ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 450 Lexington Avenue, 38th Floor New York, NY 10017
INTERNAL INVESTIGATIVE MEMORANDUM
Matter: Dunmore Energy Holdings Ltd. — DOJ Sanctions & Export Controls Inquiry
Matter No.: 1016-00009
Date: October 10, 2022
To:
Victoria Chambers, Responsible Partner (Washington, D.C.) Jasmine Thornton, Lead Associate (Washington, D.C.) Conrad Reeves, Senior Counsel, Export Controls & Sanctions (Washington, D.C.)
From: Liam Donahue, Associate, White Collar & Investigations (New York)
Re: Assessment of Tobias Engel's Role — Dunmore Renewables GmbH Transaction with Caspian Logistik GmbH
CONFIDENTIALITY NOTICE: This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of litigation and in connection with the internal investigation being conducted at the direction of counsel. It should not be disclosed to any person outside of counsel without prior authorization from Victoria Chambers. This memorandum reflects preliminary assessments and conclusions based on the evidence reviewed to date. It does not constitute legal advice to any person other than the client, Dunmore Energy Holdings Ltd., and its subsidiaries.
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I. Executive Summary
This memorandum analyzes a single suspect transaction between Dunmore Renewables GmbH ("Dunmore Renewables"), the Hamburg-based renewable energy subsidiary of Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore"), and Caspian Logistik GmbH ("Caspian Logistik"), a Hamburg-registered logistics company under investigation for potential export control violations involving dual-use items. The purpose of this memorandum is to assess the role and knowledge of Tobias Engel, Managing Director of Dunmore Renewables, in connection with this transaction and to evaluate the implications for the broader internal investigation.
The transaction at issue involves the procurement and shipment of specialized oilfield-adjacent equipment — specifically, high-pressure valve assemblies and pump components — ordered by Dunmore Renewables ostensibly for a geothermal energy project in the Upper Rhine region of Baden-Württemberg, Germany. The equipment was routed through Caspian Logistik GmbH for logistics and freight forwarding purposes. Approximately $1.1 million of the $1.8 million in equipment procured under this transaction was diverted by Caspian Logistik from the intended project site and shipped instead to a freight consolidation point in Riga, Latvia, and onward to Moscow, Russia, for ultimate delivery to end users that may include Volkhov Industrial Group JSC ("Volkhov" or "VIG")-connected entities. The remaining approximately $700,000 in equipment was delivered to the geothermal project site as originally intended.
The total transaction value was approximately $1.8 million (€1.65 million at prevailing exchange rates at the time of procurement). This represents a discrete subset of the broader $12.4 million in oilfield equipment exports facilitated via Caspian Logistik that are at issue in this investigation. While the dollar amount of the diverted portion ($1.1 million) is modest relative to the aggregate exposure, the transaction is significant because it involves a Dunmore subsidiary operating outside the DTI trading desk structure that is the primary focus of the investigation.
Based on the totality of evidence reviewed to date — including Bates-stamped documents from the Nexagen Analytics Technology-Assisted Review ("TAR") document review platform (Project No. NX-DEH-2204), Tobias Engel's witness interview conducted on September 8, 2022 (Round 2), and the forensic tracing of associated payment flows performed by Ridgeline Advisory Group LLC (Engagement No. RAG-2022-0319) — Tobias Engel is assessed to have been tangentially involved in the transaction. The evidence reviewed to date indicates that Engel approved the purchase order and engaged Caspian Logistik as a logistics provider in the ordinary course of his duties as Managing Director of Dunmore Renewables, but that he did not have direct knowledge that the equipment would be diverted to sanctioned end users in Russia. There is no documentary evidence, and no testimony from Engel or other witnesses, that Engel was aware of or authorized the diversion.
Engel's involvement nevertheless raises significant questions about Dunmore's decentralized compliance architecture and the absence of adequate export control screening at the subsidiary level. Dunmore Renewables maintained its own local procurement and vendor management function, with limited integration into the centralized compliance infrastructure operated at DEH's Houston headquarters. No sanctions screening was conducted on Caspian Logistik, and no export control classification review was performed on the equipment at the time of procurement. These systemic compliance deficiencies are discussed in greater detail in Section VII below and are consistent with the broader findings in the Assessment of Dunmore's Pre-Existing Sanctions Compliance Program memorandum, which is forthcoming.
The recommendations set forth in this memorandum are that Engel should not be considered a subject or target of the investigation, that the Caspian Logistik framework agreement should be terminated immediately, and that the transaction should be disclosed to DOJ and OFAC as part of the ongoing voluntary self-disclosure process. This memorandum also identifies the Hargrave-to-Engel referral of Caspian Logistik as additional evidence relevant to the assessment of Derek Hargrave's culpability.
II. Background
A. Dunmore Renewables GmbH — Entity Profile
Dunmore Renewables GmbH is a Gesellschaft mit beschränkter Haftung ("GmbH") incorporated under the laws of the Federal Republic of Germany. Its registered office is located at Überseeallee 12, 20457 Hamburg, Germany, in the HafenCity district of Hamburg. The entity was formed in 2018 as a wholly-owned subsidiary of Dunmore Energy Holdings Ltd., a Cayman Islands exempted company (Cayman Company Registration No. MC-334821) that serves as the ultimate holding company for the Dunmore group of companies.
Tobias Engel, a German national based in Hamburg, has served as Managing Director (Geschäftsführer) of Dunmore Renewables GmbH since the subsidiary's formation. Engel reports to Sandra Whitfield, Chief Financial Officer of DEH, for financial reporting and budgetary matters, and to Callum Renshaw, Chief Executive Officer of DEH, on strategic matters. As Managing Director, Engel has procurement authority for contracts and purchase orders within approved project budgets and is authorized to bind Dunmore Renewables to commercial agreements in the ordinary course of business.
The principal business of Dunmore Renewables is the development and operation of renewable energy projects, with a focus on onshore wind, solar, and geothermal energy generation. The subsidiary's project portfolio is concentrated primarily in Western and Central Europe, with a smaller but growing presence in West Africa. In fiscal year 2021, Dunmore Renewables contributed approximately $320 million in revenue to DEH's total consolidated revenue of approximately $4.87 billion. While the renewable energy segment represents a relatively small share of DEH's overall revenue — the group's principal revenue drivers being upstream oil and gas operations and the DTI trading platform — the subsidiary has been positioned as a growth vehicle and has received significant capital allocation in recent years.
