Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H" or the "Firm") was engaged on August 14, 2023, by Dunmore Energy Holdings Ltd. ("DEH" or the "Company") to conduct an internal investigation into five fuel oil sale transactions executed between DEH's wholly owned subsidiary, Dunmore Trading International Ltd. ("DTI"), and Caspian Star Commodities DMCC ("Caspian Star"), a Dubai-registered commodities trading firm.

II. Investigation Methodology A. Document Review The C&H investigation team conducted a comprehensive review of documents produced by DTI and DEH in connection with this engagement. Documents were collected from DTI's London offices, DEH's Houston offices, and electronic repositories maintained by DTI's compliance and trading functions. The review encompassed ten categories of documents, which are enumerated below:

1. Counterparty Onboarding File for Caspian Star (July 2021). This file included the completed KYC (Know Your Customer) questionnaire submitted by Caspian Star; corporate registry extracts from the Dubai Multi Commodities Centre ("DMCC") Free Zone Authority reflecting Caspian Star's registered address at Unit 4412, Jumeirah Business Centre 1, Cluster G, Jumeirah Lakes Towers, Dubai, UAE; a certified copy of Caspian S

2. Five Sale Contracts. ISDA-form trade confirmations for each of the five subject transactions, each referencing the sale of LSFO 380 CST grade with delivery terms specified as FOB Fujairah, UAE. Each confirmation was executed by authorized signatories of both DTI and Caspian Star and contained standard representations and warranties regarding sanctions compliance, including representations by Caspian Star that it w

3. Five Commercial Invoices. Invoice numbers CS-DTI-0091, CS-DTI-0094, CS-DTI-0101, CS-DTI-0108, and CS-DTI-0115, corresponding to the five subject transactions. Each invoice set forth the volume of LSFO delivered (in metric tons), the agreed price, payment terms (net 30 days, wire transfer in USD), and banking details for Caspian Star's account at Emirates Gulf Commercial Bank, Dubai.

4. Wire Transfer Records. Records obtained from Ridgeline National Bank, N.A. (700 Louisiana Street, Suite 4800, Houston, TX 77002) documenting five USD wire transfers associated with the five subject transactions. The wire transfer records reflect that Caspian Star's payments were routed from its account at Emirates Gulf Commercial Bank, Dubai, through the U.S. correspondent banking system via Ridgeline National Ban

5. DTI's Global Sanctions Compliance Policy (Version 3.2, effective January 1, 2022). This document sets forth DTI's internal policies and procedures governing sanctions compliance, including counterparty screening requirements, re-screening frequency (annual), escalation procedures for potential sanctions hits, and recordkeeping obligations. The policy designates the DEH Chief Compliance Officer as the senior office

6. HCS ScreenPro Re-Screening Logs for Caspian Star. Automated system logs documenting the re-screening of Caspian Star conducted in October 2022. The logs confirm that the screening was performed against the OFAC SDN List, the EU Consolidated Sanctions List, and the UK Office of Financial Sanctions Implementation ("OFSI") list. No matches were returned. The logs also reflect the date and time of the screening, the v

7. Borwick & Thatcher LLP FY 2022 Management Letter. A management letter dated January 30, 2023, prepared by Borwick & Thatcher LLP (1 More London Place, London SE1 2AF, UK), DEH's external auditors, and addressed to the DEH Board of Directors. The letter identified Caspian Star among a group of counterparties flagged as "high-risk" based on credit risk criteria — specifically, the absence of audited financial statem

8. DTI Internal Email Correspondence (March–June 2023). A corpus of internal email communications relating to the enhanced compliance review initiated by Derek Huang on March 6, 2023, in response to the Borwick & Thatcher audit flag. This correspondence documents the chronology of the enhanced review, including assignments to compliance staff, follow-up requests for updated KYC information from Caspian Star, and inte

9. Derek Huang Email of June 2, 2023. An email from Derek Huang, CCO of DEH, to Marcus Whitfield, SVP & General Counsel of DEH, reporting the discovery that OFAC's SDN List supplemental information had been updated on May 12, 2023, to expressly identify Caspian Star Commodities DMCC as an entity owned or controlled by Timur R. Kadyrov. The email recommended immediate blocking of Caspian Star as a counterparty and eng

10. DTI's Caspian Star Account Block Memorandum (June 5, 2023). An internal memorandum documenting DTI's decision to block Caspian Star as a counterparty and freeze all pending transactions. The memorandum was issued by the DTI compliance function and approved by Gregor Albrecht, Managing Director of DTI, within three business days of Huang's discovery. In total, the C&H investigation team reviewed approximately 1,45

III. Factual Findings The factual narrative set forth below is based on the documents and interviews described in Section II above. Where our findings are based on documentary evidence, we have noted the relevant source documents. Where our findings are based on interview testimony, we have noted the relevant interviewee. All factual statements reflect our assessment of the most likely facts based on the evidence ava

IV. Legal Analysis A. Applicable Sanctions Framework The five subject transactions must be analyzed under the sanctions framework established by Executive Order 14024, its implementing regulations, and the International Emergency Economic Powers Act ("IEEPA"). Executive Order 14024 was signed by the President on April 15, 2021, and is titled "Blocking Property With Respect To Specified Harmful Foreign Activities of t

Section 1(a)(i) of E.O. 14024 provides that all property and interests in property of any designated person that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. OFAC has promulgated implementing regulations under E

