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1016-00009 · Dunmore Energy Holdings · Remediation & Compliance

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ATTORNEY-CLIENT PRIVILEGED & WORK PRODUCT SELECTIVE WAIVER TO DOJ PURSUANT TO PROTOCOL DATED JULY 1, 2022 CONFIDENTIAL TREATMENT REQUESTED

SUPPLEMENTAL REMEDIATION REPORT — IMPLEMENTATION SUMMARY

In the Matter of Dunmore Energy Holdings Ltd.

Grand Jury Subpoena GJ No. 22-418 U.S. District Court for the District of Columbia Grand Jury 22-2

January 15, 2024

Submitted by:

CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401

On behalf of:

DUNMORE ENERGY HOLDINGS LTD. Harbour Place, 4th Floor 103 South Church Street George Town, Grand Cayman KY1-1002 Cayman Islands

Operational Headquarters: 1200 McKinney Street, Suite 3400 Houston, TX 77010

Prepared by:

Victoria Chambers Responsible Partner, White Collar & Investigations

Conrad Reeves Senior Counsel, Export Controls & Sanctions

Calderwood & Harkness Matter No. 1016-00009

SUBMITTED TO

Assistant U.S. Attorney Meredith Calloway National Security Division Counterintelligence and Export Control Section (CES) U.S. Department of Justice

Trial Attorney Samuel Kovacs Counterintelligence and Export Control Section (CES) U.S. Department of Justice

Trial Attorney Diana Pressman Counterintelligence and Export Control Section (CES) U.S. Department of Justice

I. EXECUTIVE SUMMARY

A. Purpose of This Report

This Supplemental Remediation Report — Implementation Summary (this "Report") is submitted by Calderwood & Harkness LLP ("Calderwood & Harkness" or "outside counsel") on behalf of Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH") to the United States Department of Justice, National Security Division, Counterintelligence and Export Control Section ("CES" or the "Government"). The purpose of this Report is to document the full design, adoption, and implementation of the Enhanced Sanctions & Export Controls Compliance Program (the "Enhanced Program") adopted by the Board of Directors of Dunmore Energy Holdings Ltd. on October 1, 2023.

This Report supplements the comprehensive internal investigation report (176 pages, with exhibits) submitted by Calderwood & Harkness to the Government on May 15, 2023 (the "Investigation Report"), which detailed the findings of the internal investigation conducted by Calderwood & Harkness in response to Grand Jury Subpoena GJ No. 22-418, issued by the U.S. District Court for the District of Columbia on April 19, 2022. This Report also supplements the voluntary self-disclosure filed by Dunmore with the Office of Foreign Assets Control ("OFAC"), Compliance & Enforcement Division, on June 1, 2023 (the "OFAC VSD").

This Report is intended to demonstrate Dunmore's sustained and good-faith commitment to compliance remediation, consistent with the standards articulated in the DOJ Corporate Enforcement Policy (updated September 2022) and the DOJ Evaluation of Corporate Compliance Programs (updated March 2023). As the Government is aware, the DOJ Corporate Enforcement Policy provides that a company may receive a declination of prosecution where, among other things, it has voluntarily self-disclosed the misconduct, fully cooperated with the Government's investigation, and timely and appropriately remediated, including implementing an effective compliance program. Dunmore respectfully submits that it has satisfied each of these criteria, as documented in this Report and the prior submissions referenced herein.

This Report is designated as Attorney-Client Privileged and Work Product. It is provided to the Government pursuant to the selective waiver protocol agreed upon between Calderwood & Harkness and CES on July 1, 2022, and it is not intended to constitute a waiver of privilege as to any third party. Dunmore expressly reserves all rights and privileges as to any person or entity other than the DOJ personnel identified herein.

B. Summary of Key Remediation Milestones

From the earliest stages of this matter, Dunmore has undertaken prompt, comprehensive, and sustained remediation efforts. The following summarizes the key milestones in the remediation timeline:

1. Appointment of New Chief Compliance Officer. Effective August 1, 2022, Dunmore appointed Priya Nayar as Chief Compliance Officer ("CCO"), replacing Gerald Fisk, who departed the company on June 10, 2022. Ms. Nayar brought more than fifteen years of sanctions and export controls compliance experience, including prior service at a Fortune 100 energy company and a leading global financial institution. Critically, Ms. Nayar was appointed with a direct reporting line to the Board of Directors, a fundamental structural change from the prior reporting arrangement.

2. Retention of Pemberton Investors Solutions LLC. On December 15, 2022, Calderwood & Harkness, on behalf of Dunmore, retained Pemberton Investors Solutions LLC ("Marlowe Asset Management"), led by Dr. Anton Bremer, to conduct a comprehensive assessment of Dunmore's existing sanctions and export controls compliance program and to design a remediation program addressing all identified deficiencies. Marlowe Asset Management's engagement encompassed program assessment, remediation program design, advisory support for the OFAC voluntary self-disclosure, and export control classification review.

3. Delivery of Marlowe Asset Management's Remediation Report. On September 15, 2023, Marlowe Asset Management delivered its remediation report and the framework for the Enhanced Sanctions & Export Controls Compliance Program. The Marlowe Asset Management report incorporated the findings of Calderwood & Harkness's own compliance program assessment and was informed by the forensic findings documented in the Investigation Report.

4. Board Adoption of the Enhanced Program. On October 1, 2023, the Board of Directors of Dunmore Energy Holdings Ltd. formally adopted the Enhanced Sanctions & Export Controls Compliance Program by unanimous resolution. The Board Resolution authorized CCO Priya Nayar to implement all elements of the Enhanced Program and established the Compliance Committee of the Board.

5. Voluntary Disgorgement Payment. On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the United States Treasury, representing the estimated net profits derived from the nine tainted crude oil swap transactions identified in the Investigation Report. This payment was made voluntarily and in advance of any enforcement action by the Government or OFAC.

6. Completion of All Major Remediation Workstreams. As detailed in Section V of this Report, all major components of the Enhanced Program have been fully implemented, including enhanced OFAC screening protocols, export control compliance enhancements, a comprehensive third-party due diligence program, transaction monitoring and payment controls, a global training program, updated policies and procedures, whistleblower and reporting mechanisms, and recordkeeping systems. The completion of these workstreams represents a fundamental transformation of Dunmore's compliance infrastructure.

C. Summary of Cooperation

Dunmore has provided full and timely cooperation with the Government throughout the investigation. The scope of Dunmore's cooperation has been extensive and is summarized below.

Document Productions. Dunmore made two comprehensive document productions to CES, totaling 438,916 responsive documents. The first production, consisting of 287,412 documents bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412, was delivered on November 1, 2022. The second production, consisting of 151,504 additional documents bearing Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916, was delivered on January 30, 2023. These productions encompassed, among other things, communications of key custodians, transactional records, compliance files, corporate governance documents, banking records, and internal audit materials. Documents were produced in native format where available and in TIFF format with full-text searchable load files where native production was not practicable.

Witness Interviews. Calderwood & Harkness conducted a total of 47 witness interviews across three rounds in six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. Summaries of these interviews were provided to the Government pursuant to the selective waiver protocol. The interview program encompassed current and former employees at all levels of the organization, from trading desk personnel and compliance analysts to senior management and Board members.

Facilitation of Government Interview. On July 12, 2023, Dunmore facilitated a follow-up interview of Omar Al-Rashidi, formerly Head of Middle East Operations at Dunmore Trading International Ltd. ("DTI"), at Calderwood & Harkness's Washington, D.C. office. AUSA Meredith Calloway and Trial Attorney Samuel Kovacs conducted the interview. Mr. Al-Rashidi provided detailed information regarding the operations of the DTI trading desk in Dubai and the roles of Derek Hargrave and Natasha Sorokin in the transactions at issue. Dunmore did not seek to obstruct, delay, or limit the scope of this interview in any manner.

OFAC Voluntary Self-Disclosure. As noted, Dunmore filed a voluntary self-disclosure with OFAC on June 1, 2023, disclosing the full scope of the apparent violations identified during the internal investigation. Dunmore subsequently provided supplemental information to OFAC Compliance Analyst Erin Matsuda on August 30, 2023, in response to her requests for additional transactional detail and supporting documentation.

Proactive Disclosure of Forensic Findings. Throughout the investigation, Dunmore proactively disclosed forensic findings to the Government, including the identification of nine tainted crude oil swap transactions with a total notional value of $156.3 million and the discovery of $34.2 million in structured payments through Crescent Commercial Bank PJSC. These disclosures were made on a rolling basis as the investigation progressed, beginning with initial proffers on July 15, 2022, and continuing through the delivery of the Investigation Report on May 15, 2023.

Preservation of Privilege. Dunmore's selective waiver of privilege to the Government pursuant to the July 1, 2022 protocol was designed to provide the Government with maximum transparency regarding the internal investigation and remediation efforts, while preserving Dunmore's privilege rights as to all third parties, including private litigants, regulators outside the United States, and any other persons or entities.

II. BACKGROUND AND CONTEXT

A. The Underlying Conduct

The internal investigation conducted by Calderwood & Harkness, the findings of which were detailed in the Investigation Report submitted to the Government on May 15, 2023, identified three categories of sanctionable conduct occurring between approximately March 2020 and April 2022.