Critically, Dunmore Renewables maintained its own local procurement and vendor management function in Hamburg, with limited integration into the centralized compliance infrastructure at DEH's operational headquarters at 1200 McKinney Street, Suite 3400, Houston, Texas 77010. As described more fully in Section VII below, the Hamburg subsidiary did not have a standalone sanctions screening capability or export control classification process. Compliance oversight of the subsidiary's procurement and commercial activities was nominally the responsibility of the centralized compliance function in Houston, led by then-Chief Compliance Officer Gerald Fisk, but in practice, the Houston compliance team provided minimal oversight of the Hamburg subsidiary's day-to-day procurement and logistics engagements.
B. Caspian Logistik GmbH — Entity Profile
Caspian Logistik GmbH is a Gesellschaft mit beschränkter Haftung registered in Hamburg, Germany, with its registered office at Mönckebergstraße 22, 20095 Hamburg, Germany. The company is managed by Klaus Weidemann, a German national, who serves as sole Managing Director. Caspian Logistik's principal business is freight forwarding, logistics management, and customs brokerage services, with a specialization in energy sector equipment shipments to Central Asia, the Middle East, and the Russia/CIS region. The company operates warehouse and consolidation facilities at its Mönckebergstraße address and maintains relationships with freight carriers and customs agents across multiple jurisdictions.
Caspian Logistik is currently under investigation by German federal authorities (separately from the Dunmore investigation) for potential violations of German and EU export control regulations involving the unauthorized export of dual-use items classified under Category 2 of the EU Dual-Use Regulation. The German investigation, of which Calderwood & Harkness became aware through open-source reporting in approximately April 2022, focuses on shipments of industrial equipment and components to end users in Russia and the CIS region.
In the context of the Dunmore internal investigation, Caspian Logistik GmbH has been identified as a logistics intermediary used by Dunmore Trading International Ltd. ("DTI"), the Dubai-based trading arm of the Dunmore group, in connection with approximately $12.4 million in oilfield equipment exports to end users in Russia between August 2020 and January 2022. Those shipments, which originated from DTI's Dubai trading desk under the direction of then-President Derek Hargrave and with the involvement of Yves Leclerc (Director of Logistics & Shipping, DTI), were routed through Caspian Logistik's Hamburg facilities and onward to Russian end users, including entities connected to the Volkhov Industrial Group. The DTI-originated shipments are analyzed in detail in the Caspian Logistik Export Shipment Analysis memorandum dated July 20, 2022 (prepared by the undersigned).
The present memorandum addresses only the Dunmore Renewables-specific transaction with Caspian Logistik, which is distinct from the DTI-originated transactions in several respects: it originated from the Hamburg renewable energy subsidiary rather than the Dubai trading desk; the equipment was ostensibly procured for a legitimate geothermal energy project; and the diversion of equipment appears to have been effectuated by Caspian Logistik without the knowledge of Dunmore Renewables personnel. However, as discussed in Section VI below, the connection between the DTI shipments and the Dunmore Renewables transaction — specifically, Derek Hargrave's referral of Caspian Logistik to Tobias Engel — raises important questions about whether the two sets of transactions are more closely linked than they appear on their face.
C. Volkhov Industrial Group JSC — Relevance
Volkhov Industrial Group JSC (Chairman: Arkady Volkhov) is a Russian industrial conglomerate headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russia. Volkhov Industrial Group operates across multiple sectors of the Russian economy, including oil and gas services, industrial manufacturing, and infrastructure development. The company has extensive ties to the Russian state and to senior Russian government officials, as documented in publicly available reporting by OFAC and the European Commission.
Volkhov Industrial Group was designated under OFAC Directive 2 — sectoral sanctions on the energy sector of the Russian Federation, pursuant to Executive Order 13662 — on November 15, 2019. Under Directive 2, U.S. persons were prohibited from providing, exporting, or reexporting goods, services, or technology in support of certain categories of projects in Russia's energy sector involving Volkhov or entities in which Volkhov held a fifty percent or greater ownership interest. Following the escalation of sanctions on the Russian Federation in 2022, Volkhov Industrial Group was subsequently added to the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") under full blocking sanctions on April 6, 2022, pursuant to Executive Order 14024. As a result, all property and interests in property of Volkhov that are or come within the United States or the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from dealing with Volkhov.
As detailed in prior investigation memoranda, Caspian Logistik GmbH has been identified as a logistics intermediary used to route equipment shipments to Volkhov-connected end users in Russia, effectively circumventing export controls. The specific connection relevant to this memorandum is the identification by Ridgeline Advisory Group of "Volga Energy Services LLC" — the entity listed as the consignee on the end-user certificates for the diverted equipment — as an entity sharing a registered address and overlapping signatories with known Volkhov subsidiaries. This connection is discussed in detail in Section IV.C below.
It is important to note that the connection between Caspian Logistik and Volkhov-controlled entities was not apparent on the face of the transaction documents reviewed by Dunmore Renewables personnel. The end-user certificates listing Volga Energy Services LLC were prepared and filed by Caspian Logistik personnel, and there is no evidence that Dunmore Renewables personnel had any interaction with Volga Energy Services LLC or any Volkhov-affiliated entity.
D. The Transaction at Issue
In approximately March 2021, Dunmore Renewables initiated the procurement of specialized high-pressure valve assemblies and pump components for its Upper Rhine geothermal pilot project, a geothermal energy development located in Baden-Württemberg, Germany. The Upper Rhine project is a legitimate, documented geothermal energy initiative that had been approved by DEH's investment committee in late 2020 and was under active development at the time of the procurement. The high-pressure valve assemblies and pump components were specified by the project engineering team as necessary for the geothermal well completion and fluid handling systems.
