memo-zenith-petroleum-diligence.docx

1016-00009 · Dunmore Energy Holdings · Internal Investigation

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum has been prepared by counsel in connection with pending and anticipated litigation and government investigations. It contains attorney mental impressions, conclusions, opinions, and legal theories, and is protected from disclosure by the attorney-client privilege, the work product doctrine, and all other applicable privileges. This document should not be disclosed to any third party without the prior written consent of counsel.

MEMORANDUM

July 5, 2022

TO: Victoria Chambers, Responsible Partner Jasmine Thornton, Lead Associate

FROM: Amara Osei, Associate, White Collar & Investigations (London)

RE: Counterparty Due Diligence Findings — Zenith Petroleum DMCC

MATTER: Dunmore Energy Holdings Ltd. — DOJ Sanctions & Export Controls Inquiry

MATTER NO.: 1016-00009

I. Executive Summary

This memorandum presents the results of counterparty due diligence conducted on Zenith Petroleum DMCC ("Zenith Petroleum" or the "Company"), a Dubai-based petroleum trading company managed by Farhan Qureshi, a Pakistani national resident in the United Arab Emirates. The due diligence was undertaken as part of the broader internal investigation into potential sanctions violations by Dunmore Energy Holdings Ltd. ("Dunmore") and its trading subsidiary, Dunmore Trading International Ltd. ("DTI"), in connection with the ongoing inquiry by the United States Department of Justice ("DOJ").

Zenith Petroleum was involved in two of the fourteen crude oil swap transactions flagged for further investigation that were executed by DTI between June 2020 and February 2022. The total notional value across all fourteen flagged transactions is approximately $218.7 million. Of those fourteen, Ridgeline Advisory Group LLC ("Ridgeline"), the forensic accounting firm retained in this matter, has identified nine transactions — with an aggregate notional value of approximately $156.3 million — as "tainted," meaning that the underlying crude oil was ultimately sourced from or destined for entities controlled by or affiliated with Volkhov Industrial Group JSC ("Volkhov"), a Russian energy conglomerate chaired by Arkady Volkhov. The two Zenith Petroleum transactions fall squarely within this subset of nine tainted transactions.

Our due diligence findings reveal circumstantial but significant indicators of a commercial relationship between Zenith Petroleum and both Petronova Trading FZE ("Petronova") — a Dubai-based trading entity managed by Sergei Volkov, a Russian national with known ties to the Volkhov group — and Volkhov-affiliated interests more broadly. These findings raise substantial concerns under the sanctions programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), including Directive 2 under Executive Order 13662 (imposing sectoral sanctions on the energy sector of the Russian Federation, effective as to Volkhov since November 15, 2019), and the full Specially Designated Nationals and blocked Persons ("SDN") blocking designation subsequently imposed on Volkhov under Executive Order 14024 on April 6, 2022.

In summary, the evidence gathered to date supports the conclusion that Zenith Petroleum served as a secondary intermediary in the supply chain alongside Petronova, facilitating DTI's access to Volkhov-origin crude oil. While Zenith Petroleum is not itself an OFAC-designated entity, and while no direct equity link between Zenith Petroleum and Volkhov or Petronova has been established, the pattern of back-to-back trading, coordinated cargo scheduling, and structured payments through shared banking relationships at Crescent Commercial Bank PJSC collectively paints a picture of a company operating in close coordination with sanctioned or sanctions-adjacent interests. DTI's failure to conduct adequate due diligence on Zenith Petroleum at onboarding — and its subsequent failure to escalate multiple red flags during the course of the trading relationship — is a significant compliance failure that will require careful treatment in any future DOJ proffer or OFAC voluntary self-disclosure.

This memorandum should be read in conjunction with the related memoranda prepared by other members of the investigation team, as cross-referenced throughout.

II. Scope and Methodology

A. Scope of Inquiry

The due diligence inquiry focused on the following principal areas with respect to Zenith Petroleum:

1. Corporate structure and formation. Examination of Zenith Petroleum's legal formation, registered address, trade licensing, and organizational documents as filed with the Dubai Multi Commodities Centre ("DMCC").

2. Beneficial ownership. Identification and verification, to the extent possible, of the ultimate beneficial owner(s) of Zenith Petroleum, including an assessment of whether any beneficial ownership interest is held, directly or indirectly, by Volkhov Industrial Group JSC, Arkady Volkhov, Sergei Volkov, Petronova Trading FZE, or any other OFAC-designated person or entity.

3. Commercial activities. Review of Zenith Petroleum's principal lines of business, trading counterparties, geographical focus, and commodity trading patterns, with particular attention to any involvement in Russian-origin crude oil markets or trade flows involving the Commonwealth of Independent States ("CIS") region.

4. Relationships with Petronova Trading FZE, Volkhov Industrial Group JSC, and affiliated entities. Investigation of any direct or indirect commercial, financial, or personal relationships between Zenith Petroleum (or its principal, Farhan Qureshi) and Petronova Trading FZE (managed by Sergei Volkov, a Russian national and UAE resident), Volkhov Industrial Group JSC (chaired by Arkady Volkhov), or any other OFAC-designated persons or entities.

5. OFAC screening. Screening of Zenith Petroleum and its known personnel against the OFAC SDN List, the Sectoral Sanctions Identifications ("SSI") List, and the Consolidated Screening List, as well as other relevant sanctions and export control lists.

The temporal scope of the inquiry covers the period from January 1, 2019 to the present date. This timeframe is consistent with the scope established by grand jury subpoena GJ No. 22-418, issued on April 19, 2022, by the United States District Court for the District of Columbia, Grand Jury 22-2, which required the production of documents relating to, among other things, crude oil trading activities involving counterparties in the Russian Federation, the United Arab Emirates, and related jurisdictions from January 1, 2019 forward.

B. Sources Consulted

In conducting this due diligence inquiry, the investigation team consulted the following sources:

1. DMCC Corporate Registry Filings. Corporate registration records and trade license records for Zenith Petroleum DMCC as maintained by the DMCC. The registered address reflected in these filings is Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE.

2. OFAC and Sanctions Databases. The OFAC SDN List, the SSI List, and the Consolidated Screening List were searched as of the date of this memorandum (July 5, 2022). Additional screening was conducted against the European Union Consolidated List of Sanctions, the United Kingdom's Office of Financial Sanctions Implementation ("OFSI") Consolidated List, and the United Nations Security Council Sanctions Lists.

3. Open-Source intelligence (OSINT). The investigation team conducted open-source research utilizing corporate databases (including Bureau van Dijk's Orbis database, Dunmore Enterprises, and the UAE Ministry of Economy commercial registry), media reports, shipping and cargo tracking databases (including Halcyon Health IT and Ridgeway Technologies), and commercial registries in the UAE, Pakistan, and the Russian Federation. Social media and professional networking sites were also reviewed for information concerning Farhan Qureshi and other persons of interest.

4. DTI Custodian Documents. Documents produced from the files and electronic devices of the following DTI data custodians were reviewed for information relevant to Zenith Petroleum:

• Derek Hargrave, President, DTI (placed on administrative leave effective July 1, 2022);

• Natasha Sorokin, Senior Trader, DTI (placed on administrative leave effective May 16, 2022);

• Omar Al-Rashidi, Head of Middle East Operations, DTI; and

• Rajesh Malhotra, Controller, DTI.

5. Banking Records. Payment records obtained from Crescent Commercial Bank PJSC ("Crescent Bank"), Dubai, including wire transfer confirmations, account statements, and correspondence with the bank's relationship manager, Khalid Mansour. These records were obtained through Dunmore's existing banking relationship with Crescent Bank and pursuant to voluntary cooperation by the bank.

6. Ridgeline Advisory Group LLC — Preliminary Forensic Tracing. Preliminary forensic tracing information prepared by Ridgeline Advisory Group LLC under Engagement No. RAG-2022-0319. Dr. Margaret Liu, CPA, CFE, serves as engagement lead. Ridgeline was retained by this firm on May 2, 2022, to conduct forensic accounting analysis of the fourteen flagged crude oil swap transactions, trace payment flows, and identify connections to Volkhov-affiliated entities. The information referenced in this memorandum is preliminary; Ridgeline's final forensic report is expected by approximately April 1, 2023.

7. Nexagen Analytics Inc. — Document Review Platform. Relevant custodian documents were identified and reviewed through the e-discovery platform maintained by Nexagen Analytics Inc. (Project No. NX-DEH-2204; project manager: Brian Cavanaugh). The document population for the Zenith Petroleum review was identified using technology-assisted review ("TAR"), supplemented by targeted keyword and date-range searches. The TAR model was trained on a seed set of documents manually coded by the investigation team and validated through quality control sampling.

8. Witness Interview Memoranda. Memoranda prepared from first-round witness interviews conducted between May 18 and June 30, 2022. The interviews most directly relevant to the Zenith Petroleum due diligence are:

• Omar Al-Rashidi, interviewed June 14, 2022 (counsel present: Jasmine Thornton, Amara Osei); and

• Natasha Sorokin, interviewed June 2, 2022 (counsel present: Jasmine Thornton; Sorokin's personal counsel Philip Keane of Wexford Keane LLP was also present).

Other first-round interviews, including interviews of Rajesh Malhotra and certain other DTI and Dunmore personnel, provided background information but did not yield material information specific to Zenith Petroleum.

III. Corporate Profile — Zenith Petroleum DMCC

A. Formation and Registration

Zenith Petroleum DMCC is a company formed and registered under the DMCC Companies Regulations within the Dubai Multi Commodities Centre free zone. The key registration details are as follows:

• Full legal name: Zenith Petroleum DMCC

• Entity type: DMCC company (limited liability company registered with the Dubai Multi Commodities Centre)

• Registered address: Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE

• Date of incorporation: Approximately March 2017, per DMCC registry records. The Company has held a valid DMCC trade license continuously since that date and was thus an established trading entity with approximately three years of operating history before the first flagged transaction in June 2020.

• Business activities (per trade license): Trading in crude oil and refined petroleum products, with a primary focus on the Middle East and CIS markets. The Company's DMCC trade license authorizes general trading in petroleum commodities, and DMCC registry records do not reflect any regulatory restrictions or disciplinary actions against the entity.

A copy of the DMCC corporate registry extract is attached as Appendix A.

B. Key Personnel

The sole director, managing director, and authorized signatory of Zenith Petroleum is Farhan Qureshi, a Pakistani national who is a resident of the United Arab Emirates. Mr. Qureshi has been associated with the Company since its formation in 2017, and his name appears on all corporate filings, trade confirmations, and banking documents reviewed to date.

Open-source research indicates that Mr. Qureshi has approximately fifteen years of experience in commodity trading in the Gulf region. Prior to founding Zenith Petroleum, he was employed at several smaller Dubai-based trading houses, including Gulf Star Commodities DMCC (approximately 2010–2014) and Horizon Petrochem FZE (approximately 2014–2017). Neither of these prior employers appears on any OFAC sanctions list, and neither has been identified as having any affiliation with Volkhov Industrial Group or its network of entities.

No additional employees, officers, or directors of Zenith Petroleum have been identified through DMCC filings or other sources. The Company appears to operate as a small trading operation managed principally by Mr. Qureshi, which is not unusual for DMCC-registered commodity trading entities.

OFAC Screening: Neither Zenith Petroleum DMCC nor Farhan Qureshi appears on the OFAC SDN List, the SSI List, or the Consolidated Screening List as of the date of this memorandum. Screening was also negative against the EU Consolidated List, the UK OFSI List, and the UN Security Council Sanctions Lists. Full OFAC screening results are set forth in Appendix E.