The Tainted Crude Oil Swap Transactions. During the relevant period, Dunmore Trading International Ltd. ("DTI"), the Dubai-based commodity trading subsidiary of Dunmore, under the supervision of Derek Hargrave (President of DTI) and with the direct involvement of Natasha Sorokin (Senior Trader), engaged in a series of crude oil swap transactions with two Dubai-based counterparties: Petronova Trading FZE, an entity registered in the Jebel Ali Free Zone, and Zenith Petroleum DMCC, an entity registered in the Dubai Multi Commodities Centre. In total, DTI entered into 14 crude oil swap transactions with these counterparties, with an aggregate notional value of approximately $218.7 million.

The internal investigation determined that nine of these 14 transactions, with an aggregate notional value of approximately $156.3 million, involved counterparties with undisclosed beneficial ownership ties to Volkhov Industrial Group JSC ("Volkhov"), a Russian industrial conglomerate. Volkhov was designated by OFAC under Directive 2 of Executive Order 13662 (sectoral sanctions pertaining to the financial services sector of the Russian Federation) on November 15, 2019. Subsequently, on April 6, 2022, Volkhov was added to the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") pursuant to Executive Order 14024, resulting in full asset blocking. The beneficial ownership connections between Petronova Trading FZE, Zenith Petroleum DMCC, and Volkhov ran through Sergei Volkov, a Russian national serving as a shadow director of Petronova, and Arkady Volkhov, a principal of Volkhov Industrial Group who held a controlling interest in Zenith Petroleum through a series of intermediary holding companies registered in the British Virgin Islands and Cyprus.

The Oilfield Equipment Exports. Separately, during the same period, DTI facilitated or directed the export of oilfield drilling equipment and components valued at approximately $12.4 million. These exports were routed through Caspian Logistik GmbH, a Hamburg-based logistics and freight-forwarding company, and were destined for end-users in the Russian Federation. The equipment at issue was classified under Export Administration Regulations ("EAR") Export Control Classification Numbers ("ECCN") 2B350 (chemical manufacturing equipment and components) and 2B999 (specific processing equipment not elsewhere specified). These exports were subject to the license requirements of EAR §746.5, which imposes comprehensive controls on exports to Russia and Belarus. No license was obtained or sought for any of these transactions. Caspian Logistik GmbH provided end-user certificates for the shipments that the investigation determined were false or misleading, identifying end-users in Turkey and Kazakhstan rather than the actual ultimate consignees in the Russian Federation.

The Structured Payments. The investigation also uncovered a pattern of structured payments totaling $34.2 million, executed through 127 separate intermediary account transactions at Crescent Commercial Bank PJSC, a Dubai-based financial institution. These payments were structured to obscure the beneficial ownership interest of Volkhov Industrial Group JSC and its affiliates in the proceeds of the crude oil swap transactions. The structuring involved the use of multiple intermediary accounts held by shell entities, with individual transaction amounts calibrated to avoid triggering enhanced due diligence thresholds at correspondent banking institutions. The investigation determined that Hargrave and Sorokin were directly involved in directing the structuring of these payments, and that Crescent Commercial Bank's compliance function either failed to detect or failed to act upon the structuring patterns.

The foregoing conduct is described in substantially greater detail in the Investigation Report. This Report does not seek to re-present the full evidentiary record, but rather to provide sufficient context for the remediation measures discussed herein.

B. The DOJ Inquiry

On April 19, 2022, a grand jury subpoena, GJ No. 22-418, was issued by the U.S. District Court for the District of Columbia, Grand Jury 22-2, directing Dunmore to produce documents and records relating to, among other things, DTI's transactions with Petronova Trading FZE, Zenith Petroleum DMCC, and Caspian Logistik GmbH; any transactions involving Volkhov Industrial Group JSC or its affiliates; and any exports of goods or technology to the Russian Federation or Belarus. The subpoena was issued in connection with an investigation by the National Security Division, Counterintelligence and Export Control Section, into potential criminal violations of the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act ("ECRA"), 50 U.S.C. §§ 4801–4852.

Calderwood & Harkness LLP was retained by Dunmore on April 14, 2022—five days prior to the issuance of the grand jury subpoena—following an internal escalation by then-CCO Gerald Fisk, who on April 11, 2022, flagged potential sanctions compliance concerns regarding DTI's counterparty relationships to General Counsel Marcus Wellbourne. Victoria Chambers was designated as the responsible partner for the engagement, and Conrad Reeves was designated as senior counsel overseeing the export controls and sanctions compliance aspects of the investigation.

The criminal statutes at issue in this matter carry significant penalties. IEEPA provides for criminal penalties of up to 20 years' imprisonment and fines of up to $1,000,000 per violation for willful violations. 50 U.S.C. § 1705(c). ECRA likewise provides for criminal penalties of up to 20 years' imprisonment and fines of up to $1,000,000, or both, for willful violations. 50 U.S.C. § 4819(b). In addition, violations may give rise to substantial civil monetary penalties, asset forfeiture, debarment, and denial of export privileges.

C. Dunmore Corporate Profile

Dunmore Energy Holdings Ltd. is a Cayman Islands–domiciled exempted company, registered with the Cayman Islands Registrar of Companies under Registration No. MC-334821. The company's registered office is located at Harbour Place, 4th Floor, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. Dunmore's operational headquarters are located at 1200 McKinney Street, Suite 3400, Houston, Texas 77010.

Dunmore is a diversified energy company engaged in oil and gas exploration, production, and trading, as well as renewable energy development. For fiscal year 2021, Dunmore reported consolidated revenues of approximately $4.87 billion. The company employs approximately 3,200 persons globally across its various subsidiaries and operational locations.

Dunmore's principal operating subsidiaries are as follows:

• Dunmore Trading International Ltd. ("DTI"): Dubai, United Arab Emirates. Licensed by the Dubai International Financial Centre ("DIFC"), License No. CL-4827. DTI was Dunmore's primary commodity trading subsidiary and the entity principally involved in the conduct at issue in this matter. DTI's operations have been substantially restructured as part of the remediation program.

• Dunmore upstream Americas LLC ("DUA"): Organized under the laws of the State of Delaware, Employer Identification Number 84-2937561. DUA is responsible for Dunmore's upstream oil and gas exploration and production operations in the Americas, with principal operations in the Permian Basin and the Gulf of Mexico.

• Dunmore Renewables GmbH: Hamburg, Germany. Dunmore Renewables oversees the company's growing portfolio of renewable energy assets in Europe, including offshore wind development in the North Sea and solar projects in Southern Europe.

• Dunmore Exploration West Africa Ltd. ("DEWA"): Lagos, Nigeria. DEWA manages Dunmore's exploration and production interests in West Africa, including onshore and offshore concessions in Nigeria and Ghana.

Dunmore's ownership structure is as follows: Greystone Capital Partners Fund IV, L.P. holds a 62.5% equity interest; management holds a 22.5% equity interest through a management equity participation program; and Thornbury Infrastructure Fund II, L.P. holds a 15.0% equity interest. Dunmore is not publicly listed on any securities exchange.

The company is led by Chief Executive Officer Callum Renshaw, who has served in that capacity since 2018. Mr. Renshaw has been fully supportive of the remediation efforts and has consistently communicated the importance of compliance to the organization.

D. Personnel Actions

Dunmore took swift and decisive personnel actions in connection with the matters identified during the internal investigation. These actions are summarized below and discussed in greater detail in Section VI of this Report.

Gerald Fisk, Former Chief Compliance Officer. Mr. Fisk departed Dunmore on June 10, 2022. While Mr. Fisk was the individual who initially flagged the potential sanctions compliance concerns to General Counsel Marcus Wellbourne on April 11, 2022, the investigation revealed that Mr. Fisk had been aware of certain red flags regarding the Petronova counterparty relationship for a period of months prior to his escalation and had failed to take timely action. Mr. Fisk retained personal counsel, Catherine Blackthorn of Blackthorn & Associates LLP in Houston, Texas.

Natasha Sorokin, Former Senior Trader, DTI. Ms. Sorokin was placed on administrative leave on May 16, 2022, immediately upon the identification of her direct involvement in the tainted transactions. She was formally separated from Dunmore on September 15, 2022, following the completion of the initial phase of the internal investigation. Ms. Sorokin retained personal counsel, Philip Keane of Wexford Keane LLP in Washington, D.C.

Derek Hargrave, Former President, DTI. Mr. Hargrave was placed on administrative leave on July 1, 2022, following the development of evidence establishing his supervisory role in the conduct at issue. He was formally separated from Dunmore on October 1, 2022. Mr. Hargrave retained personal counsel, James Overstreet of Overstreet & McClain PLLC in Dallas, Texas.

Priya Nayar, Chief Compliance Officer. Ms. Nayar was appointed as Dunmore's Chief Compliance Officer effective August 1, 2022, replacing Gerald Fisk. Ms. Nayar's appointment represented a critical milestone in Dunmore's remediation efforts and signaled the company's commitment to building a world-class compliance function. Ms. Nayar's qualifications, authority, and role within the Enhanced Program are discussed in detail in Section V.A.1 of this Report.

III. ASSESSMENT OF PRE-EXISTING COMPLIANCE PROGRAM DEFICIENCIES

A. Summary of Calderwood & Harkness's Assessment (November 15, 2022)

On November 15, 2022, Conrad Reeves and Jasmine Thornton of Calderwood & Harkness delivered a detailed memorandum to the Board of Directors of Dunmore assessing the state of Dunmore's pre-existing sanctions and export controls compliance program as of April 2022 (the "Compliance Assessment Memorandum"). The Compliance Assessment Memorandum evaluated the program against the standards articulated in the DOJ Evaluation of Corporate Compliance Programs and identified significant deficiencies across multiple dimensions of the compliance framework.

