On the anniversary of the Panama Papers, human rights campaigner Global Witness put out a press release linking one of the largest privatisations in history—the sale of almost 20 percent of Russian oil giant Rosneft to a consortium led by FTSE 100 company Glencore—with allegations of Russian tampering in the 2016 U.S. election, Cayman Island shell companies, and the fact that Glencore companies have been reported to appear over 660 times in the Panama Papers themselves. That 660 is probably not a record, but an indication that the company—in common with so many others—uses shell companies to conduct its transactions. The fact that something is common practice and legal, however, does not make it best practice.
So, let’s start with the Rosneft transaction. A source with knowledge of the deal said that Glencore had disclosed as much about the deal as was possible, given the involvement of a number of Russian banks in the financing. That disclosure was, however, incomplete because the Russian banks did not want their involvement made public. But even the disclosures made do not begin to hint at the complexity of the structures used to complete the deal, and it would be impossible even to summarise them here. Put simply, the acquisition was made through a nesting, like a Russian doll, of Singapore-registered shell companies, all named QHG [something] LLP, into which funds were placed by the primary investors—Glencore, the Qatar Investment Authority, incidentally Glencore’s largest shareholder, and Italian bank Intesa, among others—then the Rosneft shares were purchased via those vehicles and held by them.