V. Mitigating Factors The following mitigating factors are present in this matter and should weigh significantly in OFAC's assessment of the appropriate enforcement response. We present these factors in approximate order of their weight under OFAC's Enforcement Guidelines:

1. Voluntary Self-Disclosure. The Company intends to file a voluntary self-disclosure ("VSD") with OFAC before OFAC independently discovers or initiates an investigation into the violations. Under the Enforcement Guidelines, voluntary self-disclosure is explicitly identified as the single most significant mitigating factor in OFAC's enforcement calculus. OFAC has consistently rewarded voluntary self-disclosure with s

2. No Actual Knowledge. DTI had no actual knowledge of Kadyrov's beneficial ownership of Caspian Star at the time any of the five transactions were executed. DTI's counterparty records identified Farid Mammadov as the sole owner and managing director of Caspian Star, and no information available to DTI during the transaction period contradicted this representation. The beneficial ownership link between Kadyrov and Ca

3. Inadvertent Conduct. The five subject transactions were routine physical commodity trades executed in the ordinary course of DTI's trading operations. The transactions involved the sale of LSFO 380 CST grade — a standard commodity in global energy markets — at market prices, on standard commercial terms, and through normal delivery channels at Fujairah, UAE. There is no indication that any of the transactions were

4. Prompt Remediation. Upon discovering the SDN link on June 2, 2023, DTI acted with commendable speed. Derek Huang reported the finding to Marcus Whitfield, SVP & General Counsel, on the same day. DTI blocked Caspian Star as a counterparty and froze all pending transactions (though none were then pending) within three business days, on June 5, 2023. The Company engaged external counsel (Calderwood & Harkness LLP) pr

5. No Direct Benefit to the SDN. All five payments were made to Caspian Star's corporate account at Emirates Gulf Commercial Bank, Dubai. The investigation has uncovered no evidence that Kadyrov personally received any funds directly from any of the five transactions. While we acknowledge that, under OFAC's framework, the identity of the ultimate recipient is not a precondition for finding a violation, the absence of

6. Existing Compliance Program. DEH maintained a sanctions compliance program prior to the discovery of the violations, which included the following elements: (a) an automated screening platform (HCS ScreenPro) operated by a recognized compliance technology provider (Harborview Compliance Solutions Inc.); (b) a policy requiring annual re-screening of all active counterparties (DTI's Global Sanctions Compliance Policy

7. Cooperation. The Company has committed to full cooperation with OFAC throughout the VSD process and any subsequent enforcement proceedings. This commitment includes the voluntary production of all relevant documents, timely and complete responses to any supplemental information requests from OFAC, and the availability of Company personnel for interviews or other information-gathering activities as may be requested

VI. Root Cause Summary Our investigation has identified three root causes that, individually and in combination, contributed to the failure to detect the SDN link between Caspian Star and Kadyrov before or during the period of the subject transactions:

1. Timing Gap. DTI's initial counterparty onboarding screening of Caspian Star was conducted in July 2021, approximately eight months before OFAC's designation of Kadyrov on March 18, 2022. At the time of onboarding, Kadyrov was not designated as an SDN, and no sanctions screening — regardless of its sophistication or comprehensiveness — would have identified a Kadyrov-related risk. The timing gap between the onboard

2. Screening Platform Limitations. HCS ScreenPro's beneficial ownership module did not generate an alert for Caspian Star during the October 2022 re-screening cycle, or at any other time prior to OFAC's May 12, 2023 SDN supplemental update. This failure was attributable to gaps in the underlying data feed from public corporate registries and third-party data aggregators. The HCS ScreenPro platform relied on corporate

3. Delayed Re-Screening and Procedural Gaps. The annual re-screening of Caspian Star, which was due by July 8, 2022 under DTI's Global Sanctions Compliance Policy (Version 3.2), was delayed until October 2022 due to staffing shortages on DTI's London-based compliance team. While the delay itself did not alter the outcome — the October 2022 re-screening also returned no hits, for the reasons discussed above — it repre

VII. Recommendation Based on the findings of this investigation and the legal analysis set forth above, we make the following recommendations:

1. File a Voluntary Self-Disclosure with OFAC. We recommend that the Company proceed with filing a VSD with OFAC as soon as practicable, targeting a filing date of no later than October 15, 2023. The VSD should be prepared in accordance with OFAC's published guidance on voluntary self-disclosures, including the requirements set forth in 31 C.F.R. Part 501, Appendix A. The VSD should provide a comprehensive narrative

2. Implement Remedial Compliance Measures. We recommend that the Company implement the remedial compliance measures to be outlined in a separate Compliance Enhancement Memorandum, which will be provided under separate cover. As noted above, we anticipate that the remedial measures will address the root causes identified in Section VI, including enhanced re-screening frequency, improved beneficial ownership verificati

3. Preserve All Relevant Documents. We recommend that the Company implement and maintain a document preservation protocol for all documents related to the Caspian Star counterparty relationship, including all screening records, wire transfer records, KYC documentation, internal communications, compliance reports, and any other documents relevant to the five subject transactions or the subsequent discovery and remedia

4. Coordinate with Grandview Capital Partners. DEH's parent context requires careful consideration of any reputational or portfolio-level implications. Grandview Capital Partners LLC (600 Lexington Avenue, Suite 2200, New York, NY 10022) holds 68.4% of DEH's equity via Grandview Energy Fund IV, LP. Managing Partner Helena Reeves should be briefed on the findings of this investigation and the Company's intended course