The findings of the Compliance Assessment Memorandum were subsequently validated and supplemented by Pemberton Investors Solutions LLC's independent gap analysis, which was delivered as part of Marlowe Asset Management's remediation report on September 15, 2023. Marlowe Asset Management's analysis confirmed each of the deficiencies identified by Calderwood & Harkness and provided additional granularity regarding the root causes of the compliance failures.

The deficiencies identified are summarized below. Each deficiency directly contributed to, or failed to prevent, the violative conduct described in Section II.A of this Report. Understanding these deficiencies is essential to appreciating the scope and design of the Enhanced Program described in Sections IV through V.

B. Key Deficiencies Identified

1. OFAC Screening Protocols

The pre-existing OFAC screening protocols at Dunmore were fundamentally inadequate in multiple respects. First, OFAC screening was conducted only at the point of counterparty onboarding. Once a counterparty was initially screened and cleared, no periodic re-screening was performed. This meant that if a counterparty or its beneficial owners were subsequently designated by OFAC, Dunmore would not identify the designation unless it happened to learn of it through other channels. Given the frequency with which OFAC updates its sanctions lists—often multiple times per week—this approach created an unacceptable gap in coverage.

Second, screening was limited to the direct counterparty's legal name. The screening process did not extend to beneficial owners, directors, officers, or known affiliates of the counterparty. This limitation was particularly consequential in the present matter, where the sanctioned nexus ran through beneficial ownership chains involving Sergei Volkov and Arkady Volkhov, rather than through the counterparty entity names themselves. Neither "Petronova Trading FZE" nor "Zenith Petroleum DMCC" appeared on any OFAC list; it was the beneficial owners and their affiliations with Volkhov Industrial Group JSC that created the sanctions nexus.

Third, the screening process failed to apply OFAC's 50 Percent Rule, which provides that the property and interests in property of entities owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons are themselves blocked, regardless of whether such entities are specifically identified on the SDN List. Application of the 50 Percent Rule would have required Dunmore to identify and screen the beneficial ownership chain of its counterparties to determine whether any blocked person held a direct or indirect ownership interest of 50 percent or more. Had Dunmore applied the 50 Percent Rule, the connections between Petronova Trading FZE, Zenith Petroleum DMCC, and Volkhov Industrial Group JSC—through Sergei Volkov and Arkady Volkhov—would likely have been identified at the onboarding stage.

Fourth, Dunmore had no automated screening system. All OFAC screening was conducted manually by compliance staff, who relied on outdated databases and manual searches of the OFAC SDN List. This manual process was slow, error-prone, and incapable of keeping pace with the volume of transactions processed by DTI's trading desk.

2. Export Control Classification and Compliance

Dunmore lacked any systematic process for classifying goods under the Export Administration Regulations ("EAR") prior to export. There was no centralized database of product classifications, and trading and logistics personnel were not trained to identify items that might be subject to EAR jurisdiction or require a license for export.

The oilfield drilling equipment and components exported through Caspian Logistik GmbH were properly classifiable under ECCN 2B350 (chemical manufacturing equipment and components) and ECCN 2B999 (specific processing equipment not elsewhere specified on the Commerce Control List). These classifications triggered license requirements under EAR §746.5 for exports to Russia and Belarus. However, no license determination was ever made, and no application for a license was ever filed. The exports proceeded without any review by qualified export controls compliance personnel.

In addition, Dunmore's pre-existing processes for verifying end-users and end-uses were inadequate. The company relied solely on end-user certificates provided by the counterparty—in this case, Caspian Logistik GmbH—without any independent verification. The end-user certificates provided by Caspian Logistik identified end-users in Turkey and Kazakhstan, when the actual ultimate consignees were located in the Russian Federation. A basic independent verification process—such as cross-referencing the stated end-users against publicly available commercial databases or checking whether the end-user entities existed at the stated addresses—would have revealed inconsistencies in the end-user certifications.

3. Third-Party Due Diligence

Dunmore's pre-existing counterparty due diligence procedures were inadequate in several critical respects. The company conducted only minimal know-your-customer ("KYC") and due diligence on intermediaries and trading counterparties. For the counterparties at issue—Petronova Trading FZE, Zenith Petroleum DMCC, and Caspian Logistik GmbH—Dunmore's due diligence files contained little more than basic corporate registration documents, bank references, and counterparty-provided information about the entities' business operations.

Critically, there was no requirement for counterparties to disclose their beneficial ownership structures. Dunmore did not request, and its counterparties did not provide, information regarding the ultimate beneficial owners of the entities with which Dunmore transacted. This omission was the single most significant due diligence failure, as it allowed Petronova Trading FZE and Zenith Petroleum DMCC to transact with DTI without disclosing their connections to Volkhov Industrial Group JSC and its principals.

Furthermore, there was no ongoing monitoring of counterparty risk profiles. Once a counterparty was onboarded, no mechanism existed for updating the risk assessment based on changed circumstances, such as new sanctions designations, adverse media, or changes in ownership structure.

4. Escalation and Reporting

The pre-existing compliance program lacked any formal escalation protocol for sanctions-related red flags. There was no documented procedure specifying the circumstances under which a potential sanctions concern should be escalated, to whom it should be escalated, or the timeline within which escalation should occur.

Of particular concern, the former CCO Gerald Fisk did not have an independent reporting line to the Board of Directors. Mr. Fisk reported solely to General Counsel Marcus Wellbourne, creating a structural impediment to the independent functioning of the compliance function. This reporting structure meant that compliance concerns could be filtered through, and potentially suppressed by, the legal department before reaching the Board level. The investigation identified at least two instances in which compliance alerts generated by Mr. Fisk's team regarding anomalies in the Petronova relationship were not escalated beyond Mr. Fisk's desk, and it remains unclear whether Mr. Fisk communicated these alerts even to General Counsel Wellbourne.

The absence of a formal escalation protocol, combined with the lack of a direct Board reporting line, contributed directly to the delay in identifying and remediating the sanctionable conduct.

5. Training. Dunmore had no dedicated sanctions or export controls training program for any category of employee. The company's existing general compliance training program—a single annual online module—did not cover OFAC-administered sanctions programs, the SDN List, Directive 2 of Executive Order 13662, the 50 Percent Rule, EAR requirements, export classification, license determination procedures, or any of the other substantive areas critical to sanctions and export controls compliance.

Trading desk personnel at DTI in Dubai, who were the employees most directly involved in transactions posing sanctions risk, received no jurisdiction-specific training regarding the sanctions programs applicable to their activities. They were not trained to identify sanctions red flags, such as the use of intermediary entities to obscure the involvement of designated persons, the structuring of payments to avoid enhanced due diligence thresholds, or the use of transshipment routes to circumvent export controls.

The absence of effective training was a contributing cause of the conduct at issue. Had trading desk personnel been trained to recognize the red flags associated with the Petronova and Zenith relationships—including the use of free zone entities, the opaque beneficial ownership structures, the involvement of Russian-connected individuals, and the unusual payment patterns—the violative conduct might have been identified and halted at an earlier stage.

6. Tone at the Top

The culture at DTI's Dubai trading desk, as documented in the Investigation Report, was one in which revenue generation was prioritized over compliance. Derek Hargrave, as President of DTI, set a tone that emphasized deal execution and trading profits and marginalized the role of the compliance function. Natasha Sorokin, as Senior Trader, operated with minimal compliance oversight and, as the investigation established, actively participated in structuring transactions to avoid sanctions detection.

These cultural deficiencies were compounded by the absence of compliance metrics in executive compensation determinations. Trading desk leadership was incentivized solely on the basis of revenue and profit targets, with no component of compensation tied to compliance performance. This created a structural misalignment of incentives that encouraged risk-taking and discouraged compliance vigilance.

The Board of Directors, prior to the events at issue, did not receive regular or detailed reporting on sanctions and export controls compliance matters. There was no Board-level committee dedicated to compliance oversight, and compliance was not a standing agenda item at Board meetings. This lack of Board-level visibility and engagement further contributed to the deficiencies in tone at the top.

IV. DESIGN OF THE ENHANCED PROGRAM

A. Engagement of Pemberton Investors Solutions LLC

On December 15, 2022, Calderwood & Harkness, on behalf of Dunmore, retained Pemberton Investors Solutions LLC ("Marlowe Asset Management") to serve as an independent compliance consultant for the purpose of conducting a comprehensive assessment of Dunmore's sanctions and export controls compliance program and designing a remediation program addressing all identified deficiencies.

The engagement was led by Dr. Anton Bremer, Lead Consultant, at Marlowe Asset Management's Washington, D.C. office located at 1300 I Street NW, Suite 700, Washington, DC 20005. Dr. Bremer is a recognized authority in the field of sanctions and export controls compliance, with more than twenty years of experience advising multinational corporations, financial institutions, and government agencies on OFAC, BIS, and EU sanctions compliance matters. Dr. Bremer previously served as a senior policy advisor at OFAC and as an assistant professor of international trade law at Georgetown University Law Center.

Marlowe Asset Management's scope of engagement encompassed four principal workstreams:

(a) A comprehensive assessment of Dunmore's pre-existing sanctions and export controls compliance program, including an independent gap analysis measured against OFAC's Framework for Compliance Commitments, the DOJ Evaluation of Corporate Compliance Programs, and industry best practices;

(b) The design of a remediation program addressing each identified deficiency, including detailed policies, procedures, organizational structures, screening systems, training curricula, and monitoring frameworks;

(c) Advisory support in connection with the preparation and filing of the OFAC voluntary self-disclosure, including analysis of the apparent violations, calculation of the applicable statutory maximum civil monetary penalty, and identification of applicable mitigating and aggravating factors under the OFAC Economic Sanctions Enforcement Guidelines; and

(d) A comprehensive review and classification of all products and equipment traded or exported by Dunmore entities under the EAR Commerce Control List, with specific attention to items classified under ECCN 2B350 and ECCN 2B999.