C. Ownership Structure

Per DMCC corporate filings, Farhan Qureshi is the registered sole shareholder of Zenith Petroleum DMCC. The Company is structured as a free zone limited liability entity, and Mr. Qureshi holds 100% of the issued share capital in his individual capacity.

It is important to note, however, that the DMCC's disclosure and transparency requirements with respect to beneficial ownership are limited. While the DMCC requires disclosure of the registered shareholder, it does not mandate comprehensive disclosure of ultimate beneficial ownership in a manner comparable to, for example, the United Kingdom's Persons with Significant Control register. Accordingly, the investigation team has not been able to independently verify whether Mr. Qureshi holds his shareholding beneficially for his own account or whether any undisclosed beneficial ownership interest exists behind his personal shareholding. This is a significant limitation of the available corporate records.

Our open-source due diligence has not identified any direct equity ties between Farhan Qureshi and Volkhov Industrial Group JSC, Arkady Volkhov, Sergei Volkov, or Petronova Trading FZE. No nominee shareholder arrangements, trust structures, or other indirect ownership mechanisms linking these parties to Zenith Petroleum have been identified through the sources consulted. However, the absence of evidence in this regard is not dispositive, particularly given the opacity of the DMCC corporate registry and the general difficulty of tracing beneficial ownership through UAE free zone structures.

D. Banking Relationships

Zenith Petroleum maintains its primary banking relationship at Crescent Commercial Bank PJSC in Dubai. The Company holds at least one current (operating) account and one trade finance facility at Crescent Bank. The bank's relationship manager for the Zenith Petroleum account is Khalid Mansour, who is also the relationship manager for several other DMCC-registered commodity trading entities.

Significantly, Ridgeline Advisory Group's preliminary forensic tracing has confirmed that Petronova Trading FZE also maintains accounts at Crescent Commercial Bank PJSC. As discussed further in Section V below, wire transfer records obtained from Crescent Bank reveal payments flowing between Zenith Petroleum and Petronova accounts at the same institution in close temporal proximity to the two flagged crude oil swap transactions.

In addition to its Crescent Bank relationship, Zenith Petroleum appears to maintain at least one secondary banking relationship with another UAE-based financial institution. This secondary account was identified in certain transaction records reviewed during the document review process; however, it does not appear to be directly relevant to the two suspect transactions that are the focus of this memorandum, and we have not yet obtained records from this institution.

IV. The Two Flagged Crude Oil Swap Transactions

A. Transaction Overview

As noted above, Zenith Petroleum was a named counterparty in two of the fourteen crude oil swap transactions executed by DTI between June 2020 and February 2022 that have been flagged for investigation. Both of these transactions fall within the subset of nine "tainted" transactions — with a combined notional value of approximately $156.3 million — that Ridgeline Advisory Group has identified as involving crude oil ultimately sourced from or destined for entities controlled by or affiliated with Volkhov Industrial Group JSC. These nine transactions are of the highest concern from a sanctions compliance perspective, as they potentially violated OFAC Directive 2 under Executive Order 13662, which imposed sectoral sanctions on the energy sector of the Russian Federation and which became applicable to Volkhov Industrial Group on November 15, 2019.

A summary table for both Zenith Petroleum transactions is attached as Appendix B. Each transaction is discussed individually below.

B. Transaction 1

Date: On or about October 15, 2020.

Structure: This transaction was structured as a crude oil swap in which DTI purchased a cargo of crude oil from Zenith Petroleum. Under the terms of the trade confirmation, Zenith Petroleum agreed to deliver a specified quantity of Urals-grade crude oil to DTI on a CFR (Cost and Freight) basis, with delivery to take place at the port of Augusta, Italy. Zenith Petroleum sourced the crude oil from an undisclosed upstream supplier; the trade confirmation does not identify the original source of the cargo, and Zenith Petroleum's standard trading terms (as reflected in the confirmation) disclaim any obligation to disclose the identity of upstream suppliers.

Notional value: Approximately $18.4 million.

Cargo details: The cargo consisted of approximately 310,000 barrels of Urals-grade crude oil. The bill of lading, retrieved from Natasha Sorokin's custodian files, identifies the loading port as Novorossiysk, Russia, and the vessel as the MT Caspian Horizon (IMO No. 9412078), a medium-range crude oil tanker flagged in the marshall Islands. Shipping records from confirm that the MT Caspian Horizon called at Novorossiysk on or about October 8, 2020, and arrived at Augusta on or about October 22, 2020. The Novorossiysk loading port is significant because it is the principal export terminal for crude oil produced by Volkhov Industrial Group's upstream subsidiaries in the Russian Federation.

Key documents: The following documents pertaining to Transaction 1 were retrieved from DTI custodian files and are maintained in the Nexagen Analytics document review platform:

• Trade confirmation dated October 12, 2020, executed between DTI (signed by Natasha Sorokin as authorized trader) and Zenith Petroleum DMCC (signed by Farhan Qureshi as managing director);

• Bill of lading dated October 8, 2020, referencing the MT Caspian Horizon, loading port Novorossiysk;

• Commercial invoice No. ZP-2020-0417 dated October 25, 2020, issued by Zenith Petroleum to DTI in the amount of $18,412,600;

• Payment records reflecting a wire transfer of $18,412,600 from DTI's account at Harborline Commerce Bank (London) to Zenith Petroleum's account at Crescent Commercial Bank PJSC (Dubai) on October 28, 2020 (Crescent Bank reference No. CCB-1028-20-7792); and

• Internal DTI deal approval memorandum signed by Derek Hargrave on October 11, 2020, authorizing the transaction.

Natasha Sorokin was the trader of record on Transaction 1, and Derek Hargrave authorized the transaction in his capacity as President of DTI.

C. Transaction 2

Date: On or about June 22, 2021.

Structure: Transaction 2 was structured similarly to Transaction 1. DTI purchased a cargo of crude oil from Zenith Petroleum on a CFR basis. The trade confirmation again specified delivery of Urals-grade crude oil, this time with delivery to the port of Rotterdam, Netherlands. As with Transaction 1, the trade confirmation did not identify Zenith Petroleum's upstream supplier.

Notional value: Approximately $23.1 million.

Cargo details: The cargo consisted of approximately 380,000 barrels of Urals-grade crude oil. The bill of lading identifies the loading port as Primorsk, Russia — another major Baltic export terminal through which Volkhov Industrial Group's upstream production is known to be exported — and the vessel as the MT Baltic Pioneer (IMO No. 9518234), a Suezmax crude oil tanker registered in Liberia. Shipping records confirm that the MT Baltic Pioneer loaded at Primorsk on or about June 15, 2021, and arrived at Rotterdam on or about June 28, 2021.

Notional value: Approximately $23.1 million.

Key documents: The following documents pertaining to Transaction 2 were retrieved from DTI custodian files:

• Trade confirmation dated June 18, 2021, executed between DTI (signed by Natasha Sorokin) and Zenith Petroleum DMCC (signed by Farhan Qureshi);

• Bill of lading dated June 15, 2021, referencing the MT Baltic Pioneer, loading port Primorsk;

• Commercial invoice No. ZP-2021-0289 dated July 2, 2021, issued by Zenith Petroleum to DTI in the amount of $23,087,500;

• Payment records reflecting a wire transfer of $23,087,500 from DTI's account at Harborline Commerce Bank (London) to Zenith Petroleum's account at Crescent Commercial Bank PJSC (Dubai) on July 6, 2021 (Crescent Bank reference No. CCB-0706-21-3148); and

• Internal DTI deal approval memorandum signed by Derek Hargrave on June 17, 2021.

As with Transaction 1, Natasha Sorokin was the trader of record and Derek Hargrave provided authorization.

D. Combined Value

The combined notional value of the two Zenith Petroleum transactions is approximately $41.5 million ($18.4 million + $23.1 million). This represents approximately 26.6% of the $156.3 million total notional value across all nine tainted transactions, and approximately 19.0% of the $218.7 million aggregate notional value across all fourteen flagged transactions. These are material transactions both in absolute dollar terms and relative to the overall scope of the investigation.

V. Connections to Petronova Trading FZE and Volkhov Industrial Group

A. Relationship Between Zenith Petroleum and Petronova Trading FZE

The investigation has uncovered substantial documentary and circumstantial evidence of a close commercial relationship between Zenith Petroleum and Petronova Trading FZE. Petronova is a free zone entity registered at Office 1407, Al Shafar Tower, Dubai Internet City, Dubai, UAE, and is managed by Sergei Volkov, a Russian national and UAE resident. As previously reported, Sergei Volkov is believed to have familial ties to Arkady Volkhov's business network, and Petronova has been identified as a primary intermediary through which Volkhov-origin crude oil was channeled into the international trading market.

The key evidence of the Zenith Petroleum–Petronova relationship is as follows:

Back-to-back trading patterns. Documentary evidence retrieved from DTI custodian files — particularly the trading records and email correspondence of Natasha Sorokin — demonstrates that Zenith Petroleum and Petronova Trading FZE frequently co-participated in back-to-back crude oil swap chains. In both of the two Zenith Petroleum transactions described in Section IV above, Ridgeline Advisory Group's preliminary forensic analysis traced the underlying cargo sourcing back through intermediate entities to operations controlled by or affiliated with Volkhov Industrial Group JSC. In these chains, Petronova typically appeared as the first intermediary — purchasing crude directly from Volkhov-affiliated upstream entities — and Zenith Petroleum appeared as a secondary intermediary, purchasing from Petronova (or from another entity in the chain) and then selling onward to DTI. This layered structure is consistent with a deliberate effort to obscure the ultimate source of the crude oil and distance the end buyer (DTI) from the sanctioned or sanctions-adjacent originator.

Wire transfer records. Wire transfer records obtained from Crescent Commercial Bank PJSC reveal a pattern of payments flowing between Zenith Petroleum and Petronova in close temporal proximity to the two flagged transactions. These payments are part of a broader pattern identified by Ridgeline Advisory Group: across the period from March 2020 to March 2022, Ridgeline has identified 127 structured wire transactions totaling approximately $34.2 million flowing between accounts associated with Petronova Trading FZE and Zenith Petroleum DMCC at Crescent Bank. While not all of these transfers are necessarily connected to the two flagged DTI transactions, the temporal clustering and round-dollar amounts of certain transfers are strongly suggestive of coordinated activity.

The following exemplary wire transfers are of particular note:

• October 9, 2020: Wire transfer of $5,200,000 from Petronova Trading FZE (Crescent Bank Acct. No. ending -4418) to Zenith Petroleum DMCC (Crescent Bank Acct. No. ending -7761), reference "Trade Settlement — Oct-20." This transfer occurred six days before the October 15, 2020 trade confirmation for Transaction 1.

• October 26, 2020: Wire transfer of $3,800,000 from Zenith Petroleum DMCC to Petronova Trading FZE at Crescent Bank, reference "Cargo Advance — ZP/PT/1020." This transfer occurred one day after Zenith Petroleum issued its invoice to DTI for Transaction 1.

• June 16, 2021: Wire transfer of $7,450,000 from Petronova Trading FZE to Zenith Petroleum DMCC at Crescent Bank, reference "Pre-payment — June Cargo." This transfer occurred one day after the MT Baltic Pioneer loaded at Primorsk for Transaction 2.

• July 8, 2021: Wire transfer of $4,100,000 from Zenith Petroleum DMCC to Petronova Trading FZE at Crescent Bank, reference "Settlement — ZP/PT/0621." This transfer occurred two days after DTI's payment to Zenith Petroleum for Transaction 2.

These transfer records, excerpted from Crescent Bank's records, are attached as Appendix C.

B. Potential Links to Volkhov Industrial Group JSC

Volkhov Industrial Group JSC is a Russian energy conglomerate headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russian Federation, and chaired by Arkady Volkhov. Volkhov Industrial Group operates upstream oil production, pipeline transportation, and downstream refining assets across the Russian Federation, with particularly significant operations in Western Siberia and the Volga-Urals basin.

