applicable to its operations within and outside the United States and to conduct those operations to the highest ethical standards. ExxonMobil also expects its suppliers, vendors, and contractors to comply with laws, rules, and regulations applicable to their businesses," it told Schemes.