Marlowe Asset Management's work was conducted over a period of approximately nine months, from January 2023 through September 2023. Dr. Bremer and his team conducted on-site reviews at Dunmore's Houston headquarters, DTI's Dubai office, Dunmore Renewables' Hamburg office, and Dunmore Exploration West Africa's Lagos office. Marlowe Asset Management's team interviewed more than sixty Dunmore employees across all major functions, reviewed hundreds of transactional files, and analyzed the output of the forensic investigation conducted by Calderwood & Harkness and Ridgeline Advisory Group LLC.

On September 15, 2023, Marlowe Asset Management delivered its final remediation report and the framework for the Enhanced Sanctions & Export Controls Compliance Program (the "Marlowe Asset Management Report"). The Marlowe Asset Management Report was approximately 280 pages, exclusive of exhibits, and included detailed policy and procedure templates, organizational design recommendations, screening system specifications, training materials outlines, and a multi-year implementation roadmap.

B. Benchmarking Against DOJ Standards

The Enhanced Program was designed from the outset to satisfy the rigorous standards articulated in the DOJ Evaluation of Corporate Compliance Programs (updated March 2023). Calderwood & Harkness prepared a detailed benchmarking memorandum, authored by Jasmine Thornton and dated September 1, 2023, which mapped each element of the Enhanced Program against all three prongs of the DOJ guidance:

Prong One: Is the Compliance Program Well-Designed? The Enhanced Program addresses all of the topics identified by the DOJ under this prong, including: risk assessment; policies and procedures; training and communications; confidential reporting structure and investigation process; third-party management; and mergers and acquisitions due diligence. As detailed in Section V of this Report, each of these areas has been substantially upgraded or newly implemented.

Prong Two: Is the Compliance Program Being Applied Earnestly and in Good Faith? The Enhanced Program includes structural features designed to demonstrate earnest application, including: the CCO's direct reporting line to the Board; the CCO's independent authority to halt transactions; a dedicated and appropriately resourced compliance function; compliance metrics in compensation determinations; and a robust disciplinary framework. These features are not merely aspirational; they have been implemented and are operational, as documented herein.

Prong Three: Does the Compliance Program Work in Practice? The Enhanced Program incorporates ongoing monitoring, testing, and continuous improvement mechanisms designed to ensure that the program is effective in practice and adapts to evolving risks. These mechanisms include annual independent program assessments, quarterly transaction sampling, semi-annual screening effectiveness testing, internal audit integration, and root cause analysis for any compliance incidents. These mechanisms are described in detail in Section IX of this Report.

The Calderwood & Harkness benchmarking memorandum also analyzed the Enhanced Program's alignment with the DOJ Corporate Enforcement Policy (updated September 2022), particularly the Policy's emphasis on timely and appropriate remediation as a prerequisite for a declination of prosecution. The memorandum concluded that the Enhanced Program, in combination with Dunmore's voluntary self-disclosure, full cooperation, and voluntary disgorgement, satisfies all of the criteria articulated in the Policy.

C. Board Resolution

On October 1, 2023, the Board of Directors of Dunmore Energy Holdings Ltd. convened a special meeting at which the Board unanimously adopted the Enhanced Sanctions & Export Controls Compliance Program by formal resolution. A copy of the Board Resolution is attached as Appendix C to this Report.

The Board Resolution accomplished three principal objectives. First, it formally adopted the Enhanced Program in its entirety, including all policies, procedures, and organizational structures described in the Marlowe Asset Management Report, as modified by input from Calderwood & Harkness, CCO Priya Nayar, and General Counsel Marcus Wellbourne. Second, it authorized and directed CCO Priya Nayar to implement all elements of the Enhanced Program on behalf of the company, with full authority to allocate resources, retain service providers, and modify procedures as necessary to ensure effective implementation. Third, it established the Compliance Committee of the Board, comprising three independent directors and CEO Callum Renshaw serving in an ex officio capacity, with a mandate to provide Board-level oversight of the compliance function and to receive quarterly reports from the CCO on compliance metrics, incident reports, and program effectiveness.

The Board Resolution represents a watershed moment in Dunmore's approach to compliance. It demonstrates an unambiguous commitment at the highest level of the organization to a culture of compliance, and it provides the structural foundation for the ongoing operation and evolution of the Enhanced Program.

V. IMPLEMENTATION OF ENHANCED PROGRAM — COMPONENT-BY-COMPONENT

This Section provides a detailed, component-by-component description of the implementation of the Enhanced Sanctions & Export Controls Compliance Program. For each component, we describe the design of the measure, the implementation steps taken, the current operational status, and the relationship to the specific deficiency or deficiencies the measure is intended to address.

A. Governance and Organizational Structure

1. Chief Compliance Officer — Priya Nayar

As noted in Section I.B.1, Priya Nayar was appointed as Dunmore's Chief Compliance Officer effective August 1, 2022. Ms. Nayar was selected following an extensive search conducted with the assistance of an executive search firm. She brought to Dunmore more than fifteen years of experience in sanctions and export controls compliance, including senior compliance roles at a Fortune 100 energy company and a global financial institution. She holds a J.D. from the Georgetown University Law Center and an LL.M. in International Economic Law from the London School of Economics and Political Science. She is admitted to the bar in the District of Columbia and the State of Texas.

Ms. Nayar's appointment was made with several structural features that distinguish her role from that of her predecessor:

(a) Direct Reporting to the Board. Unlike her predecessor Gerald Fisk, who reported solely to General Counsel Marcus Wellbourne, Ms. Nayar reports directly to the Board of Directors through the newly established Board Compliance Committee. This direct reporting line ensures that the CCO has unfiltered access to the Board and that compliance matters are elevated to the Board level without intermediation. For operational matters requiring day-to-day coordination, Ms. Nayar maintains a dual reporting line to CEO Callum Renshaw, but her primary accountability is to the Board Compliance Committee.

(b) Independent Authority to Halt Transactions. Ms. Nayar has been vested with the independent authority to halt, block, or reject any transaction pending compliance review. This authority is exercised at her sole discretion and cannot be overridden by the trading desk, business unit leadership, or any other function without the express approval of the Board Compliance Committee. This authority directly addresses the cultural dynamic at DTI's Dubai trading desk, where compliance concerns were historically subordinated to revenue imperatives.

(c) Dedicated Budget. The annual compliance budget has been increased from $1.2 million under the prior regime to $4.5 million, representing an approximately fourfold increase. This budget funds the expanded compliance team, the automated screening platform, external consultants, training programs, and other compliance infrastructure. The compliance budget is set annually by the Board Compliance Committee and is not subject to reduction by operating management without Board approval.

(d) Expanded Compliance Team. Under Ms. Nayar's leadership, the compliance team has grown from three professionals under Gerald Fisk to twelve compliance professionals. The expanded team includes sanctions compliance analysts, export controls specialists, due diligence investigators, and training coordinators. Team members are located in Houston, Dubai, Hamburg, and Lagos, providing regional coverage across Dunmore's principal operating jurisdictions.

2. Compliance Committee of the Board

The Compliance Committee of the Board was established by the Board Resolution of October 1, 2023. The Committee comprises three independent directors—Margaret Atherton (Chair), Robert Nakamura, and Patricia Delacroix—and CEO Callum Renshaw, who serves in an ex officio capacity. None of the independent directors has any involvement in Dunmore's day-to-day trading or operational activities, ensuring their objectivity and independence.

The Committee's mandate includes the following responsibilities:

(a) Receiving and reviewing quarterly reports from CCO Priya Nayar on compliance metrics, screening statistics, incident reports, escalated matters, training completion rates, and overall program effectiveness;

(b) Reviewing and approving the annual compliance budget proposed by the CCO;

(c) Overseeing the annual independent assessment of the Enhanced Program conducted by Marlowe Asset Management or another qualified third-party consultant;

(d) Reviewing the results of transaction sampling, screening effectiveness testing, and internal audit reviews of the compliance function;

(e) Approving substantive policy changes to the Enhanced Program; and

(f) Providing strategic guidance to the CCO on compliance priorities and resource allocation.

The Committee held its inaugural meeting on October 20, 2023, at which CCO Nayar presented the implementation plan for the Enhanced Program and the Committee approved the compliance budget and the timeline for completion of the initial training program. Subsequent quarterly meetings are scheduled for January, April, July, and October of each year.

3. Reporting Lines

The restructured reporting lines are a foundational element of the Enhanced Program. The organizational design ensures that compliance considerations are embedded at every level of the organization and that information flows freely between the compliance function, senior management, and the Board.

At the corporate level, CCO Priya Nayar reports directly to the Board Compliance Committee for all compliance-related matters and maintains a dual reporting line to CEO Callum Renshaw for operational coordination. At the regional level, Dunmore has appointed regional compliance officers in each of its four principal operating jurisdictions:

• Houston: Daniel Ortega, Regional Compliance Officer — Americas

• Dubai: Aisha Khoury, Regional Compliance Officer — Middle East

• Hamburg: Markus Berger, Regional Compliance Officer — Europe

• Lagos: Chidinma Okafor, Regional Compliance Officer — West Africa

Each regional compliance officer reports directly to CCO Nayar and is responsible for day-to-day compliance oversight in their respective jurisdiction. The regional compliance officers have the authority to escalate matters directly to the CCO and, in urgent circumstances, to halt transactions pending CCO review. The appointment of a Regional Compliance Officer in Dubai is of particular significance, given that DTI's Dubai trading desk was the locus of the conduct at issue. Ms. Khoury, who joined Dunmore in March 2023, has extensive experience in DIFC-regulated compliance and Middle East sanctions risk.