Volkhov Industrial Group was designated by OFAC under Directive 2 of Executive Order 13662 (sectoral sanctions on the energy sector of the Russian Federation) effective November 15, 2019. Directive 2 prohibited U.S. persons from transacting in, providing financing for, or otherwise dealing in new debt of longer than 60 days maturity or new equity for Volkhov Industrial Group and entities in which it holds a 50% or greater ownership interest. More recently, following the Russian Federation's invasion of Ukraine, Volkhov Industrial Group and Arkady Volkhov personally were placed on the OFAC SDN List (full blocking) on April 6, 2022, pursuant to Executive Order 14024.

No direct corporate or equity link has been identified between Zenith Petroleum DMCC and Volkhov Industrial Group JSC. As noted in Section III.C above, open-source due diligence and corporate registry searches have not revealed any shareholding, directorship, or other formal corporate relationship connecting Farhan Qureshi or Zenith Petroleum to Arkady Volkhov, Volkhov Industrial Group, or any Volkhov subsidiary.

However, substantial circumstantial evidence suggests that Zenith Petroleum functioned as a secondary intermediary in Volkhov's crude oil export chain:

Shipping records and loading ports. The bills of lading for both Zenith Petroleum transactions identify loading ports — Novorossiysk (Transaction 1) and Primorsk (Transaction 2) — that are the principal export terminals for crude oil produced by Volkhov Industrial Group's upstream subsidiaries. While these are major commercial ports used by many Russian oil exporters, the combination of loading port data with the other circumstantial evidence discussed in this section is significant. Furthermore, Halcyon Health IT records indicate that the vessel charters for both the MT Caspian Horizon and the MT Baltic Pioneer were arranged through Volga Maritime Services LLC, a shipping and logistics company that open-source research identifies as a regular service provider to Volkhov-affiliated entities.

Email correspondence. Email correspondence retrieved from Natasha Sorokin's custodian files demonstrates that Sorokin communicated with both Sergei Volkov (at Petronova) and Farhan Qureshi (at Zenith Petroleum) regarding the same cargo parcels. Specifically:

• In an email dated October 6, 2020 (Nexagen Bates No. NX-NS-004217), Sorokin wrote to Volkov and Qureshi (copying no one at DTI) to discuss "the October Novorossiysk lifting" and to coordinate loading dates and vessel nominations. The email chain suggests that Sorokin was aware that the cargo she was negotiating to purchase from Zenith Petroleum was, in fact, being sourced from the same supply chain as cargoes arranged through Petronova.

• In a separate email chain dated June 10–12, 2021 (Nexagen Bates Nos. NX-NS-007843 through NX-NS-007849), Sorokin exchanged messages with Qureshi regarding the "June Primorsk parcel," with Volkov copied on certain messages. The correspondence includes discussion of pricing, vessel availability, and loading schedules, and contains a reference by Qureshi to "the usual arrangement with S.V." — which in context appears to refer to Sergei Volkov and/or the standard commercial terms between Zenith Petroleum and Petronova.

Selected emails are attached as Appendix D.

Witness testimony. During his June 14, 2022 interview, Omar Al-Rashidi, Head of Middle East Operations at DTI, provided significant testimony regarding the relationship between Zenith Petroleum and Petronova. When asked about DTI's use of Zenith Petroleum as a counterparty, Al-Rashidi stated that he understood Zenith Petroleum to be "in the same orbit" as Petronova and that the two entities were used interchangeably as a booking counterparty "depending on documentation and pricing considerations." Al-Rashidi further stated that it was his understanding that Natasha Sorokin, as the lead trader on these transactions, would select either Petronova or Zenith Petroleum as the named counterparty based on factors including which entity could offer more favorable terms, which entity's documentation was better suited to the specific transaction structure, and — notably — which entity would be less likely to attract scrutiny from Dunmore's compliance function. Al-Rashidi stated that he did not personally make the decision to use Zenith Petroleum but was aware that Sorokin and, to a lesser extent, Derek Hargrave, were familiar with the arrangement.

It should be noted that Al-Rashidi's testimony is subject to the caveats outlined in the interview memorandum, including that Al-Rashidi has a personal interest in minimizing his own role in the transactions and in attributing knowledge to Sorokin and Hargrave. Nevertheless, his account is consistent with the documentary record.

C. OFAC 50% Rule Analysis

As a preliminary matter, the investigation team has considered whether Zenith Petroleum is itself subject to OFAC sanctions by operation of the so-called "50% Rule." Under OFAC guidance, entities that are owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons are themselves considered blocked, regardless of whether the entity appears on the SDN List by name. This analysis is set forth in greater detail in the memorandum prepared by Conrad Reeves dated June 20, 2022, which analyzes Volkhov's designation history and the application of the 50% Rule to various entities in Volkhov's network.

On the available evidence, Zenith Petroleum does not appear to be 50% or more owned by Volkhov Industrial Group JSC or any other SDN-designated entity. Farhan Qureshi is the sole registered shareholder, and no evidence of hidden beneficial ownership by Volkhov or any SDN-listed person has been identified. Accordingly, Zenith Petroleum is not itself a blocked entity by operation of the 50% Rule.

However, this conclusion does not end the sanctions analysis. The critical question for purposes of the DTI transactions is not whether Zenith Petroleum was itself blocked, but rather whether the underlying crude oil transactions were conducted "for the benefit of" or involved the "interests of" Volkhov Industrial Group — which was designated under Directive 2 (sectoral sanctions) throughout the period of both transactions, and which became a fully blocked SDN as of April 6, 2022. The forensic evidence assembled to date strongly suggests that the crude oil in both transactions originated from Volkhov-controlled upstream operations, that Petronova and Zenith Petroleum served as layered intermediaries to obscure this fact, and that the economic benefit of the transactions ultimately inured to Volkhov's interests. Under OFAC's broad interpretive guidance regarding prohibited dealings that involve the "interests" of sanctioned persons, the use of non-designated intermediaries does not shield the underlying transaction from sanctions prohibitions if the transaction is structured to evade or avoid those prohibitions.

This issue requires further legal analysis and will be addressed in greater detail in subsequent memoranda.

VI. Assessment of Dunmore's Pre-Transaction Due Diligence on Zenith Petroleum

A. DTI's KYC and Onboarding Records

The investigation team reviewed DTI's counterparty onboarding file for Zenith Petroleum DMCC. The file, which was maintained in DTI's compliance records and retrieved from Rajesh Malhotra's custodian files, is notable for its thinness. The onboarding file contained the following materials:

• Basic DMCC registration documents for Zenith Petroleum, including the company's certificate of incorporation and trade license;

• A photocopy of Farhan Qureshi's UAE residence visa and Pakistani passport;

• A standard DTI counterparty questionnaire, completed by Qureshi, providing basic information about Zenith Petroleum's business activities, principal markets, and banking relationships; and

• A single-page internal DTI memorandum noting the approval of Zenith Petroleum as a trading counterparty, signed by Omar Al-Rashidi and dated August 3, 2020.

Critically, the onboarding file contained no record of OFAC screening having been conducted on Zenith Petroleum or Farhan Qureshi at the time of onboarding. This deficiency is not unique to Zenith Petroleum; rather, it is consistent with the broader and systemic deficiencies in Dunmore's pre-existing sanctions compliance program that have been identified during the investigation. The full scope and nature of these compliance program failures will be discussed in detail in the memorandum being prepared by Conrad Reeves and Jasmine Thornton on the adequacy of Dunmore's pre-existing sanctions compliance program, which is anticipated to be dated November 15, 2022.

Furthermore, the onboarding file contained no enhanced due diligence of any kind. Despite Zenith Petroleum's status as a Dubai-based trading entity active in Russian-origin crude oil markets — a profile that should have triggered heightened scrutiny under any reasonably designed sanctions compliance program — there is no evidence that DTI's compliance function conducted any additional investigation into Zenith Petroleum's ownership structure, beneficial ownership, upstream suppliers, or potential connections to sanctioned persons or entities.

B. Red Flags Not Escalated

Beyond the deficient onboarding, the investigation has identified several red flags that arose during the course of DTI's trading relationship with Zenith Petroleum — red flags that should have triggered enhanced due diligence, an independent compliance review, or escalation to the Chief Compliance Officer. At the relevant time, the Chief Compliance Officer of Dunmore was Gerald Fisk, who departed the company on June 10, 2022, under circumstances that are the subject of a separate inquiry.

The red flags that should have been escalated include the following:

1. Involvement in Russian-origin crude oil trades. Both Zenith Petroleum transactions involved Urals-grade crude oil loaded at Russian export terminals (Novorossiysk and Primorsk). Given the heightened sanctions risk associated with Russian-origin energy commodities — particularly after OFAC's November 2019 designation of Volkhov under Directive 2 — any transaction involving Russian-origin crude should have been flagged for enhanced review.

2. Temporal overlap with Petronova transactions. The two Zenith Petroleum transactions occurred during the same period in which DTI was executing similar crude oil swap transactions with Petronova Trading FZE. In several instances, the Zenith Petroleum and Petronova transactions involved similar cargo lots, loading ports, and vessel charters. This overlap should have been detected by any reasonably designed transaction monitoring system or, at a minimum, by the traders and compliance personnel responsible for reviewing deal documentation.

3. Payment structures through Crescent Commercial Bank PJSC. The routing of payments through Zenith Petroleum's and Petronova's accounts at the same Crescent Bank branch, with transfers between the two entities occurring in close temporal proximity to the DTI transactions, is a classic indicator of layered or structured payment flows designed to obscure the ultimate beneficiary of a transaction. These payment patterns should have been identified through routine transaction monitoring.

4. Al-Rashidi's awareness of the Petronova–Zenith Petroleum relationship. Omar Al-Rashidi, who approved the onboarding of Zenith Petroleum as a counterparty, has acknowledged in his interview that he was aware of the commercial relationship between Petronova and Zenith Petroleum. This awareness should have prompted Al-Rashidi to escalate the matter to the Chief Compliance Officer or to insist on enhanced due diligence before approving Zenith Petroleum as a counterparty — particularly given that Petronova's own connections to Volkhov-affiliated interests were, or should have been, known to DTI's senior management.

The compliance failures and supervisory deficiencies of Gerald Fisk in his capacity as Chief Compliance Officer — including his failure to implement adequate transaction monitoring, his failure to require OFAC screening of new counterparties, and his apparent failure to supervise the trading desk's onboarding of high-risk counterparties like Zenith Petroleum — are analyzed in the separate memorandum prepared by Nicholas Ferreira, dated August 15, 2022.

VII. Regulatory Implications

A. OFAC Sanctions Analysis

The two Zenith Petroleum transactions described in this memorandum potentially violated Directive 2 under Executive Order 13662, which imposes sectoral sanctions on the energy sector of the Russian Federation. Volkhov Industrial Group JSC was added to the SSI List under Directive 2 effective November 15, 2019. Both Zenith Petroleum transactions — dated October 2020 and June 2021, respectively — occurred during the period when Directive 2 was in effect as to Volkhov. The forensic evidence indicates that the crude oil involved in both transactions was sourced from Volkhov-controlled upstream operations and that the transactions were structured through intermediaries (Petronova and Zenith Petroleum) to obscure this fact.