On March 15, 2021, Dunmore Renewables issued Purchase Order DR-PO-2021-0147, approved by Tobias Engel in his capacity as Managing Director, for equipment valued at approximately €1.65 million (approximately $1.8 million at prevailing exchange rates). The equipment was sourced from a European manufacturer of industrial components — the documentation reviewed to date indicates that the components were of German origin, manufactured by a well-known German industrial supplier whose identity is not relevant to the Engel assessment and is addressed separately in the export control classification analysis.
For logistics and freight forwarding services, Dunmore Renewables engaged Caspian Logistik GmbH under a pre-existing framework logistics agreement between Dunmore Renewables and Caspian Logistik, Agreement No. DR-CL-2020-003, dated January 2020. This framework agreement had been executed by Engel as Managing Director of Dunmore Renewables. Engel has stated, and the documentary record confirms, that the engagement of Caspian Logistik was based on a referral from DTI's Dubai office — specifically, Derek Hargrave, then-President of DTI, recommended Caspian Logistik to Engel as a reliable logistics provider with extensive experience in energy sector equipment freight forwarding and customs brokerage. The circumstances of this referral are discussed in greater detail in Section VI below.
The equipment procured under Purchase Order DR-PO-2021-0147 was initially received at a Caspian Logistik warehouse facility in Hamburg (located at the Mönckebergstraße 22 address) in approximately April 2021. The equipment was received in full at the Hamburg warehouse, consistent with the purchase order specifications.
Shipping records reviewed in the document collection — specifically, documents bearing Bates stamps DEH-DOJ-194327 through DEH-DOJ-194341 — indicate that the shipment was subsequently divided into two parts. Approximately $700,000 in equipment was shipped from the Caspian Logistik warehouse to the Upper Rhine geothermal project site in Baden-Württemberg, Germany, consistent with the original procurement purpose. This portion of the shipment was received at the project site and appears to have been incorporated into the geothermal well completion as intended.
However, the remaining approximately $1.1 million in equipment was not delivered to the Upper Rhine project site. Instead, shipping records and bills of lading indicate that this portion of the equipment was diverted — shipped from the Caspian Logistik warehouse in Hamburg to a freight consolidation point in Riga, Latvia, and from there onward to Moscow, Russia. The end-user certificates on file at Caspian Logistik for the diverted portion listed "Volga Energy Services LLC" (a previously unidentified entity) as the consignee in Moscow. As detailed in Section IV.C below, Ridgeline Advisory Group's forensic analysis determined that Volga Energy Services LLC shares a registered address and signatory with a known Volkhov Industrial Group subsidiary, strongly suggesting that the diverted equipment ultimately reached Volkhov-connected end users.
Payment for the full $1.8 million in equipment was made by Dunmore Renewables directly to the European equipment manufacturer. Caspian Logistik was paid a separate logistics fee of approximately €48,000 under the framework logistics agreement for its freight forwarding and warehousing services. The payment arrangements are analyzed in detail in Section IV.D below.
III. Tobias Engel — Role and Knowledge Assessment
A. Professional Background
Tobias Engel is a German national, born in 1975, and has been resident in Hamburg for the duration of his tenure at Dunmore Renewables. He has served as Managing Director (Geschäftsführer) of Dunmore Renewables GmbH since the subsidiary's formation in 2018. Engel was recruited to lead the newly established renewable energy subsidiary by DEH's executive leadership, including CEO Callum Renshaw and CFO Sandra Whitfield, based on his extensive experience in European renewable energy project development.
Prior to joining Dunmore, Engel held positions of increasing responsibility in the renewable energy sector at several European energy companies. His career has been focused on the commercial and operational aspects of renewable energy development — project origination, engineering procurement and construction ("EPC") management, and operational oversight of wind, solar, and geothermal assets. He does not have a background in oil and gas trading, oilfield equipment procurement, or export controls and sanctions compliance. His professional expertise lies in the renewable energy sector rather than in the upstream hydrocarbon operations that constitute the majority of DEH's business.
Within the Dunmore corporate structure, Engel reports to Sandra Whitfield, CFO of DEH, for financial reporting, budgetary, and accounting matters, and to Callum Renshaw, CEO of DEH, on strategic matters including project approvals and capital allocation. Engel does not report to or have a direct working relationship with Derek Hargrave (former President, DTI) or with the DTI trading desk in Dubai, although the two were in occasional contact regarding logistics and operational matters, as evidenced by the Caspian Logistik referral discussed below.
A review of Dunmore's internal human resources and compliance records confirms that Engel has no prior compliance violations, disciplinary actions, or performance-related warnings within the Dunmore organization. He has not been the subject of any prior investigation by regulatory authorities or by Dunmore's internal audit or compliance functions.
B. Engel's Role in the Transaction
Engel's role in the transaction at issue was limited to the following documented actions:
First, Engel approved Purchase Order DR-PO-2021-0147, dated March 15, 2021, as part of his standard procurement authority for the Upper Rhine geothermal project. The approval of the purchase order was within the scope of Engel's authority as Managing Director and was consistent with the approved project budget for the Upper Rhine pilot. The purchase order was a routine procurement action in the context of Dunmore Renewables' project development activities.
Second, Engel authorized the engagement of Caspian Logistik GmbH as the logistics and freight forwarding provider for the equipment shipment. This engagement was made under the existing framework logistics agreement (Agreement No. DR-CL-2020-003), which Engel had executed in January 2020. Engel has stated that he selected Caspian Logistik based on the recommendation from Derek Hargrave at DTI and that he viewed Caspian Logistik as a routine, competent logistics provider with experience in energy sector equipment shipments within Europe and to international destinations.
Third, documentary evidence in the form of email correspondence — specifically, emails bearing Bates stamps DEH-DOJ-201456 through DEH-DOJ-201462 — shows that Engel's interaction with Klaus Weidemann, Managing Director of Caspian Logistik, was limited to standard logistics coordination. The emails in question, dated between March and April 2021, relate to the confirmation of shipment dates for the equipment, acknowledgment of warehouse receipt at the Caspian Logistik facility in Hamburg, and scheduling of delivery to the Upper Rhine project site. The tone and substance of these communications are entirely consistent with routine commercial logistics coordination. There is no discussion of end-user certifications, export control classifications, destination countries outside of Germany, or any other topic that would suggest awareness of or involvement in the diversion of equipment.