An updated organizational chart showing the compliance function's reporting lines and structure is attached as Appendix F to this Report.

B. Enhanced OFAC Screening Protocols

1. Automated Screening System

The implementation of an automated sanctions screening platform represents one of the most significant technological upgrades undertaken as part of the Enhanced Program. The prior manual screening process—which relied on compliance staff manually searching outdated databases against counterparty legal names—has been entirely replaced by an automated, enterprise-wide screening solution.

The automated screening platform was developed and configured by Pemberton Investors Solutions LLC as part of its remediation engagement. The platform is integrated with the following sanctions and restricted party lists:

• OFAC Specially Designated Nationals and blocked Persons List (SDN List)

• OFAC Consolidated Sanctions List (Non-SDN Lists)

• OFAC Sectoral Sanctions Identifications List (SSI List)

• Bureau of Industry and Security ("BIS") Entity List

• BIS Denied Persons List

• BIS Unverified List

• EU Consolidated List of Persons, Groups, and Entities Subject to EU Financial Sanctions

• UK HM Treasury Consolidated List of Financial Sanctions Targets

• UN Security Council Consolidated List

The platform performs real-time screening of all counterparties, beneficial owners, directors, officers, agents, and other associated parties at the point of transaction initiation. Screening is conducted using advanced fuzzy-matching algorithms that account for transliterations, aliases, name variations, and typographical inconsistencies. The system generates alerts for any potential matches, which are then reviewed and adjudicated by compliance personnel through the tiered escalation process described in Section V.B.4 below.

The platform is configured to perform automated daily refreshes against all supported sanctions and restricted party lists. When OFAC publishes updates to the SDN List or any other list, the platform downloads and integrates the updates within 24 hours, triggering automatic re-screening of all active counterparties and associated parties against the updated data. This ensures that new designations are identified and acted upon promptly.

2. Beneficial Ownership and 50% Rule Screening

Addressing one of the most critical deficiencies identified in the pre-existing program, the Enhanced Program requires all counterparties to provide certified beneficial ownership information at the time of onboarding and to recertify such information on an annual basis. The beneficial ownership certification requires disclosure of all natural persons who, directly or indirectly, own or control 25% or more of the equity interests in the counterparty, as well as all persons who exercise effective control over the counterparty's management or operations.

In addition, and critically, the Enhanced Program's screening protocols now fully incorporate OFAC's 50 Percent Rule. Under this rule, any entity that is owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons is itself treated as blocked, regardless of whether the entity appears on the SDN List. The automated screening platform is configured to apply the 50 Percent Rule by screening not only the counterparty itself but also its disclosed beneficial owners, directors, and officers. Where the counterparty's ownership structure includes intermediate holding entities, those entities are also screened to the extent ownership information is available.

As a further measure, Dunmore has completed a retroactive re-screening of all existing counterparties. This comprehensive re-screening exercise, completed by December 1, 2023, covered more than 4,700 active and recently active counterparties across all Dunmore entities. Each counterparty was re-screened against all supported sanctions and restricted party lists, and beneficial ownership information was requested and reviewed. The results of the re-screening exercise are summarized in Appendix E to this Report. The re-screening identified a small number of counterparties requiring enhanced due diligence or relationship termination, all of which have been addressed.

3. Periodic Re-Screening

Under the Enhanced Program, all active counterparties are re-screened against updated sanctions and restricted party lists on a quarterly basis, at minimum. This quarterly re-screening is performed automatically by the screening platform and does not require manual initiation by compliance personnel.

In addition to the scheduled quarterly re-screening, the Enhanced Program provides for event-driven re-screening in the following circumstances:

(a) When OFAC or any other supported list administrator publishes new designations that may be relevant to Dunmore's counterparty portfolio;

(b) When adverse media monitoring services identify negative news or investigative reporting concerning a Dunmore counterparty;

(d) When any other information comes to the attention of the compliance function that may indicate a change in the sanctions risk profile of a counterparty.

The combination of scheduled quarterly re-screening and event-driven re-screening ensures that Dunmore's counterparty population is subject to continuous and dynamic sanctions risk monitoring.

4. Escalation Protocol for Screening Hits

The Enhanced Program includes a formal, documented escalation protocol for the adjudication of sanctions screening alerts. The protocol operates on a three-tier escalation framework:

Tier 1 — Initial Review by Compliance Analyst. All screening alerts generated by the automated platform are initially reviewed by a compliance analyst, who conducts a preliminary assessment to determine whether the alert represents a potential true hit or a false positive. False positives—which commonly arise from name similarities, transliteration variants, and other incidental matches—are documented and cleared. Potential true hits are escalated to Tier 2.

Tier 2 — Secondary Review by Regional Compliance Officer. The regional compliance officer conducts a more detailed review of the potential true hit, drawing upon additional information sources including commercial databases, corporate registry filings, open-source intelligence, and any available beneficial ownership information. The regional compliance officer may request additional information from the counterparty or the business unit. If the regional compliance officer determines that the alert represents a true hit or cannot be resolved, the matter is escalated to Tier 3.

Tier 3 — Final Determination by CCO Priya Nayar. The CCO reviews the matter and makes the final determination regarding the appropriate course of action, which may include blocking the transaction, terminating the counterparty relationship, filing a blocking report with OFAC, or referring the matter to outside counsel for further legal analysis. The CCO has the authority to block any transaction at this stage and to take any other action necessary to ensure compliance. Matters requiring further investigation are escalated to General Counsel Marcus Wellbourne and to Calderwood & Harkness or other outside counsel as appropriate.

All screening alerts and their dispositions are documented in a centralized incident log maintained by the compliance function. The incident log records the alert identifier, the counterparty or party screened, the list(s) generating the alert, the tier at which the alert was resolved, the identity of the reviewer at each tier, the date and time of each review action, and the final disposition. The incident log is reviewed quarterly by the Board Compliance Committee as part of the CCO's quarterly reporting.

C. Export Control Compliance Enhancements

1. Export Classification Review

As part of the Enhanced Program, Dunmore conducted a comprehensive review and classification of all products, equipment, and technology traded or exported by Dunmore entities under the EAR Commerce Control List. This review was performed by Pemberton Investors Solutions LLC in coordination with Conrad Reeves and the compliance team, and was informed by the product specifications, technical data sheets, and transactional records maintained by Dunmore's trading and logistics functions.

The review gave specific attention to the items that were the subject of the oilfield equipment exports at issue—namely, items classifiable under ECCN 2B350 (chemical manufacturing equipment and components, including certain types of valves, pumps, heat exchangers, and distillation columns) and ECCN 2B999 (specific processing equipment not elsewhere specified on the CCL, including certain oilfield drilling components). The review confirmed that these items are subject to EAR jurisdiction and require a license for export to Russia and Belarus under EAR §746.5.

The results of the classification review have been compiled into a centralized classification database, which is maintained and updated on an ongoing basis by the regional compliance officers. The database assigns an EAR classification to each product or equipment type traded or exported by Dunmore, along with a notation of any applicable license requirements based on destination country and end-user considerations. The database is accessible to all trading, logistics, and compliance personnel through Dunmore's compliance intranet portal.

2. License Determination Procedures

Under the Enhanced Program, a mandatory license determination must be completed prior to any export, re-export, or in-country transfer of any controlled item by any Dunmore entity. The license determination process requires the following steps:

(a) Classification Verification. The item to be exported is classified under the EAR Commerce Control List using the centralized classification database. If the item has not previously been classified, a new classification is performed by a qualified export controls specialist and reviewed by the regional compliance officer before the transaction proceeds.

(b) Country Chart Analysis. The item's classification is cross-referenced against the EAR Country Chart (Supplement No. 1 to Part 738) and any applicable country-specific restrictions, including EAR §746.5 (Russia/Belarus), to determine whether a license is required for the proposed destination country.

(c) End-User and End-Use Analysis. The identity of the end-user and the stated end-use are evaluated to determine whether any end-user-based restrictions apply, including the Entity List (Supplement No. 4 to Part 744), the Denied Persons List, or the Unverified List.

(d) License Exception Analysis. Where a license is required, the compliance team evaluates whether any available license exception applies.

(e) CCO Approval. For any export to Russia, Belarus, or any entity on the SDN List, Entity List, or Denied Persons List, the transaction requires express written authorization from CCO Priya Nayar following legal review by qualified export controls counsel. As a matter of policy, Dunmore does not export controlled items to Russia or Belarus and does not intend to seek export licenses for such destinations.

The license determination is documented on a standardized form and retained in the centralized compliance document management system. No export may proceed without a completed and approved license determination form.

3. End-User Verification

The Enhanced Program includes a substantially strengthened end-user verification process, designed to address the specific failure that allowed the false end-user certificates provided by Caspian Logistik GmbH to go undetected.