Following the escalation of U.S. sanctions on Russia in early 2022, Volkhov Industrial Group and Arkady Volkhov were placed on the OFAC SDN List (full blocking) on April 6, 2022, pursuant to Executive Order 14024. Under the SDN designation, all property and interests in property of Volkhov Industrial Group and Arkady Volkhov that are in the United States, or in the possession or control of U.S. persons, are blocked, and U.S. persons are broadly prohibited from engaging in any transactions involving such property or interests. However, it is important to note that the two Zenith Petroleum transactions predate the April 6, 2022 SDN designation, and thus the analysis of those transactions turns on the more limited prohibitions of Directive 2 rather than the broader blocking provisions applicable to SDN-listed persons.

The analysis of whether DTI, its employees, or Dunmore constituted "U.S. persons" for purposes of OFAC jurisdiction — a threshold question that determines whether OFAC sanctions apply to their conduct — is addressed in the memorandum prepared by Jasmine Thornton dated May 10, 2022, which analyzes Dunmore's corporate structure and the jurisdictional nexus to U.S. sanctions law. As noted in that memorandum, the relevant jurisdictional connections include DTI's use of U.S. dollar-denominated wire transfers cleared through U.S. correspondent banks, the U.S. citizenship of Derek Hargrave, and the presence of certain Dunmore group entities incorporated in the United States.

The applicable regulatory provisions governing the sanctions analysis include 31 C.F.R. Part 589 (Ukraine-/Russia-Related Sanctions Regulations) and the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, which provides the statutory authority for the Executive Orders under which Volkhov was designated.

B. Criminal Exposure

The two Zenith Petroleum transactions potentially implicate the criminal provisions of IEEPA, which provide for penalties of up to twenty years of imprisonment for willful violations. See 50 U.S.C. § 1705(c). The DOJ's National Security Division, through its Counterintelligence and Export Control Section, is leading the criminal investigation into the DTI transactions. The investigation is being supervised by Assistant United States Attorney Meredith Calloway, with Trial Attorneys Samuel Kovacs and Diana Pressman serving as co-counsel.

The use of Zenith Petroleum as a secondary intermediary — layered between Petronova and DTI to further obscure the Volkhov origin of the crude oil — may be viewed by the DOJ as evidence of deliberate structuring designed to evade sanctions. If the government can establish that DTI personnel (particularly Natasha Sorokin and Derek Hargrave) were aware that Zenith Petroleum was serving as a pass-through entity for Volkhov-origin crude, the knowing and willful element of an IEEPA criminal violation would be significantly strengthened. The email correspondence discussed in Section V.B above, in which Sorokin communicated with both Volkov and Qureshi regarding the same cargo parcels, is particularly damaging in this regard, as it suggests that Sorokin was aware of the coordinated nature of the trading arrangements.

It is also significant that the grand jury subpoena GJ No. 22-418, issued on April 19, 2022, specifically names Zenith Petroleum DMCC as a subject counterparty. This indicates that the DOJ has independently identified Zenith Petroleum as a person of interest in the investigation and is seeking documents and information relating to DTI's transactions with the entity. The naming of Zenith Petroleum in the subpoena underscores the importance of developing a complete factual record regarding these transactions as expeditiously as possible.

VIII. Open Items and Recommendations

A. Further Investigation Steps

Based on the findings set forth in this memorandum, the investigation team recommends the following additional steps to further develop the factual record regarding Zenith Petroleum:

1. Additional banking records. We recommend requesting additional account records from Crescent Commercial Bank PJSC for Zenith Petroleum's accounts, including complete account statements, wire transfer details, and supporting documentation for the full period of January 2019 to present. These records should be obtained through Dunmore's existing relationship with Khalid Mansour at Crescent Bank. The objective is to trace the full payment chain between Zenith Petroleum, Petronova, and any other entities that may have been involved in the relevant crude oil supply chains.

2. Ridgeline forensic analysis. We recommend that Ridgeline Advisory Group be directed to complete its full forensic analysis of the two Zenith Petroleum transaction flows, including a complete tracing of the upstream sourcing chain and the downstream payment flows, as part of its broader engagement. Ridgeline's final forensic report is expected by approximately April 1, 2023. However, given the significance of the Zenith Petroleum findings for the ongoing DOJ investigation, we recommend requesting that Ridgeline prioritize its analysis of these two transactions to the extent practicable.

3. Interview of Farhan Qureshi. We recommend exploring the feasibility of securing a voluntary interview with Farhan Qureshi. Such an interview could provide critical information about Zenith Petroleum's upstream suppliers, its relationship with Petronova and Sergei Volkov, and the extent of Qureshi's knowledge of the Volkhov connection. However, any outreach to Qureshi must be carefully assessed in light of jurisdictional risks (Qureshi is a non-U.S. person located outside the United States), cooperation risks (an approach by Dunmore's counsel could alert Qureshi and prompt him to destroy evidence or coordinate his account with other witnesses), and the need to avoid any action that could be construed by the DOJ as witness tampering or obstruction. We recommend consulting with AUSA Calloway before making any approach to Qureshi to confirm that the DOJ does not object.

4. Second-round witness interviews. The second round of witness interviews is scheduled to commence on August 5, 2022. We recommend that the following topics be addressed in the second-round interviews:

• Re-interview of Omar Al-Rashidi: Al-Rashidi should be asked to provide additional detail regarding his understanding of the relationship between Zenith Petroleum and Petronova, the basis for his characterization of Zenith Petroleum as being "in the same orbit" as Petronova, and the circumstances of his approval of Zenith Petroleum as a counterparty in August 2020.

• Re-interview of Natasha Sorokin: Sorokin's personal counsel, Philip Keane of Wexford Keane LLP, should be contacted to arrange a second interview in which Sorokin is asked specifically about the two Zenith Petroleum transactions, her communications with Qureshi and Volkov regarding coordinated cargo scheduling, and her understanding of the sourcing of the crude oil involved in these transactions. Given that Sorokin is represented by independent counsel and has invoked certain Fifth Amendment concerns in prior discussions, cooperation in a second interview is not assured, and this contingency should be factored into the investigation plan.

B. Implications for DOJ Cooperation and Proffer

The Zenith Petroleum findings described in this memorandum should be incorporated into the supplemental proffer to AUSA Calloway. The initial proffer in this matter was made on July 15, 2022, and the Zenith Petroleum analysis — which was not yet complete at the time of the initial proffer — represents a material addition to the factual record that should be disclosed in a timely manner consistent with the cooperation strategy.

We further recommend that the Zenith Petroleum analysis be included as a discrete section in the comprehensive internal investigation report that is being prepared for submission to the DOJ. That report, currently expected to total approximately 176 pages, is intended to provide a thorough accounting of DTI's trading activities, the identified sanctions violations, the compliance program failures that enabled those violations, and the remedial measures implemented by Dunmore. The Zenith Petroleum findings should be integrated into both the transaction-by-transaction analysis and the counterparty due diligence section of that report.

C. Implications for OFAC Voluntary Self-Disclosure

The two Zenith Petroleum transactions should be included within the scope of any future OFAC voluntary self-disclosure ("VSD"). Under OFAC's Enforcement Guidelines, the filing of a complete and timely VSD is a significant mitigating factor in OFAC's calculation of civil monetary penalties. Given that the Zenith Petroleum transactions potentially constitute apparent violations of Directive 2, the omission of these transactions from a VSD could undermine the completeness and credibility of the disclosure.

The broader VSD strategy — including the question of whether and when to file a VSD, the scope of transactions to be included, and the coordination of any VSD with the ongoing DOJ criminal investigation — is to be analyzed in the memorandum being prepared by Conrad Reeves on VSD strategy, which is anticipated for completion in 2023.

IX. Conclusion

Based on the due diligence findings set forth in this memorandum, the investigation team has reached the following conclusions:

1. Zenith Petroleum DMCC, while not itself an OFAC-designated entity, functioned as a secondary intermediary in a supply chain that facilitated DTI's access to crude oil originating from Volkhov Industrial Group-controlled operations. The evidence indicates that Zenith Petroleum operated in close coordination with Petronova Trading FZE, serving as an additional layer of intermediation designed to distance DTI from the sanctioned or sanctions-adjacent source of the crude oil.

2. The two flagged crude oil swap transactions involving Zenith Petroleum — with a combined notional value of approximately $41.5 million — are properly included within the nine tainted transactions (totaling approximately $156.3 million in notional value) that Ridgeline Advisory Group has identified as involving crude oil ultimately sourced from or destined for Volkhov-connected entities, in potential violation of OFAC Directive 2 under Executive Order 13662.

3. DTI's failure to conduct adequate counterparty due diligence on Zenith Petroleum at the time of onboarding — including the failure to perform OFAC screening, the failure to investigate Zenith Petroleum's ownership and business relationships, and the failure to conduct enhanced due diligence despite the entity's activity in Russian-origin crude markets — constitutes a significant compliance failure. The subsequent failure to escalate clear red flags that arose during the course of the trading relationship, including the temporal overlap with Petronova transactions, the structured payment patterns at Crescent Commercial Bank, and the acknowledged awareness of senior DTI personnel regarding the Petronova–Zenith Petroleum connection, compounded the initial onboarding deficiencies and contributed materially to the sanctions compliance failures at the center of this investigation.

4. Further investigation is needed. The forensic analysis of the Zenith Petroleum transaction flows is preliminary, and important open questions remain regarding the full payment chain, the identity of upstream suppliers, and the extent of knowledge and intent on the part of DTI personnel. The investigation team's recommendations for further steps are set forth in Section VIII above.

This memorandum will be supplemented as additional information becomes available.

Appendices (Referenced)

The following appendices are attached to this memorandum or are available in the investigation team's document repository:

Appendix A — Zenith Petroleum DMCC Corporate Registry Extract

DMCC registration documents for Zenith Petroleum DMCC, including the certificate of incorporation, trade license, and memorandum and articles of association. Registered address: Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE.

Appendix B — Transaction Summary for the Two Zenith Petroleum Crude Oil Swaps

Appendix C — Selected Wire Transfer Records (Crescent Commercial Bank PJSC)

Excerpted wire transfer confirmations and account records documenting transfers between Zenith Petroleum DMCC and Petronova Trading FZE at Crescent Commercial Bank PJSC, Dubai. These transfers form part of the 127 structured transactions (totaling approximately $34.2 million) identified by Ridgeline Advisory Group between March 2020 and March 2022.

Appendix D — Key Email Correspondence

Selected email correspondence retrieved from the custodian files of Natasha Sorokin, including communications between Sorokin, Sergei Volkov (Petronova Trading FZE), and Farhan Qureshi (Zenith Petroleum DMCC) regarding coordinated crude oil cargo scheduling for the October 2020 and June 2021 transactions. Nexagen Bates Nos. NX-NS-004217 and NX-NS-007843 through NX-NS-007849.

Appendix E — OFAC Screening Results

Results of OFAC SDN List, SSI List, and Consolidated Screening List searches conducted on Zenith Petroleum DMCC and Farhan Qureshi as of July 5, 2022. No hits were returned for any screened party. Supplemental screening against the EU Consolidated List, UK OFSI List, and UN Security Council Sanctions Lists was also negative.