Significantly, there is no documentary evidence in the reviewed corpus — which includes the full TAR-reviewed document collection produced to the investigation team under the Nexagen Analytics review platform — that Engel was aware of, authorized, or participated in the decision to divert approximately $1.1 million in equipment from the Upper Rhine project to Riga, Latvia, and onward to Moscow, Russia. Engel did not review, approve, or sign the end-user certificates for the diverted shipment. Those certificates were prepared and filed entirely by Caspian Logistik personnel, including Klaus Weidemann, without the involvement of Dunmore Renewables.
Furthermore, the investigation team has reviewed Engel's communications with other Dunmore personnel — including email, instant messaging, and calendar records — for the period from January 2021 through June 2022, and has identified no communications suggesting that Engel was aware of the connection between Caspian Logistik and Volkhov Industrial Group, or that he had any contact with Volkhov-connected entities or individuals.
C. Interview of Tobias Engel (September 8, 2022 — Round 2)
Interview Circumstances. The second interview of Tobias Engel was conducted on September 8, 2022, via secure videoconference. Engel participated from his office in Hamburg, Germany. The interview was conducted by Liam Donahue (Associate, Calderwood & Harkness LLP, New York office) and Amara Osei (Associate, Calderwood & Harkness LLP, London office, 30 St Mary Axe, 12th Floor, London EC3A 8BF). The interview lasted approximately two hours and fifteen minutes. A contemporaneous memorandum of the interview was prepared by Donahue immediately following the session.
At the outset of the interview, Donahue administered the standard Upjohn corporate Miranda warning to Engel, consistent with the Witness Interview Protocol dated April 18, 2022 (prepared by Victoria Chambers). Engel was informed that: (1) Calderwood & Harkness represents Dunmore Energy Holdings Ltd. and its subsidiaries, not Engel individually; (2) the purpose of the interview was to gather facts in connection with the internal investigation; (3) the conversation was protected by the attorney-client privilege, which belongs to the company, not to Engel; (4) the company may choose to waive the privilege and disclose the substance of the interview to third parties, including government regulators; and (5) Engel was free to retain personal counsel at his own expense. Engel acknowledged his understanding of the admonition and consented to proceed with the interview. No personal counsel was present on Engel's behalf. Engel appeared voluntarily as a current employee of Dunmore Renewables GmbH.
Key Statements. The following is a summary of the key statements made by Engel during the September 8, 2022 interview. These statements are presented in summarized form based on the contemporaneous interview memorandum and are not verbatim quotations.
Selection of Caspian Logistik. Engel stated that he selected Caspian Logistik GmbH as a logistics provider based on a recommendation from Derek Hargrave. According to Engel, in late 2019 or early 2020, Hargrave mentioned during a telephone call that Caspian Logistik was a logistics company based in Hamburg that DTI had used for equipment shipments and that Hargrave considered reliable. Engel stated that because Dunmore Renewables was a relatively new subsidiary at the time and did not have established logistics relationships for equipment shipments, the referral from a senior Dunmore executive seemed like a practical and efficient way to identify a competent provider. Engel stated that he did not conduct independent due diligence on Caspian Logistik beyond reviewing its basic corporate registration information and confirming that it was a going concern in Hamburg. Engel executed the framework logistics agreement (DR-CL-2020-003) in January 2020 and subsequently engaged Caspian Logistik for several routine logistics tasks prior to the transaction at issue.
Awareness of Caspian Logistik's Activities on Behalf of DTI. Engel stated that he was unaware that Caspian Logistik was being used by DTI's Dubai trading desk to route oilfield equipment shipments to end users in Russia. He stated that he understood Caspian Logistik to be a general-purpose logistics provider and was not aware of the nature or scope of DTI's transactions with the same company. Engel stated that he had no involvement in DTI's trading operations and no visibility into DTI's procurement, logistics, or customer relationships.
Contacts with Sanctioned or Suspect Entities. Engel confirmed that he had no communications — whether by email, telephone, in person, or through any other medium — with Sergei Volkov of Petronova Trading FZE, Arkady Volkhov of Volkhov Industrial Group, or any representative of Volga Energy Services LLC. Engel stated that he had never heard of Volga Energy Services LLC prior to the investigation team raising it in the interview. He also confirmed that he had no interactions with any entity that he understood to be Russian, or any entity that he understood to be subject to U.S. or EU sanctions.
Knowledge of Equipment Diversion. Engel stated unequivocally that he became aware of the diversion of equipment from the Upper Rhine project only after the Calderwood & Harkness investigation team raised the issue during the September 8, 2022 interview. He stated that he had assumed, based on the delivery confirmations he received from his project engineering team for the portion of the equipment that arrived at the project site, that the full order had been delivered. When asked why he did not notice that only approximately $700,000 of the $1.8 million in equipment had been received at the project site, Engel explained that the procurement involved multiple component types and that not all components were needed immediately at the site. He stated that he believed some components had been held in storage at the Caspian Logistik warehouse for staged delivery and that he had not conducted a reconciliation of the full order against actual deliveries. Engel acknowledged that this was a lapse in his oversight responsibilities but maintained that it was attributable to the fast-paced nature of the project development rather than any intent to facilitate or conceal a diversion.
Compliance Infrastructure at Dunmore Renewables. Engel explained that Dunmore Renewables did not have a standalone sanctions screening or export control classification process at the subsidiary level. He stated that his understanding was that compliance matters — including sanctions screening of counterparties and export control classification of equipment — were handled by the centralized compliance function at DEH's Houston headquarters under the direction of Gerald Fisk, then-Chief Compliance Officer. Engel stated that, in practice, the Houston compliance team provided minimal oversight of the Hamburg subsidiary's procurement and logistics activities. He recalled receiving periodic general compliance training materials from Houston but could not recall any specific training addressing export controls, sanctions screening of logistics providers, or end-user verification procedures. Engel acknowledged that the absence of subsidiary-level compliance controls was a deficiency and stated that he supported efforts to strengthen compliance at the subsidiary level going forward.