Under the new procedures, end-user verification requires independent corroboration of the end-user's identity and stated end-use. The compliance team is required to:

(a) Verify the existence of the stated end-user as a legal entity by reference to corporate registry filings, commercial databases (such as Dunmore Enterprises, Bureau van Dijk Orbis, or equivalent), and other publicly available sources;

(b) Confirm that the end-user's stated business activities are consistent with the stated end-use of the exported items;

ATTORNEY-CLIENT PRIVILEGED & WORK PRODUCT SELECTIVE WAIVER TO DOJ PURSUANT TO PROTOCOL DATED JULY 1, 2022 CONFIDENTIAL TREATMENT REQUESTED
SUPPLEMENTAL REMEDIATION REPORT — IMPLEMENTATION SUMMARY
In the Matter of Dunmore Energy Holdings Ltd.
Grand Jury Subpoena GJ No. 22-418 U.S. District Court for the District of Columbia Grand Jury 22-2
January 15, 2024
Submitted by:
CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401
On behalf of:
DUNMORE ENERGY HOLDINGS LTD. Harbour Place, 4th Floor 103 South Church Street George Town, Grand Cayman KY1-1002 Cayman Islands
Operational Headquarters: 1200 McKinney Street, Suite 3400 Houston, TX 77010
Prepared by:
Victoria Chambers Responsible Partner, White Collar & Investigations
Conrad Reeves Senior Counsel, Export Controls & Sanctions
Calderwood & Harkness Matter No. 1016-00009
SUBMITTED TO
Assistant U.S. Attorney Meredith Calloway National Security Division Counterintelligence and Export Control Section (CES) U.S. Department of Justice
Trial Attorney Samuel Kovacs Counterintelligence and Export Control Section (CES) U.S. Department of Justice
Trial Attorney Diana Pressman Counterintelligence and Export Control Section (CES) U.S. Department of Justice
I. EXECUTIVE SUMMARY
A. Purpose of This Report
This Supplemental Remediation Report — Implementation Summary (this "Report") is submitted by Calderwood & Harkness LLP ("Calderwood & Harkness" or "outside counsel") on behalf of Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH") to the United States Department of Justice, National Security Division, Counterintelligence and Export Control Section ("CES" or the "Government"). The purpose of this Report is to document the full design, adoption, and implementation of the Enhanced Sanctions & Export Controls Compliance Program (the "Enhanced Program") adopted by the Board of Directors of Dunmore Energy Holdings Ltd. on October 1, 2023.
This Report supplements the comprehensive internal investigation report (176 pages, with exhibits) submitted by Calderwood & Harkness to the Government on May 15, 2023 (the "Investigation Report"), which detailed the findings of the internal investigation conducted by Calderwood & Harkness in response to Grand Jury Subpoena GJ No. 22-418, issued by the U.S. District Court for the District of Columbia on April 19, 2022. This Report also supplements the voluntary self-disclosure filed by Dunmore with the Office of Foreign Assets Control ("OFAC"), Compliance & Enforcement Division, on June 1, 2023 (the "OFAC VSD").
This Report is intended to demonstrate Dunmore's sustained and good-faith commitment to compliance remediation, consistent with the standards articulated in the DOJ Corporate Enforcement Policy (updated September 2022) and the DOJ Evaluation of Corporate Compliance Programs (updated March 2023). As the Government is aware, the DOJ Corporate Enforcement Policy provides that a company may receive a declination of prosecution where, among other things, it has voluntarily self-disclosed the misconduct, fully cooperated with the Government's investigation, and timely and appropriately remediated, including implementing an effective compliance program. Dunmore respectfully submits that it has satisfied each of these criteria, as documented in this Report and the prior submissions referenced herein.
This Report is designated as Attorney-Client Privileged and Work Product. It is provided to the Government pursuant to the selective waiver protocol agreed upon between Calderwood & Harkness and CES on July 1, 2022, and it is not intended to constitute a waiver of privilege as to any third party. Dunmore expressly reserves all rights and privileges as to any person or entity other than the DOJ personnel identified herein.
B. Summary of Key Remediation Milestones
From the earliest stages of this matter, Dunmore has undertaken prompt, comprehensive, and sustained remediation efforts. The following summarizes the key milestones in the remediation timeline:
1. Appointment of New Chief Compliance Officer. Effective August 1, 2022, Dunmore appointed Priya Nayar as Chief Compliance Officer ("CCO"), replacing Gerald Fisk, who departed the company on June 10, 2022. Ms. Nayar brought more than fifteen years of sanctions and export controls compliance experience, including prior service at a Fortune 100 energy company and a leading global financial institution. Critically, Ms. Nayar was appointed with a direct reporting line to the Board of Directors, a fundamental structural change from the prior reporting arrangement.
2. Retention of Pemberton Investors Solutions LLC. On December 15, 2022, Calderwood & Harkness, on behalf of Dunmore, retained Pemberton Investors Solutions LLC ("Marlowe Asset Management"), led by Dr. Anton Bremer, to conduct a comprehensive assessment of Dunmore's existing sanctions and export controls compliance program and to design a remediation program addressing all identified deficiencies. Marlowe Asset Management's engagement encompassed program assessment, remediation program design, advisory support for the OFAC voluntary self-disclosure, and export control classification review.
3. Delivery of Marlowe Asset Management's Remediation Report. On September 15, 2023, Marlowe Asset Management delivered its remediation report and the framework for the Enhanced Sanctions & Export Controls Compliance Program. The Marlowe Asset Management report incorporated the findings of Calderwood & Harkness's own compliance program assessment and was informed by the forensic findings documented in the Investigation Report.
4. Board Adoption of the Enhanced Program. On October 1, 2023, the Board of Directors of Dunmore Energy Holdings Ltd. formally adopted the Enhanced Sanctions & Export Controls Compliance Program by unanimous resolution. The Board Resolution authorized CCO Priya Nayar to implement all elements of the Enhanced Program and established the Compliance Committee of the Board.
5. Voluntary Disgorgement Payment. On November 30, 2023, Dunmore made a voluntary disgorgement payment of $8,750,000 to the United States Treasury, representing the estimated net profits derived from the nine tainted crude oil swap transactions identified in the Investigation Report. This payment was made voluntarily and in advance of any enforcement action by the Government or OFAC.
6. Completion of All Major Remediation Workstreams. As detailed in Section V of this Report, all major components of the Enhanced Program have been fully implemented, including enhanced OFAC screening protocols, export control compliance enhancements, a comprehensive third-party due diligence program, transaction monitoring and payment controls, a global training program, updated policies and procedures, whistleblower and reporting mechanisms, and recordkeeping systems. The completion of these workstreams represents a fundamental transformation of Dunmore's compliance infrastructure.
C. Summary of Cooperation
Dunmore has provided full and timely cooperation with the Government throughout the investigation. The scope of Dunmore's cooperation has been extensive and is summarized below.
Document Productions. Dunmore made two comprehensive document productions to CES, totaling 438,916 responsive documents. The first production, consisting of 287,412 documents bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412, was delivered on November 1, 2022. The second production, consisting of 151,504 additional documents bearing Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916, was delivered on January 30, 2023. These productions encompassed, among other things, communications of key custodians, transactional records, compliance files, corporate governance documents, banking records, and internal audit materials. Documents were produced in native format where available and in TIFF format with full-text searchable load files where native production was not practicable.
Witness Interviews. Calderwood & Harkness conducted a total of 47 witness interviews across three rounds in six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. Summaries of these interviews were provided to the Government pursuant to the selective waiver protocol. The interview program encompassed current and former employees at all levels of the organization, from trading desk personnel and compliance analysts to senior management and Board members.
Facilitation of Government Interview. On July 12, 2023, Dunmore facilitated a follow-up interview of Omar Al-Rashidi, formerly Head of Middle East Operations at Dunmore Trading International Ltd. ("DTI"), at Calderwood & Harkness's Washington, D.C. office. AUSA Meredith Calloway and Trial Attorney Samuel Kovacs conducted the interview. Mr. Al-Rashidi provided detailed information regarding the operations of the DTI trading desk in Dubai and the roles of Derek Hargrave and Natasha Sorokin in the transactions at issue. Dunmore did not seek to obstruct, delay, or limit the scope of this interview in any manner.
OFAC Voluntary Self-Disclosure. As noted, Dunmore filed a voluntary self-disclosure with OFAC on June 1, 2023, disclosing the full scope of the apparent violations identified during the internal investigation. Dunmore subsequently provided supplemental information to OFAC Compliance Analyst Erin Matsuda on August 30, 2023, in response to her requests for additional transactional detail and supporting documentation.
Proactive Disclosure of Forensic Findings. Throughout the investigation, Dunmore proactively disclosed forensic findings to the Government, including the identification of nine tainted crude oil swap transactions with a total notional value of $156.3 million and the discovery of $34.2 million in structured payments through Crescent Commercial Bank PJSC. These disclosures were made on a rolling basis as the investigation progressed, beginning with initial proffers on July 15, 2022, and continuing through the delivery of the Investigation Report on May 15, 2023.
Preservation of Privilege. Dunmore's selective waiver of privilege to the Government pursuant to the July 1, 2022 protocol was designed to provide the Government with maximum transparency regarding the internal investigation and remediation efforts, while preserving Dunmore's privilege rights as to all third parties, including private litigants, regulators outside the United States, and any other persons or entities.
II. BACKGROUND AND CONTEXT
A. The Underlying Conduct
The internal investigation conducted by Calderwood & Harkness, the findings of which were detailed in the Investigation Report submitted to the Government on May 15, 2023, identified three categories of sanctionable conduct occurring between approximately March 2020 and April 2022.