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

Field	Transaction 1	Transaction 2
Transaction Date	October 15, 2020	June 22, 2021
Counterparty	Zenith Petroleum DMCC	Zenith Petroleum DMCC
Notional Value	$18,412,600	$23,087,500
Crude Grade	Urals	Urals
Loading Port	Novorossiysk, Russia	Primorsk, Russia
Vessel	MT Caspian Horizon (IMO 9412078)	MT Baltic Pioneer (IMO 9518234)
Payment Amount	$18,412,600	$23,087,500
Payment Date	October 28, 2020	July 6, 2021
Crescent Bank Ref. No.	CCB-1028-20-7792	CCB-0706-21-3148
Trader of Record	Natasha Sorokin	Natasha Sorokin
Authorizing Officer	Derek Hargrave	Derek Hargrave

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum has been prepared by counsel in connection with pending and anticipated litigation and government investigations. It contains attorney mental impressions, conclusions, opinions, and legal theories, and is protected from disclosure by the attorney-client privilege, the work product doctrine, and all other applicable privileges. This document should not be disclosed to any third party without the prior written consent of counsel.
MEMORANDUM
July 5, 2022
TO: Victoria Chambers, Responsible Partner Jasmine Thornton, Lead Associate
FROM: Amara Osei, Associate, White Collar & Investigations (London)
RE: Counterparty Due Diligence Findings — Zenith Petroleum DMCC
MATTER: Dunmore Energy Holdings Ltd. — DOJ Sanctions & Export Controls Inquiry
MATTER NO.: 1016-00009
I. Executive Summary
This memorandum presents the results of counterparty due diligence conducted on Zenith Petroleum DMCC ("Zenith Petroleum" or the "Company"), a Dubai-based petroleum trading company managed by Farhan Qureshi, a Pakistani national resident in the United Arab Emirates. The due diligence was undertaken as part of the broader internal investigation into potential sanctions violations by Dunmore Energy Holdings Ltd. ("Dunmore") and its trading subsidiary, Dunmore Trading International Ltd. ("DTI"), in connection with the ongoing inquiry by the United States Department of Justice ("DOJ").
Zenith Petroleum was involved in two of the fourteen crude oil swap transactions flagged for further investigation that were executed by DTI between June 2020 and February 2022. The total notional value across all fourteen flagged transactions is approximately $218.7 million. Of those fourteen, Ridgeline Advisory Group LLC ("Ridgeline"), the forensic accounting firm retained in this matter, has identified nine transactions — with an aggregate notional value of approximately $156.3 million — as "tainted," meaning that the underlying crude oil was ultimately sourced from or destined for entities controlled by or affiliated with Volkhov Industrial Group JSC ("Volkhov"), a Russian energy conglomerate chaired by Arkady Volkhov. The two Zenith Petroleum transactions fall squarely within this subset of nine tainted transactions.
Our due diligence findings reveal circumstantial but significant indicators of a commercial relationship between Zenith Petroleum and both Petronova Trading FZE ("Petronova") — a Dubai-based trading entity managed by Sergei Volkov, a Russian national with known ties to the Volkhov group — and Volkhov-affiliated interests more broadly. These findings raise substantial concerns under the sanctions programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), including Directive 2 under Executive Order 13662 (imposing sectoral sanctions on the energy sector of the Russian Federation, effective as to Volkhov since November 15, 2019), and the full Specially Designated Nationals and blocked Persons ("SDN") blocking designation subsequently imposed on Volkhov under Executive Order 14024 on April 6, 2022.
In summary, the evidence gathered to date supports the conclusion that Zenith Petroleum served as a secondary intermediary in the supply chain alongside Petronova, facilitating DTI's access to Volkhov-origin crude oil. While Zenith Petroleum is not itself an OFAC-designated entity, and while no direct equity link between Zenith Petroleum and Volkhov or Petronova has been established, the pattern of back-to-back trading, coordinated cargo scheduling, and structured payments through shared banking relationships at Crescent Commercial Bank PJSC collectively paints a picture of a company operating in close coordination with sanctioned or sanctions-adjacent interests. DTI's failure to conduct adequate due diligence on Zenith Petroleum at onboarding — and its subsequent failure to escalate multiple red flags during the course of the trading relationship — is a significant compliance failure that will require careful treatment in any future DOJ proffer or OFAC voluntary self-disclosure.
This memorandum should be read in conjunction with the related memoranda prepared by other members of the investigation team, as cross-referenced throughout.
II. Scope and Methodology
A. Scope of Inquiry
The due diligence inquiry focused on the following principal areas with respect to Zenith Petroleum:
1.  Corporate structure and formation. Examination of Zenith Petroleum's legal formation, registered address, trade licensing, and organizational documents as filed with the Dubai Multi Commodities Centre ("DMCC").
2.  Beneficial ownership. Identification and verification, to the extent possible, of the ultimate beneficial owner(s) of Zenith Petroleum, including an assessment of whether any beneficial ownership interest is held, directly or indirectly, by Volkhov Industrial Group JSC, Arkady Volkhov, Sergei Volkov, Petronova Trading FZE, or any other OFAC-designated person or entity.
3.  Commercial activities. Review of Zenith Petroleum's principal lines of business, trading counterparties, geographical focus, and commodity trading patterns, with particular attention to any involvement in Russian-origin crude oil markets or trade flows involving the Commonwealth of Independent States ("CIS") region.
4.  Relationships with Petronova Trading FZE, Volkhov Industrial Group JSC, and affiliated entities. Investigation of any direct or indirect commercial, financial, or personal relationships between Zenith Petroleum (or its principal, Farhan Qureshi) and Petronova Trading FZE (managed by Sergei Volkov, a Russian national and UAE resident), Volkhov Industrial Group JSC (chaired by Arkady Volkhov), or any other OFAC-designated persons or entities.
5.  OFAC screening. Screening of Zenith Petroleum and its known personnel against the OFAC SDN List, the Sectoral Sanctions Identifications ("SSI") List, and the Consolidated Screening List, as well as other relevant sanctions and export control lists.
The temporal scope of the inquiry covers the period from January 1, 2019 to the present date. This timeframe is consistent with the scope established by grand jury subpoena GJ No. 22-418, issued on April 19, 2022, by the United States District Court for the District of Columbia, Grand Jury 22-2, which required the production of documents relating to, among other things, crude oil trading activities involving counterparties in the Russian Federation, the United Arab Emirates, and related jurisdictions from January 1, 2019 forward.
B. Sources Consulted
In conducting this due diligence inquiry, the investigation team consulted the following sources:
1.  DMCC Corporate Registry Filings. Corporate registration records and trade license records for Zenith Petroleum DMCC as maintained by the DMCC. The registered address reflected in these filings is Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE.
2.  OFAC and Sanctions Databases. The OFAC SDN List, the SSI List, and the Consolidated Screening List were searched as of the date of this memorandum (July 5, 2022). Additional screening was conducted against the European Union Consolidated List of Sanctions, the United Kingdom's Office of Financial Sanctions Implementation ("OFSI") Consolidated List, and the United Nations Security Council Sanctions Lists.
3.  Open-Source intelligence (OSINT). The investigation team conducted open-source research utilizing corporate databases (including Bureau van Dijk's Orbis database, Dunmore Enterprises, and the UAE Ministry of Economy commercial registry), media reports, shipping and cargo tracking databases (including Halcyon Health IT and Ridgeway Technologies), and commercial registries in the UAE, Pakistan, and the Russian Federation. Social media and professional networking sites were also reviewed for information concerning Farhan Qureshi and other persons of interest.
4.  DTI Custodian Documents. Documents produced from the files and electronic devices of the following DTI data custodians were reviewed for information relevant to Zenith Petroleum:
•  Derek Hargrave, President, DTI (placed on administrative leave effective July 1, 2022);
•  Natasha Sorokin, Senior Trader, DTI (placed on administrative leave effective May 16, 2022);
•  Omar Al-Rashidi, Head of Middle East Operations, DTI; and
•  Rajesh Malhotra, Controller, DTI.
5.  Banking Records. Payment records obtained from Crescent Commercial Bank PJSC ("Crescent Bank"), Dubai, including wire transfer confirmations, account statements, and correspondence with the bank's relationship manager, Khalid Mansour. These records were obtained through Dunmore's existing banking relationship with Crescent Bank and pursuant to voluntary cooperation by the bank.
6.  Ridgeline Advisory Group LLC — Preliminary Forensic Tracing. Preliminary forensic tracing information prepared by Ridgeline Advisory Group LLC under Engagement No. RAG-2022-0319. Dr. Margaret Liu, CPA, CFE, serves as engagement lead. Ridgeline was retained by this firm on May 2, 2022, to conduct forensic accounting analysis of the fourteen flagged crude oil swap transactions, trace payment flows, and identify connections to Volkhov-affiliated entities. The information referenced in this memorandum is preliminary; Ridgeline's final forensic report is expected by approximately April 1, 2023.
7.  Nexagen Analytics Inc. — Document Review Platform. Relevant custodian documents were identified and reviewed through the e-discovery platform maintained by Nexagen Analytics Inc. (Project No. NX-DEH-2204; project manager: Brian Cavanaugh). The document population for the Zenith Petroleum review was identified using technology-assisted review ("TAR"), supplemented by targeted keyword and date-range searches. The TAR model was trained on a seed set of documents manually coded by the investigation team and validated through quality control sampling.
8.  Witness Interview Memoranda. Memoranda prepared from first-round witness interviews conducted between May 18 and June 30, 2022. The interviews most directly relevant to the Zenith Petroleum due diligence are:
•  Omar Al-Rashidi, interviewed June 14, 2022 (counsel present: Jasmine Thornton, Amara Osei); and
•  Natasha Sorokin, interviewed June 2, 2022 (counsel present: Jasmine Thornton; Sorokin's personal counsel Philip Keane of Wexford Keane LLP was also present).
Other first-round interviews, including interviews of Rajesh Malhotra and certain other DTI and Dunmore personnel, provided background information but did not yield material information specific to Zenith Petroleum.
III. Corporate Profile — Zenith Petroleum DMCC
A. Formation and Registration
Zenith Petroleum DMCC is a company formed and registered under the DMCC Companies Regulations within the Dubai Multi Commodities Centre free zone. The key registration details are as follows:
•  Full legal name: Zenith Petroleum DMCC
•  Entity type: DMCC company (limited liability company registered with the Dubai Multi Commodities Centre)
•  Registered address: Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE
•  Date of incorporation: Approximately March 2017, per DMCC registry records. The Company has held a valid DMCC trade license continuously since that date and was thus an established trading entity with approximately three years of operating history before the first flagged transaction in June 2020.
•  Business activities (per trade license): Trading in crude oil and refined petroleum products, with a primary focus on the Middle East and CIS markets. The Company's DMCC trade license authorizes general trading in petroleum commodities, and DMCC registry records do not reflect any regulatory restrictions or disciplinary actions against the entity.
A copy of the DMCC corporate registry extract is attached as Appendix A.
B. Key Personnel
The sole director, managing director, and authorized signatory of Zenith Petroleum is Farhan Qureshi, a Pakistani national who is a resident of the United Arab Emirates. Mr. Qureshi has been associated with the Company since its formation in 2017, and his name appears on all corporate filings, trade confirmations, and banking documents reviewed to date.
Open-source research indicates that Mr. Qureshi has approximately fifteen years of experience in commodity trading in the Gulf region. Prior to founding Zenith Petroleum, he was employed at several smaller Dubai-based trading houses, including Gulf Star Commodities DMCC (approximately 2010–2014) and Horizon Petrochem FZE (approximately 2014–2017). Neither of these prior employers appears on any OFAC sanctions list, and neither has been identified as having any affiliation with Volkhov Industrial Group or its network of entities.
No additional employees, officers, or directors of Zenith Petroleum have been identified through DMCC filings or other sources. The Company appears to operate as a small trading operation managed principally by Mr. Qureshi, which is not unusual for DMCC-registered commodity trading entities.