Reaction to Investigation Findings. Engel expressed surprise and concern upon learning of the Hargrave-Caspian Logistik connection and the broader pattern of equipment diversions facilitated through Caspian Logistik. He stated that he did not know the details of DTI's separate equipment export transactions through the same logistics provider and that the referral from Hargrave had seemed, at the time, to be an unremarkable recommendation of a competent service provider.
Credibility Assessment. Engel appeared forthcoming and credible throughout the September 8, 2022 interview. His demeanor was cooperative and responsive. He answered questions directly and did not appear evasive or rehearsed. His account of events is internally consistent and is consistent with the documentary record, which shows limited engagement with Caspian Logistik beyond routine logistics coordination. No contradictory evidence has been identified in the reviewed document corpus. In particular, the email correspondence between Engel and Weidemann (Bates DEH-DOJ-201456 through DEH-DOJ-201462) corroborates Engel's characterization of the relationship as routine and logistically focused. No communications between Engel and Hargrave discussing Caspian Logistik's role in routing equipment to Russia have been identified, and no communications between Engel and any sanctioned entity or individual have been identified.
It should be noted that this credibility assessment is based on the evidence available to date. If additional evidence is identified in subsequent phases of the document review or through other investigative channels, the assessment may need to be revised.
D. Assessment of Engel's Knowledge and Culpability
Based on the totality of evidence reviewed to date — including the documentary record, payment records, electronic communications, and Engel's statements in his September 8, 2022 interview — the investigation team assesses that Tobias Engel did not have actual knowledge that the equipment procured under Purchase Order DR-PO-2021-0147 would be diverted from the Upper Rhine geothermal project to sanctioned Russian end users.
Engel's involvement in the transaction was tangential. He approved a legitimate procurement for a documented geothermal energy project within his established procurement authority. He engaged a logistics provider that had been recommended by a senior Dunmore executive — Derek Hargrave, then-President of DTI — and that had been performing logistics services for Dunmore Renewables under a pre-existing framework agreement for approximately one year prior to the transaction. Engel's interactions with Caspian Logistik were limited to routine logistics coordination, and he had no involvement in the preparation or filing of the end-user certificates for the diverted equipment.
However, Engel's conduct does reflect deficiencies in his exercise of managerial oversight. Specifically:
(a) Engel did not conduct independent due diligence on Caspian Logistik GmbH at the time of the framework agreement or at the time of the transaction, beyond reviewing basic corporate registration information.
(b) Engel did not verify end-user certifications or delivery confirmations for the full order. He did not reconcile the quantity and value of equipment received at the project site against the total purchase order value, and he did not inquire about the disposition of the approximately $1.1 million in equipment that was not delivered to the project site.
(c) Engel did not request or obtain export control classification guidance from the Houston compliance function or any other source for the equipment at the time of procurement.
These failures are significant but are properly characterized as failures of institutional controls rather than evidence of individual wrongdoing. The absence of subsidiary-level export control screening protocols, the lack of integration between Dunmore Renewables' procurement function and the centralized compliance infrastructure, and the absence of sanctions compliance representations or audit rights in the framework logistics agreement all contributed to the environment in which the equipment diversion could occur without detection by Dunmore Renewables personnel. These systemic compliance deficiencies are discussed in greater detail in Section VII below and are the subject of the broader compliance assessment being conducted by Conrad Reeves and Jasmine Thornton.
Recommendation: Engel should not be considered a subject or target of the investigation. His role does not evidence willful misconduct or conscious avoidance of facts suggesting potential sanctions or export control violations. His conduct is better characterized as a failure of institutional controls — the kind of deficiency that, while it may be relevant to the corporate entity's liability and the adequacy of Dunmore's compliance program, does not rise to the level of individual culpability that would warrant further investigative action or potential referral. Engel should continue to be treated as a cooperative witness, and he should be reminded of his ongoing litigation hold obligations and his duty to preserve all relevant documents and communications.
IV. The Equipment Diversion — Detailed Factual Analysis
A. Procurement and Logistics Chain
The following is a chronological summary of the procurement, logistics, and diversion of the equipment at issue, based on the documentary evidence reviewed to date:
Late 2020 – February 2021: Project Planning and Equipment Specification. The Upper Rhine geothermal pilot project was approved by DEH's investment committee in late 2020. The project engineering team at Dunmore Renewables, led by the project's chief engineer, identified the need for specialized high-pressure valve assemblies and pump components for the geothermal well completion and subsurface fluid handling systems. The engineering specifications were finalized in February 2021, and the procurement team at Dunmore Renewables identified a qualified European manufacturer as the supplier.
March 15, 2021: Purchase Order Issuance. Dunmore Renewables issued Purchase Order DR-PO-2021-0147 to the European equipment manufacturer for equipment valued at approximately €1.65 million (approximately $1.8 million). The purchase order was approved by Tobias Engel as Managing Director of Dunmore Renewables. The purchase order specified delivery to the Caspian Logistik warehouse in Hamburg for logistics handling and onward shipment to the project site.
March 2021: Logistics Engagement. Dunmore Renewables engaged Caspian Logistik GmbH under the framework logistics agreement (Agreement No. DR-CL-2020-003) to receive, warehouse, and forward the equipment to the Upper Rhine project site in Baden-Württemberg. The logistics scope of work involved receipt of equipment at the Hamburg warehouse, temporary warehousing pending transportation arrangements, and domestic overland shipment to the project site.
April 2021: Equipment Receipt at Hamburg Warehouse. The full equipment order was delivered by the manufacturer to the Caspian Logistik warehouse facility at Mönckebergstraße 22, Hamburg, in April 2021. Warehouse receipt documentation confirms that the full order was received in accordance with the purchase order specifications.
April – May 2021: Split Shipment. Following receipt at the Hamburg warehouse, the shipment was divided into two parts:
(i) Legitimate Delivery. Approximately $700,000 in equipment (consisting primarily of pump components and a subset of the valve assemblies) was shipped from the Caspian Logistik warehouse to the Upper Rhine geothermal project site in Baden-Württemberg, Germany. This shipment was received at the project site and is documented in project delivery records. The delivery was consistent with the original procurement purpose, and no irregularities have been identified with respect to this portion of the shipment.