The Tainted Crude Oil Swap Transactions. During the relevant period, Dunmore Trading International Ltd. ("DTI"), the Dubai-based commodity trading subsidiary of Dunmore, under the supervision of Derek Hargrave (President of DTI) and with the direct involvement of Natasha Sorokin (Senior Trader), engaged in a series of crude oil swap transactions with two Dubai-based counterparties: Petronova Trading FZE, an entity registered in the Jebel Ali Free Zone, and Zenith Petroleum DMCC, an entity registered in the Dubai Multi Commodities Centre. In total, DTI entered into 14 crude oil swap transactions with these counterparties, with an aggregate notional value of approximately $218.7 million.
The internal investigation determined that nine of these 14 transactions, with an aggregate notional value of approximately $156.3 million, involved counterparties with undisclosed beneficial ownership ties to Volkhov Industrial Group JSC ("Volkhov"), a Russian industrial conglomerate. Volkhov was designated by OFAC under Directive 2 of Executive Order 13662 (sectoral sanctions pertaining to the financial services sector of the Russian Federation) on November 15, 2019. Subsequently, on April 6, 2022, Volkhov was added to the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") pursuant to Executive Order 14024, resulting in full asset blocking. The beneficial ownership connections between Petronova Trading FZE, Zenith Petroleum DMCC, and Volkhov ran through Sergei Volkov, a Russian national serving as a shadow director of Petronova, and Arkady Volkhov, a principal of Volkhov Industrial Group who held a controlling interest in Zenith Petroleum through a series of intermediary holding companies registered in the British Virgin Islands and Cyprus.
The Oilfield Equipment Exports. Separately, during the same period, DTI facilitated or directed the export of oilfield drilling equipment and components valued at approximately $12.4 million. These exports were routed through Caspian Logistik GmbH, a Hamburg-based logistics and freight-forwarding company, and were destined for end-users in the Russian Federation. The equipment at issue was classified under Export Administration Regulations ("EAR") Export Control Classification Numbers ("ECCN") 2B350 (chemical manufacturing equipment and components) and 2B999 (specific processing equipment not elsewhere specified). These exports were subject to the license requirements of EAR §746.5, which imposes comprehensive controls on exports to Russia and Belarus. No license was obtained or sought for any of these transactions. Caspian Logistik GmbH provided end-user certificates for the shipments that the investigation determined were false or misleading, identifying end-users in Turkey and Kazakhstan rather than the actual ultimate consignees in the Russian Federation.
The Structured Payments. The investigation also uncovered a pattern of structured payments totaling $34.2 million, executed through 127 separate intermediary account transactions at Crescent Commercial Bank PJSC, a Dubai-based financial institution. These payments were structured to obscure the beneficial ownership interest of Volkhov Industrial Group JSC and its affiliates in the proceeds of the crude oil swap transactions. The structuring involved the use of multiple intermediary accounts held by shell entities, with individual transaction amounts calibrated to avoid triggering enhanced due diligence thresholds at correspondent banking institutions. The investigation determined that Hargrave and Sorokin were directly involved in directing the structuring of these payments, and that Crescent Commercial Bank's compliance function either failed to detect or failed to act upon the structuring patterns.
The foregoing conduct is described in substantially greater detail in the Investigation Report. This Report does not seek to re-present the full evidentiary record, but rather to provide sufficient context for the remediation measures discussed herein.
B. The DOJ Inquiry
On April 19, 2022, a grand jury subpoena, GJ No. 22-418, was issued by the U.S. District Court for the District of Columbia, Grand Jury 22-2, directing Dunmore to produce documents and records relating to, among other things, DTI's transactions with Petronova Trading FZE, Zenith Petroleum DMCC, and Caspian Logistik GmbH; any transactions involving Volkhov Industrial Group JSC or its affiliates; and any exports of goods or technology to the Russian Federation or Belarus. The subpoena was issued in connection with an investigation by the National Security Division, Counterintelligence and Export Control Section, into potential criminal violations of the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act ("ECRA"), 50 U.S.C. §§ 4801–4852.
Calderwood & Harkness LLP was retained by Dunmore on April 14, 2022—five days prior to the issuance of the grand jury subpoena—following an internal escalation by then-CCO Gerald Fisk, who on April 11, 2022, flagged potential sanctions compliance concerns regarding DTI's counterparty relationships to General Counsel Marcus Wellbourne. Victoria Chambers was designated as the responsible partner for the engagement, and Conrad Reeves was designated as senior counsel overseeing the export controls and sanctions compliance aspects of the investigation.
The criminal statutes at issue in this matter carry significant penalties. IEEPA provides for criminal penalties of up to 20 years' imprisonment and fines of up to $1,000,000 per violation for willful violations. 50 U.S.C. § 1705(c). ECRA likewise provides for criminal penalties of up to 20 years' imprisonment and fines of up to $1,000,000, or both, for willful violations. 50 U.S.C. § 4819(b). In addition, violations may give rise to substantial civil monetary penalties, asset forfeiture, debarment, and denial of export privileges.
C. Dunmore Corporate Profile
Dunmore Energy Holdings Ltd. is a Cayman Islands–domiciled exempted company, registered with the Cayman Islands Registrar of Companies under Registration No. MC-334821. The company's registered office is located at Harbour Place, 4th Floor, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. Dunmore's operational headquarters are located at 1200 McKinney Street, Suite 3400, Houston, Texas 77010.
Dunmore is a diversified energy company engaged in oil and gas exploration, production, and trading, as well as renewable energy development. For fiscal year 2021, Dunmore reported consolidated revenues of approximately $4.87 billion. The company employs approximately 3,200 persons globally across its various subsidiaries and operational locations.
Dunmore's principal operating subsidiaries are as follows:
• Dunmore Trading International Ltd. ("DTI"): Dubai, United Arab Emirates. Licensed by the Dubai International Financial Centre ("DIFC"), License No. CL-4827. DTI was Dunmore's primary commodity trading subsidiary and the entity principally involved in the conduct at issue in this matter. DTI's operations have been substantially restructured as part of the remediation program.
• Dunmore upstream Americas LLC ("DUA"): Organized under the laws of the State of Delaware, Employer Identification Number 84-2937561. DUA is responsible for Dunmore's upstream oil and gas exploration and production operations in the Americas, with principal operations in the Permian Basin and the Gulf of Mexico.
• Dunmore Renewables GmbH: Hamburg, Germany. Dunmore Renewables oversees the company's growing portfolio of renewable energy assets in Europe, including offshore wind development in the North Sea and solar projects in Southern Europe.
• Dunmore Exploration West Africa Ltd. ("DEWA"): Lagos, Nigeria. DEWA manages Dunmore's exploration and production interests in West Africa, including onshore and offshore concessions in Nigeria and Ghana.
Dunmore's ownership structure is as follows: Greystone Capital Partners Fund IV, L.P. holds a 62.5% equity interest; management holds a 22.5% equity interest through a management equity participation program; and Thornbury Infrastructure Fund II, L.P. holds a 15.0% equity interest. Dunmore is not publicly listed on any securities exchange.
The company is led by Chief Executive Officer Callum Renshaw, who has served in that capacity since 2018. Mr. Renshaw has been fully supportive of the remediation efforts and has consistently communicated the importance of compliance to the organization.
D. Personnel Actions
Dunmore took swift and decisive personnel actions in connection with the matters identified during the internal investigation. These actions are summarized below and discussed in greater detail in Section VI of this Report.
Gerald Fisk, Former Chief Compliance Officer. Mr. Fisk departed Dunmore on June 10, 2022. While Mr. Fisk was the individual who initially flagged the potential sanctions compliance concerns to General Counsel Marcus Wellbourne on April 11, 2022, the investigation revealed that Mr. Fisk had been aware of certain red flags regarding the Petronova counterparty relationship for a period of months prior to his escalation and had failed to take timely action. Mr. Fisk retained personal counsel, Catherine Blackthorn of Blackthorn & Associates LLP in Houston, Texas.
Natasha Sorokin, Former Senior Trader, DTI. Ms. Sorokin was placed on administrative leave on May 16, 2022, immediately upon the identification of her direct involvement in the tainted transactions. She was formally separated from Dunmore on September 15, 2022, following the completion of the initial phase of the internal investigation. Ms. Sorokin retained personal counsel, Philip Keane of Wexford Keane LLP in Washington, D.C.
Derek Hargrave, Former President, DTI. Mr. Hargrave was placed on administrative leave on July 1, 2022, following the development of evidence establishing his supervisory role in the conduct at issue. He was formally separated from Dunmore on October 1, 2022. Mr. Hargrave retained personal counsel, James Overstreet of Overstreet & McClain PLLC in Dallas, Texas.
Priya Nayar, Chief Compliance Officer. Ms. Nayar was appointed as Dunmore's Chief Compliance Officer effective August 1, 2022, replacing Gerald Fisk. Ms. Nayar's appointment represented a critical milestone in Dunmore's remediation efforts and signaled the company's commitment to building a world-class compliance function. Ms. Nayar's qualifications, authority, and role within the Enhanced Program are discussed in detail in Section V.A.1 of this Report.
III. ASSESSMENT OF PRE-EXISTING COMPLIANCE PROGRAM DEFICIENCIES
A. Summary of Calderwood & Harkness's Assessment (November 15, 2022)
On November 15, 2022, Conrad Reeves and Jasmine Thornton of Calderwood & Harkness delivered a detailed memorandum to the Board of Directors of Dunmore assessing the state of Dunmore's pre-existing sanctions and export controls compliance program as of April 2022 (the "Compliance Assessment Memorandum"). The Compliance Assessment Memorandum evaluated the program against the standards articulated in the DOJ Evaluation of Corporate Compliance Programs and identified significant deficiencies across multiple dimensions of the compliance framework.
The findings of the Compliance Assessment Memorandum were subsequently validated and supplemented by Pemberton Investors Solutions LLC's independent gap analysis, which was delivered as part of Marlowe Asset Management's remediation report on September 15, 2023. Marlowe Asset Management's analysis confirmed each of the deficiencies identified by Calderwood & Harkness and provided additional granularity regarding the root causes of the compliance failures.