OFAC Screening: Neither Zenith Petroleum DMCC nor Farhan Qureshi appears on the OFAC SDN List, the SSI List, or the Consolidated Screening List as of the date of this memorandum. Screening was also negative against the EU Consolidated List, the UK OFSI List, and the UN Security Council Sanctions Lists. Full OFAC screening results are set forth in Appendix E.
C. Ownership Structure
Per DMCC corporate filings, Farhan Qureshi is the registered sole shareholder of Zenith Petroleum DMCC. The Company is structured as a free zone limited liability entity, and Mr. Qureshi holds 100% of the issued share capital in his individual capacity.
It is important to note, however, that the DMCC's disclosure and transparency requirements with respect to beneficial ownership are limited. While the DMCC requires disclosure of the registered shareholder, it does not mandate comprehensive disclosure of ultimate beneficial ownership in a manner comparable to, for example, the United Kingdom's Persons with Significant Control register. Accordingly, the investigation team has not been able to independently verify whether Mr. Qureshi holds his shareholding beneficially for his own account or whether any undisclosed beneficial ownership interest exists behind his personal shareholding. This is a significant limitation of the available corporate records.
Our open-source due diligence has not identified any direct equity ties between Farhan Qureshi and Volkhov Industrial Group JSC, Arkady Volkhov, Sergei Volkov, or Petronova Trading FZE. No nominee shareholder arrangements, trust structures, or other indirect ownership mechanisms linking these parties to Zenith Petroleum have been identified through the sources consulted. However, the absence of evidence in this regard is not dispositive, particularly given the opacity of the DMCC corporate registry and the general difficulty of tracing beneficial ownership through UAE free zone structures.
D. Banking Relationships
Zenith Petroleum maintains its primary banking relationship at Crescent Commercial Bank PJSC in Dubai. The Company holds at least one current (operating) account and one trade finance facility at Crescent Bank. The bank's relationship manager for the Zenith Petroleum account is Khalid Mansour, who is also the relationship manager for several other DMCC-registered commodity trading entities.
Significantly, Ridgeline Advisory Group's preliminary forensic tracing has confirmed that Petronova Trading FZE also maintains accounts at Crescent Commercial Bank PJSC. As discussed further in Section V below, wire transfer records obtained from Crescent Bank reveal payments flowing between Zenith Petroleum and Petronova accounts at the same institution in close temporal proximity to the two flagged crude oil swap transactions.
In addition to its Crescent Bank relationship, Zenith Petroleum appears to maintain at least one secondary banking relationship with another UAE-based financial institution. This secondary account was identified in certain transaction records reviewed during the document review process; however, it does not appear to be directly relevant to the two suspect transactions that are the focus of this memorandum, and we have not yet obtained records from this institution.
IV. The Two Flagged Crude Oil Swap Transactions
A. Transaction Overview
As noted above, Zenith Petroleum was a named counterparty in two of the fourteen crude oil swap transactions executed by DTI between June 2020 and February 2022 that have been flagged for investigation. Both of these transactions fall within the subset of nine "tainted" transactions — with a combined notional value of approximately $156.3 million — that Ridgeline Advisory Group has identified as involving crude oil ultimately sourced from or destined for entities controlled by or affiliated with Volkhov Industrial Group JSC. These nine transactions are of the highest concern from a sanctions compliance perspective, as they potentially violated OFAC Directive 2 under Executive Order 13662, which imposed sectoral sanctions on the energy sector of the Russian Federation and which became applicable to Volkhov Industrial Group on November 15, 2019.
A summary table for both Zenith Petroleum transactions is attached as Appendix B. Each transaction is discussed individually below.
B. Transaction 1
Date: On or about October 15, 2020.
Structure: This transaction was structured as a crude oil swap in which DTI purchased a cargo of crude oil from Zenith Petroleum. Under the terms of the trade confirmation, Zenith Petroleum agreed to deliver a specified quantity of Urals-grade crude oil to DTI on a CFR (Cost and Freight) basis, with delivery to take place at the port of Augusta, Italy. Zenith Petroleum sourced the crude oil from an undisclosed upstream supplier; the trade confirmation does not identify the original source of the cargo, and Zenith Petroleum's standard trading terms (as reflected in the confirmation) disclaim any obligation to disclose the identity of upstream suppliers.
Notional value: Approximately $18.4 million.
Cargo details: The cargo consisted of approximately 310,000 barrels of Urals-grade crude oil. The bill of lading, retrieved from Natasha Sorokin's custodian files, identifies the loading port as Novorossiysk, Russia, and the vessel as the MT Caspian Horizon (IMO No. 9412078), a medium-range crude oil tanker flagged in the marshall Islands. Shipping records from confirm that the MT Caspian Horizon called at Novorossiysk on or about October 8, 2020, and arrived at Augusta on or about October 22, 2020. The Novorossiysk loading port is significant because it is the principal export terminal for crude oil produced by Volkhov Industrial Group's upstream subsidiaries in the Russian Federation.
Key documents: The following documents pertaining to Transaction 1 were retrieved from DTI custodian files and are maintained in the Nexagen Analytics document review platform:
•  Trade confirmation dated October 12, 2020, executed between DTI (signed by Natasha Sorokin as authorized trader) and Zenith Petroleum DMCC (signed by Farhan Qureshi as managing director);
•  Bill of lading dated October 8, 2020, referencing the MT Caspian Horizon, loading port Novorossiysk;
•  Commercial invoice No. ZP-2020-0417 dated October 25, 2020, issued by Zenith Petroleum to DTI in the amount of $18,412,600;
•  Payment records reflecting a wire transfer of $18,412,600 from DTI's account at Harborline Commerce Bank (London) to Zenith Petroleum's account at Crescent Commercial Bank PJSC (Dubai) on October 28, 2020 (Crescent Bank reference No. CCB-1028-20-7792); and
•  Internal DTI deal approval memorandum signed by Derek Hargrave on October 11, 2020, authorizing the transaction.
Natasha Sorokin was the trader of record on Transaction 1, and Derek Hargrave authorized the transaction in his capacity as President of DTI.
C. Transaction 2
Date: On or about June 22, 2021.
Structure: Transaction 2 was structured similarly to Transaction 1. DTI purchased a cargo of crude oil from Zenith Petroleum on a CFR basis. The trade confirmation again specified delivery of Urals-grade crude oil, this time with delivery to the port of Rotterdam, Netherlands. As with Transaction 1, the trade confirmation did not identify Zenith Petroleum's upstream supplier.
Notional value: Approximately $23.1 million.
Cargo details: The cargo consisted of approximately 380,000 barrels of Urals-grade crude oil. The bill of lading identifies the loading port as Primorsk, Russia — another major Baltic export terminal through which Volkhov Industrial Group's upstream production is known to be exported — and the vessel as the MT Baltic Pioneer (IMO No. 9518234), a Suezmax crude oil tanker registered in Liberia. Shipping records confirm that the MT Baltic Pioneer loaded at Primorsk on or about June 15, 2021, and arrived at Rotterdam on or about June 28, 2021.
Notional value: Approximately $23.1 million.
Key documents: The following documents pertaining to Transaction 2 were retrieved from DTI custodian files:
•  Trade confirmation dated June 18, 2021, executed between DTI (signed by Natasha Sorokin) and Zenith Petroleum DMCC (signed by Farhan Qureshi);
•  Bill of lading dated June 15, 2021, referencing the MT Baltic Pioneer, loading port Primorsk;
•  Commercial invoice No. ZP-2021-0289 dated July 2, 2021, issued by Zenith Petroleum to DTI in the amount of $23,087,500;
•  Payment records reflecting a wire transfer of $23,087,500 from DTI's account at Harborline Commerce Bank (London) to Zenith Petroleum's account at Crescent Commercial Bank PJSC (Dubai) on July 6, 2021 (Crescent Bank reference No. CCB-0706-21-3148); and
•  Internal DTI deal approval memorandum signed by Derek Hargrave on June 17, 2021.
As with Transaction 1, Natasha Sorokin was the trader of record and Derek Hargrave provided authorization.
D. Combined Value
The combined notional value of the two Zenith Petroleum transactions is approximately $41.5 million ($18.4 million + $23.1 million). This represents approximately 26.6% of the $156.3 million total notional value across all nine tainted transactions, and approximately 19.0% of the $218.7 million aggregate notional value across all fourteen flagged transactions. These are material transactions both in absolute dollar terms and relative to the overall scope of the investigation.
V. Connections to Petronova Trading FZE and Volkhov Industrial Group
A. Relationship Between Zenith Petroleum and Petronova Trading FZE
The investigation has uncovered substantial documentary and circumstantial evidence of a close commercial relationship between Zenith Petroleum and Petronova Trading FZE. Petronova is a free zone entity registered at Office 1407, Al Shafar Tower, Dubai Internet City, Dubai, UAE, and is managed by Sergei Volkov, a Russian national and UAE resident. As previously reported, Sergei Volkov is believed to have familial ties to Arkady Volkhov's business network, and Petronova has been identified as a primary intermediary through which Volkhov-origin crude oil was channeled into the international trading market.
The key evidence of the Zenith Petroleum–Petronova relationship is as follows:
Back-to-back trading patterns. Documentary evidence retrieved from DTI custodian files — particularly the trading records and email correspondence of Natasha Sorokin — demonstrates that Zenith Petroleum and Petronova Trading FZE frequently co-participated in back-to-back crude oil swap chains. In both of the two Zenith Petroleum transactions described in Section IV above, Ridgeline Advisory Group's preliminary forensic analysis traced the underlying cargo sourcing back through intermediate entities to operations controlled by or affiliated with Volkhov Industrial Group JSC. In these chains, Petronova typically appeared as the first intermediary — purchasing crude directly from Volkhov-affiliated upstream entities — and Zenith Petroleum appeared as a secondary intermediary, purchasing from Petronova (or from another entity in the chain) and then selling onward to DTI. This layered structure is consistent with a deliberate effort to obscure the ultimate source of the crude oil and distance the end buyer (DTI) from the sanctioned or sanctions-adjacent originator.
Wire transfer records. Wire transfer records obtained from Crescent Commercial Bank PJSC reveal a pattern of payments flowing between Zenith Petroleum and Petronova in close temporal proximity to the two flagged transactions. These payments are part of a broader pattern identified by Ridgeline Advisory Group: across the period from March 2020 to March 2022, Ridgeline has identified 127 structured wire transactions totaling approximately $34.2 million flowing between accounts associated with Petronova Trading FZE and Zenith Petroleum DMCC at Crescent Bank. While not all of these transfers are necessarily connected to the two flagged DTI transactions, the temporal clustering and round-dollar amounts of certain transfers are strongly suggestive of coordinated activity.
The following exemplary wire transfers are of particular note:
•  October 9, 2020: Wire transfer of $5,200,000 from Petronova Trading FZE (Crescent Bank Acct. No. ending -4418) to Zenith Petroleum DMCC (Crescent Bank Acct. No. ending -7761), reference "Trade Settlement — Oct-20." This transfer occurred six days before the October 15, 2020 trade confirmation for Transaction 1.
•  October 26, 2020: Wire transfer of $3,800,000 from Zenith Petroleum DMCC to Petronova Trading FZE at Crescent Bank, reference "Cargo Advance — ZP/PT/1020." This transfer occurred one day after Zenith Petroleum issued its invoice to DTI for Transaction 1.
•  June 16, 2021: Wire transfer of $7,450,000 from Petronova Trading FZE to Zenith Petroleum DMCC at Crescent Bank, reference "Pre-payment — June Cargo." This transfer occurred one day after the MT Baltic Pioneer loaded at Primorsk for Transaction 2.
•  July 8, 2021: Wire transfer of $4,100,000 from Zenith Petroleum DMCC to Petronova Trading FZE at Crescent Bank, reference "Settlement — ZP/PT/0621." This transfer occurred two days after DTI's payment to Zenith Petroleum for Transaction 2.
These transfer records, excerpted from Crescent Bank's records, are attached as Appendix C.
B. Potential Links to Volkhov Industrial Group JSC
Volkhov Industrial Group JSC is a Russian energy conglomerate headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russian Federation, and chaired by Arkady Volkhov. Volkhov Industrial Group operates upstream oil production, pipeline transportation, and downstream refining assets across the Russian Federation, with particularly significant operations in Western Siberia and the Volga-Urals basin.