(ii) Diverted Shipment. Approximately $1.1 million in equipment (consisting primarily of high-pressure valve assemblies and certain pump components) was not shipped to the Upper Rhine project site. Instead, shipping records and bills of lading indicate that this portion of the equipment was shipped from the Caspian Logistik warehouse in Hamburg to a freight consolidation point in Riga, Latvia. From Riga, the equipment was shipped onward to Moscow, Russia. The consignee identified on the end-user certificates for this portion of the shipment was Volga Energy Services LLC, at a Moscow address.
The decision to split the shipment and to divert a portion of the equipment appears to have been made by Caspian Logistik personnel without the knowledge or authorization of Dunmore Renewables. As noted in Section III.B above, the documentary record does not contain any communications between Engel (or any other Dunmore Renewables employee) and Caspian Logistik personnel regarding the diversion. The emails between Engel and Weidemann in the reviewed corpus relate exclusively to the legitimate delivery portion of the shipment and to routine logistics matters such as shipment scheduling and warehouse receipt confirmation.
Analysis of Shipping Documents (Bates DEH-DOJ-194327 through DEH-DOJ-194341). The documents bearing Bates stamps DEH-DOJ-194327 through DEH-DOJ-194341 include bills of lading, customs declarations, freight forwarding instructions, and warehouse receipt acknowledgments for both the legitimate and diverted portions of the shipment. The following observations are relevant:
• The bills of lading for the diverted portion of the shipment (Bates DEH-DOJ-194333 through DEH-DOJ-194336) list Caspian Logistik GmbH as the shipper and Volga Energy Services LLC as the consignee. The destination is listed as Moscow, Russia, with an intermediate stop at a freight consolidation facility in Riga, Latvia.
• The customs declarations for the diverted shipment (Bates DEH-DOJ-194337) describe the goods in general terms consistent with industrial valve assemblies and pump components but do not reference Dunmore Renewables or the Upper Rhine geothermal project.
• The end-user certificates for the diverted shipment (Bates DEH-DOJ-194338 through DEH-DOJ-194340) are discussed in detail in Section IV.C below.
• The warehouse receipt and delivery confirmation for the legitimate portion of the shipment (Bates DEH-DOJ-194327 through DEH-DOJ-194329) are consistent with the project engineering team's records and confirm delivery to the project site in Baden-Württemberg.
The role of Caspian Logistik in the diversion is clear from the documentary record: Caspian Logistik received the full equipment order at its Hamburg warehouse, divided the shipment, delivered one portion to the legitimate project site, and diverted the remaining portion to a destination in Russia via Latvia. The preparation of shipping documents, customs declarations, and end-user certificates for the diverted portion was performed entirely by Caspian Logistik personnel. There is no evidence that Dunmore Renewables was involved in or aware of these activities at the time they occurred.
B. Connection to the Broader Caspian Logistik Export Pattern
The $1.8 million Dunmore Renewables transaction — of which $1.1 million was diverted — represents a portion of the total $12.4 million in oilfield equipment exports facilitated by Caspian Logistik GmbH on behalf of Dunmore entities between August 2020 and January 2022. As detailed in the Caspian Logistik Export Shipment Analysis memorandum dated July 20, 2022 (prepared by the undersigned), the majority of the $12.4 million in exports originated from DTI's Dubai trading desk under the direction of Derek Hargrave, with the involvement of Yves Leclerc (Director of Logistics & Shipping, DTI). Those transactions involved the procurement of oilfield equipment by DTI, routing through Caspian Logistik's Hamburg warehouse, and onward shipment to end users in Russia, including entities connected to Volkhov Industrial Group.
The Dunmore Renewables transaction appears to be an outlier within the broader pattern in several respects:
(a) Origination. The transaction originated from the Hamburg-based renewable energy subsidiary, not from DTI's Dubai trading desk. This is the only transaction in the $12.4 million total that originated from Dunmore Renewables rather than DTI.
(b) Stated Purpose. The equipment was ostensibly procured for a legitimate renewable energy project (the Upper Rhine geothermal pilot), not for oilfield use. While the high-pressure valve assemblies and pump components have oilfield-adjacent applications, they were specified by Dunmore Renewables' project engineering team for geothermal well completion purposes.
(c) Knowledge of Diversion. Unlike the DTI-originated transactions, where the evidence reviewed to date suggests that Hargrave and Leclerc had awareness of and involvement in the routing of equipment to Russian end users, the Dunmore Renewables transaction appears to have been diverted by Caspian Logistik without the knowledge of Dunmore Renewables personnel.
Despite these distinguishing features, the transaction shares a critical point of connection with the DTI-originated transactions: the involvement of Caspian Logistik as the logistics intermediary, and the fact that Caspian Logistik was introduced to Dunmore Renewables by Derek Hargrave. This connection raises the question of whether Hargrave deliberately expanded Caspian Logistik's access to Dunmore entities beyond DTI in order to create additional diversion channels. This issue is discussed in Section VI below.
The investigation team notes that the Dunmore Renewables transaction also represents a methodological shift in the diversion pattern. In the DTI-originated transactions, the equipment was procured by DTI specifically for sale or delivery to Russian end users, and the routing through Caspian Logistik was an integral part of the export logistics chain. In the Dunmore Renewables transaction, by contrast, the equipment was procured for a legitimate purpose, and the diversion occurred post-receipt at the Caspian Logistik warehouse. This suggests that Caspian Logistik (and, potentially, individuals within DTI who were aware of the Hamburg logistics relationship) may have identified the Dunmore Renewables procurement as an opportunistic source of equipment that could be diverted to Russian end users without the originating subsidiary's knowledge.
C. End-User Certificate Analysis
The end-user certificates for the diverted portion of the Dunmore Renewables shipment are among the most significant documents in the record for this transaction. The certificates, bearing Bates stamps DEH-DOJ-194338 through DEH-DOJ-194340, were recovered from Caspian Logistik's files as part of the document production in this investigation.