Volkhov Industrial Group was designated by OFAC under Directive 2 of Executive Order 13662 (sectoral sanctions on the energy sector of the Russian Federation) effective November 15, 2019. Directive 2 prohibited U.S. persons from transacting in, providing financing for, or otherwise dealing in new debt of longer than 60 days maturity or new equity for Volkhov Industrial Group and entities in which it holds a 50% or greater ownership interest. More recently, following the Russian Federation's invasion of Ukraine, Volkhov Industrial Group and Arkady Volkhov personally were placed on the OFAC SDN List (full blocking) on April 6, 2022, pursuant to Executive Order 14024.
No direct corporate or equity link has been identified between Zenith Petroleum DMCC and Volkhov Industrial Group JSC. As noted in Section III.C above, open-source due diligence and corporate registry searches have not revealed any shareholding, directorship, or other formal corporate relationship connecting Farhan Qureshi or Zenith Petroleum to Arkady Volkhov, Volkhov Industrial Group, or any Volkhov subsidiary.
However, substantial circumstantial evidence suggests that Zenith Petroleum functioned as a secondary intermediary in Volkhov's crude oil export chain:
Shipping records and loading ports. The bills of lading for both Zenith Petroleum transactions identify loading ports — Novorossiysk (Transaction 1) and Primorsk (Transaction 2) — that are the principal export terminals for crude oil produced by Volkhov Industrial Group's upstream subsidiaries. While these are major commercial ports used by many Russian oil exporters, the combination of loading port data with the other circumstantial evidence discussed in this section is significant. Furthermore, Halcyon Health IT records indicate that the vessel charters for both the MT Caspian Horizon and the MT Baltic Pioneer were arranged through Volga Maritime Services LLC, a shipping and logistics company that open-source research identifies as a regular service provider to Volkhov-affiliated entities.
Email correspondence. Email correspondence retrieved from Natasha Sorokin's custodian files demonstrates that Sorokin communicated with both Sergei Volkov (at Petronova) and Farhan Qureshi (at Zenith Petroleum) regarding the same cargo parcels. Specifically:
•  In an email dated October 6, 2020 (Nexagen Bates No. NX-NS-004217), Sorokin wrote to Volkov and Qureshi (copying no one at DTI) to discuss "the October Novorossiysk lifting" and to coordinate loading dates and vessel nominations. The email chain suggests that Sorokin was aware that the cargo she was negotiating to purchase from Zenith Petroleum was, in fact, being sourced from the same supply chain as cargoes arranged through Petronova.
•  In a separate email chain dated June 10–12, 2021 (Nexagen Bates Nos. NX-NS-007843 through NX-NS-007849), Sorokin exchanged messages with Qureshi regarding the "June Primorsk parcel," with Volkov copied on certain messages. The correspondence includes discussion of pricing, vessel availability, and loading schedules, and contains a reference by Qureshi to "the usual arrangement with S.V." — which in context appears to refer to Sergei Volkov and/or the standard commercial terms between Zenith Petroleum and Petronova.
Selected emails are attached as Appendix D.
Witness testimony. During his June 14, 2022 interview, Omar Al-Rashidi, Head of Middle East Operations at DTI, provided significant testimony regarding the relationship between Zenith Petroleum and Petronova. When asked about DTI's use of Zenith Petroleum as a counterparty, Al-Rashidi stated that he understood Zenith Petroleum to be "in the same orbit" as Petronova and that the two entities were used interchangeably as a booking counterparty "depending on documentation and pricing considerations." Al-Rashidi further stated that it was his understanding that Natasha Sorokin, as the lead trader on these transactions, would select either Petronova or Zenith Petroleum as the named counterparty based on factors including which entity could offer more favorable terms, which entity's documentation was better suited to the specific transaction structure, and — notably — which entity would be less likely to attract scrutiny from Dunmore's compliance function. Al-Rashidi stated that he did not personally make the decision to use Zenith Petroleum but was aware that Sorokin and, to a lesser extent, Derek Hargrave, were familiar with the arrangement.
It should be noted that Al-Rashidi's testimony is subject to the caveats outlined in the interview memorandum, including that Al-Rashidi has a personal interest in minimizing his own role in the transactions and in attributing knowledge to Sorokin and Hargrave. Nevertheless, his account is consistent with the documentary record.
C. OFAC 50% Rule Analysis
As a preliminary matter, the investigation team has considered whether Zenith Petroleum is itself subject to OFAC sanctions by operation of the so-called "50% Rule." Under OFAC guidance, entities that are owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons are themselves considered blocked, regardless of whether the entity appears on the SDN List by name. This analysis is set forth in greater detail in the memorandum prepared by Conrad Reeves dated June 20, 2022, which analyzes Volkhov's designation history and the application of the 50% Rule to various entities in Volkhov's network.
On the available evidence, Zenith Petroleum does not appear to be 50% or more owned by Volkhov Industrial Group JSC or any other SDN-designated entity. Farhan Qureshi is the sole registered shareholder, and no evidence of hidden beneficial ownership by Volkhov or any SDN-listed person has been identified. Accordingly, Zenith Petroleum is not itself a blocked entity by operation of the 50% Rule.
However, this conclusion does not end the sanctions analysis. The critical question for purposes of the DTI transactions is not whether Zenith Petroleum was itself blocked, but rather whether the underlying crude oil transactions were conducted "for the benefit of" or involved the "interests of" Volkhov Industrial Group — which was designated under Directive 2 (sectoral sanctions) throughout the period of both transactions, and which became a fully blocked SDN as of April 6, 2022. The forensic evidence assembled to date strongly suggests that the crude oil in both transactions originated from Volkhov-controlled upstream operations, that Petronova and Zenith Petroleum served as layered intermediaries to obscure this fact, and that the economic benefit of the transactions ultimately inured to Volkhov's interests. Under OFAC's broad interpretive guidance regarding prohibited dealings that involve the "interests" of sanctioned persons, the use of non-designated intermediaries does not shield the underlying transaction from sanctions prohibitions if the transaction is structured to evade or avoid those prohibitions.
This issue requires further legal analysis and will be addressed in greater detail in subsequent memoranda.
VI. Assessment of Dunmore's Pre-Transaction Due Diligence on Zenith Petroleum
A. DTI's KYC and Onboarding Records
The investigation team reviewed DTI's counterparty onboarding file for Zenith Petroleum DMCC. The file, which was maintained in DTI's compliance records and retrieved from Rajesh Malhotra's custodian files, is notable for its thinness. The onboarding file contained the following materials:
•  Basic DMCC registration documents for Zenith Petroleum, including the company's certificate of incorporation and trade license;
•  A photocopy of Farhan Qureshi's UAE residence visa and Pakistani passport;
•  A standard DTI counterparty questionnaire, completed by Qureshi, providing basic information about Zenith Petroleum's business activities, principal markets, and banking relationships; and
•  A single-page internal DTI memorandum noting the approval of Zenith Petroleum as a trading counterparty, signed by Omar Al-Rashidi and dated August 3, 2020.
Critically, the onboarding file contained no record of OFAC screening having been conducted on Zenith Petroleum or Farhan Qureshi at the time of onboarding. This deficiency is not unique to Zenith Petroleum; rather, it is consistent with the broader and systemic deficiencies in Dunmore's pre-existing sanctions compliance program that have been identified during the investigation. The full scope and nature of these compliance program failures will be discussed in detail in the memorandum being prepared by Conrad Reeves and Jasmine Thornton on the adequacy of Dunmore's pre-existing sanctions compliance program, which is anticipated to be dated November 15, 2022.
Furthermore, the onboarding file contained no enhanced due diligence of any kind. Despite Zenith Petroleum's status as a Dubai-based trading entity active in Russian-origin crude oil markets — a profile that should have triggered heightened scrutiny under any reasonably designed sanctions compliance program — there is no evidence that DTI's compliance function conducted any additional investigation into Zenith Petroleum's ownership structure, beneficial ownership, upstream suppliers, or potential connections to sanctioned persons or entities.
B. Red Flags Not Escalated
Beyond the deficient onboarding, the investigation has identified several red flags that arose during the course of DTI's trading relationship with Zenith Petroleum — red flags that should have triggered enhanced due diligence, an independent compliance review, or escalation to the Chief Compliance Officer. At the relevant time, the Chief Compliance Officer of Dunmore was Gerald Fisk, who departed the company on June 10, 2022, under circumstances that are the subject of a separate inquiry.
The red flags that should have been escalated include the following:
1.  Involvement in Russian-origin crude oil trades. Both Zenith Petroleum transactions involved Urals-grade crude oil loaded at Russian export terminals (Novorossiysk and Primorsk). Given the heightened sanctions risk associated with Russian-origin energy commodities — particularly after OFAC's November 2019 designation of Volkhov under Directive 2 — any transaction involving Russian-origin crude should have been flagged for enhanced review.
2.  Temporal overlap with Petronova transactions. The two Zenith Petroleum transactions occurred during the same period in which DTI was executing similar crude oil swap transactions with Petronova Trading FZE. In several instances, the Zenith Petroleum and Petronova transactions involved similar cargo lots, loading ports, and vessel charters. This overlap should have been detected by any reasonably designed transaction monitoring system or, at a minimum, by the traders and compliance personnel responsible for reviewing deal documentation.
3.  Payment structures through Crescent Commercial Bank PJSC. The routing of payments through Zenith Petroleum's and Petronova's accounts at the same Crescent Bank branch, with transfers between the two entities occurring in close temporal proximity to the DTI transactions, is a classic indicator of layered or structured payment flows designed to obscure the ultimate beneficiary of a transaction. These payment patterns should have been identified through routine transaction monitoring.
4.  Al-Rashidi's awareness of the Petronova–Zenith Petroleum relationship. Omar Al-Rashidi, who approved the onboarding of Zenith Petroleum as a counterparty, has acknowledged in his interview that he was aware of the commercial relationship between Petronova and Zenith Petroleum. This awareness should have prompted Al-Rashidi to escalate the matter to the Chief Compliance Officer or to insist on enhanced due diligence before approving Zenith Petroleum as a counterparty — particularly given that Petronova's own connections to Volkhov-affiliated interests were, or should have been, known to DTI's senior management.
The compliance failures and supervisory deficiencies of Gerald Fisk in his capacity as Chief Compliance Officer — including his failure to implement adequate transaction monitoring, his failure to require OFAC screening of new counterparties, and his apparent failure to supervise the trading desk's onboarding of high-risk counterparties like Zenith Petroleum — are analyzed in the separate memorandum prepared by Nicholas Ferreira, dated August 15, 2022.
VII. Regulatory Implications
A. OFAC Sanctions Analysis
The two Zenith Petroleum transactions described in this memorandum potentially violated Directive 2 under Executive Order 13662, which imposes sectoral sanctions on the energy sector of the Russian Federation. Volkhov Industrial Group JSC was added to the SSI List under Directive 2 effective November 15, 2019. Both Zenith Petroleum transactions — dated October 2020 and June 2021, respectively — occurred during the period when Directive 2 was in effect as to Volkhov. The forensic evidence indicates that the crude oil involved in both transactions was sourced from Volkhov-controlled upstream operations and that the transactions were structured through intermediaries (Petronova and Zenith Petroleum) to obscure this fact.
Following the escalation of U.S. sanctions on Russia in early 2022, Volkhov Industrial Group and Arkady Volkhov were placed on the OFAC SDN List (full blocking) on April 6, 2022, pursuant to Executive Order 14024. Under the SDN designation, all property and interests in property of Volkhov Industrial Group and Arkady Volkhov that are in the United States, or in the possession or control of U.S. persons, are blocked, and U.S. persons are broadly prohibited from engaging in any transactions involving such property or interests. However, it is important to note that the two Zenith Petroleum transactions predate the April 6, 2022 SDN designation, and thus the analysis of those transactions turns on the more limited prohibitions of Directive 2 rather than the broader blocking provisions applicable to SDN-listed persons.
The analysis of whether DTI, its employees, or Dunmore constituted "U.S. persons" for purposes of OFAC jurisdiction — a threshold question that determines whether OFAC sanctions apply to their conduct — is addressed in the memorandum prepared by Jasmine Thornton dated May 10, 2022, which analyzes Dunmore's corporate structure and the jurisdictional nexus to U.S. sanctions law. As noted in that memorandum, the relevant jurisdictional connections include DTI's use of U.S. dollar-denominated wire transfers cleared through U.S. correspondent banks, the U.S. citizenship of Derek Hargrave, and the presence of certain Dunmore group entities incorporated in the United States.
The applicable regulatory provisions governing the sanctions analysis include 31 C.F.R. Part 589 (Ukraine-/Russia-Related Sanctions Regulations) and the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, which provides the statutory authority for the Executive Orders under which Volkhov was designated.
B. Criminal Exposure
The two Zenith Petroleum transactions potentially implicate the criminal provisions of IEEPA, which provide for penalties of up to twenty years of imprisonment for willful violations. See 50 U.S.C. § 1705(c). The DOJ's National Security Division, through its Counterintelligence and Export Control Section, is leading the criminal investigation into the DTI transactions. The investigation is being supervised by Assistant United States Attorney Meredith Calloway, with Trial Attorneys Samuel Kovacs and Diana Pressman serving as co-counsel.
The use of Zenith Petroleum as a secondary intermediary — layered between Petronova and DTI to further obscure the Volkhov origin of the crude oil — may be viewed by the DOJ as evidence of deliberate structuring designed to evade sanctions. If the government can establish that DTI personnel (particularly Natasha Sorokin and Derek Hargrave) were aware that Zenith Petroleum was serving as a pass-through entity for Volkhov-origin crude, the knowing and willful element of an IEEPA criminal violation would be significantly strengthened. The email correspondence discussed in Section V.B above, in which Sorokin communicated with both Volkov and Qureshi regarding the same cargo parcels, is particularly damaging in this regard, as it suggests that Sorokin was aware of the coordinated nature of the trading arrangements.
It is also significant that the grand jury subpoena GJ No. 22-418, issued on April 19, 2022, specifically names Zenith Petroleum DMCC as a subject counterparty. This indicates that the DOJ has independently identified Zenith Petroleum as a person of interest in the investigation and is seeking documents and information relating to DTI's transactions with the entity. The naming of Zenith Petroleum in the subpoena underscores the importance of developing a complete factual record regarding these transactions as expeditiously as possible.
VIII. Open Items and Recommendations
A. Further Investigation Steps
Based on the findings set forth in this memorandum, the investigation team recommends the following additional steps to further develop the factual record regarding Zenith Petroleum:
1.  Additional banking records. We recommend requesting additional account records from Crescent Commercial Bank PJSC for Zenith Petroleum's accounts, including complete account statements, wire transfer details, and supporting documentation for the full period of January 2019 to present. These records should be obtained through Dunmore's existing relationship with Khalid Mansour at Crescent Bank. The objective is to trace the full payment chain between Zenith Petroleum, Petronova, and any other entities that may have been involved in the relevant crude oil supply chains.
2.  Ridgeline forensic analysis. We recommend that Ridgeline Advisory Group be directed to complete its full forensic analysis of the two Zenith Petroleum transaction flows, including a complete tracing of the upstream sourcing chain and the downstream payment flows, as part of its broader engagement. Ridgeline's final forensic report is expected by approximately April 1, 2023. However, given the significance of the Zenith Petroleum findings for the ongoing DOJ investigation, we recommend requesting that Ridgeline prioritize its analysis of these two transactions to the extent practicable.
3.  Interview of Farhan Qureshi. We recommend exploring the feasibility of securing a voluntary interview with Farhan Qureshi. Such an interview could provide critical information about Zenith Petroleum's upstream suppliers, its relationship with Petronova and Sergei Volkov, and the extent of Qureshi's knowledge of the Volkhov connection. However, any outreach to Qureshi must be carefully assessed in light of jurisdictional risks (Qureshi is a non-U.S. person located outside the United States), cooperation risks (an approach by Dunmore's counsel could alert Qureshi and prompt him to destroy evidence or coordinate his account with other witnesses), and the need to avoid any action that could be construed by the DOJ as witness tampering or obstruction. We recommend consulting with AUSA Calloway before making any approach to Qureshi to confirm that the DOJ does not object.
4.  Second-round witness interviews. The second round of witness interviews is scheduled to commence on August 5, 2022. We recommend that the following topics be addressed in the second-round interviews:
•  Re-interview of Omar Al-Rashidi: Al-Rashidi should be asked to provide additional detail regarding his understanding of the relationship between Zenith Petroleum and Petronova, the basis for his characterization of Zenith Petroleum as being "in the same orbit" as Petronova, and the circumstances of his approval of Zenith Petroleum as a counterparty in August 2020.
•  Re-interview of Natasha Sorokin: Sorokin's personal counsel, Philip Keane of Wexford Keane LLP, should be contacted to arrange a second interview in which Sorokin is asked specifically about the two Zenith Petroleum transactions, her communications with Qureshi and Volkov regarding coordinated cargo scheduling, and her understanding of the sourcing of the crude oil involved in these transactions. Given that Sorokin is represented by independent counsel and has invoked certain Fifth Amendment concerns in prior discussions, cooperation in a second interview is not assured, and this contingency should be factored into the investigation plan.
B. Implications for DOJ Cooperation and Proffer
The Zenith Petroleum findings described in this memorandum should be incorporated into the supplemental proffer to AUSA Calloway. The initial proffer in this matter was made on July 15, 2022, and the Zenith Petroleum analysis — which was not yet complete at the time of the initial proffer — represents a material addition to the factual record that should be disclosed in a timely manner consistent with the cooperation strategy.
We further recommend that the Zenith Petroleum analysis be included as a discrete section in the comprehensive internal investigation report that is being prepared for submission to the DOJ. That report, currently expected to total approximately 176 pages, is intended to provide a thorough accounting of DTI's trading activities, the identified sanctions violations, the compliance program failures that enabled those violations, and the remedial measures implemented by Dunmore. The Zenith Petroleum findings should be integrated into both the transaction-by-transaction analysis and the counterparty due diligence section of that report.
C. Implications for OFAC Voluntary Self-Disclosure
The two Zenith Petroleum transactions should be included within the scope of any future OFAC voluntary self-disclosure ("VSD"). Under OFAC's Enforcement Guidelines, the filing of a complete and timely VSD is a significant mitigating factor in OFAC's calculation of civil monetary penalties. Given that the Zenith Petroleum transactions potentially constitute apparent violations of Directive 2, the omission of these transactions from a VSD could undermine the completeness and credibility of the disclosure.
The broader VSD strategy — including the question of whether and when to file a VSD, the scope of transactions to be included, and the coordination of any VSD with the ongoing DOJ criminal investigation — is to be analyzed in the memorandum being prepared by Conrad Reeves on VSD strategy, which is anticipated for completion in 2023.
IX. Conclusion
Based on the due diligence findings set forth in this memorandum, the investigation team has reached the following conclusions:
1.  Zenith Petroleum DMCC, while not itself an OFAC-designated entity, functioned as a secondary intermediary in a supply chain that facilitated DTI's access to crude oil originating from Volkhov Industrial Group-controlled operations. The evidence indicates that Zenith Petroleum operated in close coordination with Petronova Trading FZE, serving as an additional layer of intermediation designed to distance DTI from the sanctioned or sanctions-adjacent source of the crude oil.
2.  The two flagged crude oil swap transactions involving Zenith Petroleum — with a combined notional value of approximately $41.5 million — are properly included within the nine tainted transactions (totaling approximately $156.3 million in notional value) that Ridgeline Advisory Group has identified as involving crude oil ultimately sourced from or destined for Volkhov-connected entities, in potential violation of OFAC Directive 2 under Executive Order 13662.
3.  DTI's failure to conduct adequate counterparty due diligence on Zenith Petroleum at the time of onboarding — including the failure to perform OFAC screening, the failure to investigate Zenith Petroleum's ownership and business relationships, and the failure to conduct enhanced due diligence despite the entity's activity in Russian-origin crude markets — constitutes a significant compliance failure. The subsequent failure to escalate clear red flags that arose during the course of the trading relationship, including the temporal overlap with Petronova transactions, the structured payment patterns at Crescent Commercial Bank, and the acknowledged awareness of senior DTI personnel regarding the Petronova–Zenith Petroleum connection, compounded the initial onboarding deficiencies and contributed materially to the sanctions compliance failures at the center of this investigation.
4.  Further investigation is needed. The forensic analysis of the Zenith Petroleum transaction flows is preliminary, and important open questions remain regarding the full payment chain, the identity of upstream suppliers, and the extent of knowledge and intent on the part of DTI personnel. The investigation team's recommendations for further steps are set forth in Section VIII above.
This memorandum will be supplemented as additional information becomes available.
Appendices (Referenced)
The following appendices are attached to this memorandum or are available in the investigation team's document repository:
Appendix A — Zenith Petroleum DMCC Corporate Registry Extract
DMCC registration documents for Zenith Petroleum DMCC, including the certificate of incorporation, trade license, and memorandum and articles of association. Registered address: Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE.
Appendix B — Transaction Summary for the Two Zenith Petroleum Crude Oil Swaps
Appendix C — Selected Wire Transfer Records (Crescent Commercial Bank PJSC)
Excerpted wire transfer confirmations and account records documenting transfers between Zenith Petroleum DMCC and Petronova Trading FZE at Crescent Commercial Bank PJSC, Dubai. These transfers form part of the 127 structured transactions (totaling approximately $34.2 million) identified by Ridgeline Advisory Group between March 2020 and March 2022.
Appendix D — Key Email Correspondence
Selected email correspondence retrieved from the custodian files of Natasha Sorokin, including communications between Sorokin, Sergei Volkov (Petronova Trading FZE), and Farhan Qureshi (Zenith Petroleum DMCC) regarding coordinated crude oil cargo scheduling for the October 2020 and June 2021 transactions. Nexagen Bates Nos. NX-NS-004217 and NX-NS-007843 through NX-NS-007849.
Appendix E — OFAC Screening Results
Results of OFAC SDN List, SSI List, and Consolidated Screening List searches conducted on Zenith Petroleum DMCC and Farhan Qureshi as of July 5, 2022. No hits were returned for any screened party. Supplemental screening against the EU Consolidated List, UK OFSI List, and UN Security Council Sanctions Lists was also negative.
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
Field | Transaction 1 | Transaction 2
Transaction Date | October 15, 2020 | June 22, 2021
Counterparty | Zenith Petroleum DMCC | Zenith Petroleum DMCC
Notional Value | $18,412,600 | $23,087,500
Crude Grade | Urals | Urals
Loading Port | Novorossiysk, Russia | Primorsk, Russia
Vessel | MT Caspian Horizon (IMO 9412078) | MT Baltic Pioneer (IMO 9518234)
Payment Amount | $18,412,600 | $23,087,500
Payment Date | October 28, 2020 | July 6, 2021
Crescent Bank Ref. No. | CCB-1028-20-7792 | CCB-0706-21-3148
Trader of Record | Natasha Sorokin | Natasha Sorokin
Authorizing Officer | Derek Hargrave | Derek Hargrave

MEMORANDUM

MATTER NO.: 1016-00009

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