The end-user certificates list "Volga Energy Services LLC" as the consignee and end user of the diverted equipment. The certificates identify the consignee's address as a commercial building in Moscow, Russia. The certificates describe the equipment in terms consistent with the high-pressure valve assemblies and pump components procured under Purchase Order DR-PO-2021-0147 but do not reference Dunmore Renewables, the Upper Rhine geothermal project, or any geothermal energy application. Instead, the stated end use is described in general terms suggesting oilfield or industrial application.
The end-user certificates were signed by Klaus Weidemann on behalf of Caspian Logistik GmbH as the shipper/forwarder and were countersigned by a representative of Volga Energy Services LLC as the receiving entity. The identity of the Volga Energy Services LLC signatory is under separate analysis. Dunmore Renewables personnel did not review, approve, or sign these certificates. The certificates were prepared entirely by Caspian Logistik, and there is no evidence that Caspian Logistik sought or obtained authorization from Dunmore Renewables for the preparation or filing of these documents.
Ridgeline Advisory Group LLC, retained by Calderwood & Harkness for forensic financial analysis and corporate intelligence services under Engagement No. RAG-2022-0319, conducted a forensic analysis of Volga Energy Services LLC. The results of that analysis, delivered on April 1, 2023, determined the following:
• Volga Energy Services LLC is registered at a commercial address in Moscow that is also the registered address of at least two other entities identified as subsidiaries or affiliates of Volkhov Industrial Group JSC.
• The signatory of the end-user certificate on behalf of Volga Energy Services LLC is an individual who also serves as a signatory on corporate documents of a known Volkhov subsidiary that was designated under OFAC Directive 2 in connection with the November 15, 2019 designation of Volkhov Industrial Group.
• Ridgeline's analysis of Russian corporate registry data and publicly available beneficial ownership information indicates that Volga Energy Services LLC is beneficially owned by entities within the Volkhov Industrial Group corporate family, though the precise ownership structure is obscured by multiple layers of intermediate holding entities.
Based on Ridgeline's analysis, the investigation team concludes with a high degree of confidence that the diverted equipment was destined for an entity controlled by or affiliated with Volkhov Industrial Group, a sanctioned entity. The end-user certificates filed by Caspian Logistik are therefore potentially false or misleading to the extent that they obscure the ultimate beneficial ownership and control of the end user by a sanctioned entity.
The potential regulatory implications of the false end-user certification are significant. Under EAR §746.5, the export, reexport, or transfer (in-country) of items subject to the EAR to Russia is subject to license requirements, and the use of false end-user certificates to facilitate such transactions may constitute a violation of the EAR. Under OFAC regulations, the provision of goods or services to an entity that is owned or controlled by a person on the SDN List may constitute a prohibited transaction, depending on the timing and the applicable sanctions program. The analysis of whether Dunmore Renewables bears corporate responsibility for Caspian Logistik's actions as its engaged logistics provider — a question of agency, vicarious liability, and the scope of the logistics engagement — is a complex legal question that is addressed in preliminary terms in the export control classification analysis (Section V) and will require further development in consultation with Conrad Reeves and, potentially, German counsel.
D. Forensic Payment Flow Analysis
Ridgeline Advisory Group's forensic analysis of the payment flows associated with the Dunmore Renewables transaction confirms that the Dunmore Renewables payment chain itself is clean and does not implicate the structured payment mechanisms identified in the broader $34.2 million payment investigation.
Equipment Payment. Payment for the equipment procured under Purchase Order DR-PO-2021-0147 — approximately $1.8 million (€1.65 million) — was made by Dunmore Renewables directly to the European equipment manufacturer. The payment was transmitted via standard commercial wire transfer from Dunmore Renewables' operating account at a major German bank to the manufacturer's account. No payments for the equipment flowed through Crescent Commercial Bank PJSC, the intermediary bank accounts identified in the structured payment investigation, or any other suspect financial intermediary. The payment was a straightforward commercial transaction consistent with Dunmore Renewables' procurement of industrial equipment in the ordinary course of its business.
Logistics Fee. Caspian Logistik GmbH was paid a logistics fee of approximately €48,000 by Dunmore Renewables for freight forwarding, warehousing, and customs brokerage services rendered under the framework logistics agreement. This payment was transmitted from Dunmore Renewables' operating account to Caspian Logistik's account at a German bank. Ridgeline's analysis of this payment identified no anomalies — the amount is consistent with market rates for logistics services of the type rendered, and the payment was made to a declared Caspian Logistik account with no identified connection to sanctioned entities or intermediary structures.
Broader Caspian Logistik Payment Flows. While the Dunmore Renewables payment chain is clean, Ridgeline's broader analysis of payments from Dunmore entities to Caspian Logistik identified total payments of approximately $2.3 million for logistics services across all equipment export transactions between August 2020 and January 2022. The majority of these payments originated from DTI's accounts and were associated with the $12.4 million in oilfield equipment exports analyzed in the July 20, 2022 memorandum. A portion of the $2.3 million in logistics fees may have represented indirect compensation to Caspian Logistik for facilitating the diversion of equipment to Russian end users — that is, the logistics fees may have been inflated or structured to compensate Caspian Logistik for the risk and effort of routing diverted equipment through intermediary destinations such as Latvia. However, this analysis relates to the DTI-originated transactions and does not implicate the Dunmore Renewables logistics fee payment, which, at €48,000, is a modest and commercially reasonable amount.
Conclusion on Payment Flows. The financial dimension of the Dunmore Renewables transaction does not raise independent compliance concerns. The issue lies not in the payment flows but in Caspian Logistik's post-receipt handling and diversion of goods that were procured and paid for by Dunmore Renewables for a legitimate purpose.
V. Export Control Classification Analysis
A. Applicable U.S. Regulatory Framework
The principal U.S. regulatory frameworks applicable to the transaction at issue are the Export Administration Regulations ("EAR"), codified at 15 C.F.R. Parts 730–774, and the economic sanctions programs administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury.
Under the EAR, the export, reexport, or transfer (in-country) of items subject to the EAR to Russia is subject to comprehensive license requirements under 15 C.F.R. §746.5, as amended in February 2022 and subsequently expanded. Section 746.5 imposes a general policy of denial for license applications for exports and reexports to Russia of items described in Supplement No. 4 to Part 746 and other controlled items, with limited exceptions.
The high-pressure valve assemblies and pump components at issue in this transaction require careful classification to determine their applicable Export Control Classification Number ("ECCN"). Based on preliminary review, the potentially relevant ECCNs include:
• ECCN 2B350: Chemical/petrochemical manufacturing equipment and components, which includes certain types of high-pressure valves and pumps designed for use in chemical processing and petrochemical applications. If the valve assemblies at issue are specifically designed for chemical or petrochemical processing applications, they may fall within this classification.
• ECCN 2B999: Specific processing equipment not controlled by 2B350, which may capture certain industrial valve assemblies and pump components that are designed for general industrial use rather than specifically for chemical or petrochemical applications.
• EAR99: If the equipment does not meet the technical parameters of any specific ECCN, it may be classified as EAR99 — items subject to the EAR but not listed on the Commerce Control List. Even EAR99 items are subject to end-use and end-user restrictions under §746.5 if destined for Russia or for a sanctioned end user.
The legal authorities underpinning the export control framework include the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, which provides the President with authority to impose economic sanctions and trade restrictions in response to national security threats, and the Export Control Reform Act ("ECRA"), 50 U.S.C. §§ 4801–4852, which provides the statutory basis for the EAR and the Commerce Department's export control authority.
A definitive classification of the equipment under the EAR requires detailed technical analysis of the specifications, materials, and design parameters of the valve assemblies and pump components. This analysis is being conducted by Conrad Reeves in coordination with the manufacturer's technical documentation and is pending completion. The preliminary assessment is that at least some of the equipment may fall within ECCN 2B350, which would subject it to more stringent licensing requirements than EAR99 classification. However, even if the equipment is classified as EAR99, the export or reexport to Russia would be subject to license requirements under §746.5, and the end-user connection to Volkhov Industrial Group would independently trigger OFAC prohibitions.
B. German/EU Export Control Considerations
In addition to the U.S. regulatory framework, the transaction raises potential compliance issues under German and EU export control and sanctions regulations. The relevant regulatory instruments include:
• EU Council Regulation (EC) No. 833/2014 (as amended): This regulation imposes restrictive measures in respect of Russia's actions destabilizing the situation in Ukraine. As amended in multiple rounds following February 2022, the regulation prohibits the sale, supply, transfer, or export of a wide range of goods and technology to any natural or legal person, entity, or body in Russia or for use in Russia.
• German Foreign Trade and Payments Act (*Außenwirtschaftsgesetz* — AWG) and Foreign Trade and Payments Ordinance (*Außenwirtschaftsverordnung* — AWV): These instruments implement German national export control requirements and provide the legal basis for enforcement of export restrictions by German authorities.
• EU Dual-Use Regulation (Regulation (EU) 2021/821): This regulation establishes an EU regime for the control of exports, brokering, technical assistance, transit, and transfer of dual-use items — items that can be used for both civil and military purposes. The high-pressure valve assemblies and pump components at issue may qualify as dual-use items depending on their technical specifications and intended applications.
Dunmore Renewables GmbH, as a German-registered entity and the contracting party under both the purchase order and the framework logistics agreement, may bear regulatory exposure under German and EU law for the diversion of equipment to Russia, even if the actual export was performed by Caspian Logistik rather than by Dunmore Renewables directly. The scope of Dunmore Renewables' potential liability under German/EU regulations depends on a range of factors, including the classification of the equipment under the EU Dual-Use Regulation, the applicability of the Russia-related restrictions in Regulation 833/2014 at the time of the shipment (March–April 2021, prior to the significant expansions in 2022), and whether Dunmore Renewables can be regarded as having facilitated or permitted the export through its engagement of Caspian Logistik as its logistics provider.
This memorandum does not provide a comprehensive analysis of German and EU regulatory exposure, which involves complex questions of German criminal and administrative law that may require consultation with local German counsel. The recommendation to engage German counsel for this purpose is set forth in Section VIII below.
C. U.S. Jurisdictional Nexus for the Dunmore Renewables Transaction
A threshold question for the U.S. regulatory analysis is whether the equipment at issue constitutes items "subject to the EAR" under 15 C.F.R. §734.3, which would bring the transaction within the jurisdictional reach of the U.S. export control regime.
The items-subject-to-the-EAR analysis involves several considerations:
(a) De Minimis U.S.-Origin Content. Under 15 C.F.R. §734.4, a foreign-made item is subject to the EAR if it contains more than a de minimis level of controlled U.S.-origin content (generally 25% for most destinations, 10% for certain sanctioned countries including Russia). The equipment was sourced from a European manufacturer, and preliminary analysis suggests that the components are of German or European origin. However, it is possible that certain subcomponents or raw materials incorporated into the equipment are of U.S. origin. A detailed de minimis analysis will require technical input from the manufacturer, which has not yet been obtained.
(b) Foreign Direct Product Rule. Under 15 C.F.R. §734.9 and the Russia/Belarus Foreign Direct Product Rule (§734.9(f)), a foreign-produced item may be subject to the EAR if it is the direct product of certain U.S.-origin technology or software, or if it is produced by a plant or major component of a plant that is itself the direct product of U.S.-origin technology. The applicability of the foreign direct product rule to the equipment at issue is under analysis by Conrad Reeves.
(c) U.S. Person Involvement. The involvement of U.S. persons in the transaction may independently create U.S. jurisdictional exposure under IEEPA and OFAC regulations, regardless of whether the items are subject to the EAR. Dunmore Renewables GmbH is a subsidiary of Dunmore Energy Holdings Ltd., a Cayman Islands holding company with operational headquarters in Houston, Texas, and a Delaware-organized U.S. subsidiary (Dunmore upstream Americas LLC, EIN: 84-2937561). The corporate structure creates a U.S. nexus through the parent company's U.S. operational presence and the involvement of U.S.-person executives in management oversight of the subsidiary. Whether Dunmore Renewables or its employees qualify as "U.S. persons" under IEEPA and OFAC regulations is a question that has been analyzed in the Corporate Structure & Jurisdiction