The deficiencies identified are summarized below. Each deficiency directly contributed to, or failed to prevent, the violative conduct described in Section II.A of this Report. Understanding these deficiencies is essential to appreciating the scope and design of the Enhanced Program described in Sections IV through V.
B. Key Deficiencies Identified
1. OFAC Screening Protocols
The pre-existing OFAC screening protocols at Dunmore were fundamentally inadequate in multiple respects. First, OFAC screening was conducted only at the point of counterparty onboarding. Once a counterparty was initially screened and cleared, no periodic re-screening was performed. This meant that if a counterparty or its beneficial owners were subsequently designated by OFAC, Dunmore would not identify the designation unless it happened to learn of it through other channels. Given the frequency with which OFAC updates its sanctions lists—often multiple times per week—this approach created an unacceptable gap in coverage.
Second, screening was limited to the direct counterparty's legal name. The screening process did not extend to beneficial owners, directors, officers, or known affiliates of the counterparty. This limitation was particularly consequential in the present matter, where the sanctioned nexus ran through beneficial ownership chains involving Sergei Volkov and Arkady Volkhov, rather than through the counterparty entity names themselves. Neither "Petronova Trading FZE" nor "Zenith Petroleum DMCC" appeared on any OFAC list; it was the beneficial owners and their affiliations with Volkhov Industrial Group JSC that created the sanctions nexus.
Third, the screening process failed to apply OFAC's 50 Percent Rule, which provides that the property and interests in property of entities owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons are themselves blocked, regardless of whether such entities are specifically identified on the SDN List. Application of the 50 Percent Rule would have required Dunmore to identify and screen the beneficial ownership chain of its counterparties to determine whether any blocked person held a direct or indirect ownership interest of 50 percent or more. Had Dunmore applied the 50 Percent Rule, the connections between Petronova Trading FZE, Zenith Petroleum DMCC, and Volkhov Industrial Group JSC—through Sergei Volkov and Arkady Volkhov—would likely have been identified at the onboarding stage.
Fourth, Dunmore had no automated screening system. All OFAC screening was conducted manually by compliance staff, who relied on outdated databases and manual searches of the OFAC SDN List. This manual process was slow, error-prone, and incapable of keeping pace with the volume of transactions processed by DTI's trading desk.
2. Export Control Classification and Compliance
Dunmore lacked any systematic process for classifying goods under the Export Administration Regulations ("EAR") prior to export. There was no centralized database of product classifications, and trading and logistics personnel were not trained to identify items that might be subject to EAR jurisdiction or require a license for export.
The oilfield drilling equipment and components exported through Caspian Logistik GmbH were properly classifiable under ECCN 2B350 (chemical manufacturing equipment and components) and ECCN 2B999 (specific processing equipment not elsewhere specified on the Commerce Control List). These classifications triggered license requirements under EAR §746.5 for exports to Russia and Belarus. However, no license determination was ever made, and no application for a license was ever filed. The exports proceeded without any review by qualified export controls compliance personnel.
In addition, Dunmore's pre-existing processes for verifying end-users and end-uses were inadequate. The company relied solely on end-user certificates provided by the counterparty—in this case, Caspian Logistik GmbH—without any independent verification. The end-user certificates provided by Caspian Logistik identified end-users in Turkey and Kazakhstan, when the actual ultimate consignees were located in the Russian Federation. A basic independent verification process—such as cross-referencing the stated end-users against publicly available commercial databases or checking whether the end-user entities existed at the stated addresses—would have revealed inconsistencies in the end-user certifications.
3. Third-Party Due Diligence
Dunmore's pre-existing counterparty due diligence procedures were inadequate in several critical respects. The company conducted only minimal know-your-customer ("KYC") and due diligence on intermediaries and trading counterparties. For the counterparties at issue—Petronova Trading FZE, Zenith Petroleum DMCC, and Caspian Logistik GmbH—Dunmore's due diligence files contained little more than basic corporate registration documents, bank references, and counterparty-provided information about the entities' business operations.
Critically, there was no requirement for counterparties to disclose their beneficial ownership structures. Dunmore did not request, and its counterparties did not provide, information regarding the ultimate beneficial owners of the entities with which Dunmore transacted. This omission was the single most significant due diligence failure, as it allowed Petronova Trading FZE and Zenith Petroleum DMCC to transact with DTI without disclosing their connections to Volkhov Industrial Group JSC and its principals.
Furthermore, there was no ongoing monitoring of counterparty risk profiles. Once a counterparty was onboarded, no mechanism existed for updating the risk assessment based on changed circumstances, such as new sanctions designations, adverse media, or changes in ownership structure.
4. Escalation and Reporting
The pre-existing compliance program lacked any formal escalation protocol for sanctions-related red flags. There was no documented procedure specifying the circumstances under which a potential sanctions concern should be escalated, to whom it should be escalated, or the timeline within which escalation should occur.
Of particular concern, the former CCO Gerald Fisk did not have an independent reporting line to the Board of Directors. Mr. Fisk reported solely to General Counsel Marcus Wellbourne, creating a structural impediment to the independent functioning of the compliance function. This reporting structure meant that compliance concerns could be filtered through, and potentially suppressed by, the legal department before reaching the Board level. The investigation identified at least two instances in which compliance alerts generated by Mr. Fisk's team regarding anomalies in the Petronova relationship were not escalated beyond Mr. Fisk's desk, and it remains unclear whether Mr. Fisk communicated these alerts even to General Counsel Wellbourne.
The absence of a formal escalation protocol, combined with the lack of a direct Board reporting line, contributed directly to the delay in identifying and remediating the sanctionable conduct.
5. Training. Dunmore had no dedicated sanctions or export controls training program for any category of employee. The company's existing general compliance training program—a single annual online module—did not cover OFAC-administered sanctions programs, the SDN List, Directive 2 of Executive Order 13662, the 50 Percent Rule, EAR requirements, export classification, license determination procedures, or any of the other substantive areas critical to sanctions and export controls compliance.
Trading desk personnel at DTI in Dubai, who were the employees most directly involved in transactions posing sanctions risk, received no jurisdiction-specific training regarding the sanctions programs applicable to their activities. They were not trained to identify sanctions red flags, such as the use of intermediary entities to obscure the involvement of designated persons, the structuring of payments to avoid enhanced due diligence thresholds, or the use of transshipment routes to circumvent export controls.
The absence of effective training was a contributing cause of the conduct at issue. Had trading desk personnel been trained to recognize the red flags associated with the Petronova and Zenith relationships—including the use of free zone entities, the opaque beneficial ownership structures, the involvement of Russian-connected individuals, and the unusual payment patterns—the violative conduct might have been identified and halted at an earlier stage.
6. Tone at the Top
The culture at DTI's Dubai trading desk, as documented in the Investigation Report, was one in which revenue generation was prioritized over compliance. Derek Hargrave, as President of DTI, set a tone that emphasized deal execution and trading profits and marginalized the role of the compliance function. Natasha Sorokin, as Senior Trader, operated with minimal compliance oversight and, as the investigation established, actively participated in structuring transactions to avoid sanctions detection.
These cultural deficiencies were compounded by the absence of compliance metrics in executive compensation determinations. Trading desk leadership was incentivized solely on the basis of revenue and profit targets, with no component of compensation tied to compliance performance. This created a structural misalignment of incentives that encouraged risk-taking and discouraged compliance vigilance.
The Board of Directors, prior to the events at issue, did not receive regular or detailed reporting on sanctions and export controls compliance matters. There was no Board-level committee dedicated to compliance oversight, and compliance was not a standing agenda item at Board meetings. This lack of Board-level visibility and engagement further contributed to the deficiencies in tone at the top.
IV. DESIGN OF THE ENHANCED PROGRAM
A. Engagement of Pemberton Investors Solutions LLC
On December 15, 2022, Calderwood & Harkness, on behalf of Dunmore, retained Pemberton Investors Solutions LLC ("Marlowe Asset Management") to serve as an independent compliance consultant for the purpose of conducting a comprehensive assessment of Dunmore's sanctions and export controls compliance program and designing a remediation program addressing all identified deficiencies.
The engagement was led by Dr. Anton Bremer, Lead Consultant, at Marlowe Asset Management's Washington, D.C. office located at 1300 I Street NW, Suite 700, Washington, DC 20005. Dr. Bremer is a recognized authority in the field of sanctions and export controls compliance, with more than twenty years of experience advising multinational corporations, financial institutions, and government agencies on OFAC, BIS, and EU sanctions compliance matters. Dr. Bremer previously served as a senior policy advisor at OFAC and as an assistant professor of international trade law at Georgetown University Law Center.
Marlowe Asset Management's scope of engagement encompassed four principal workstreams:
(a) A comprehensive assessment of Dunmore's pre-existing sanctions and export controls compliance program, including an independent gap analysis measured against OFAC's Framework for Compliance Commitments, the DOJ Evaluation of Corporate Compliance Programs, and industry best practices;
(b) The design of a remediation program addressing each identified deficiency, including detailed policies, procedures, organizational structures, screening systems, training curricula, and monitoring frameworks;
(c) Advisory support in connection with the preparation and filing of the OFAC voluntary self-disclosure, including analysis of the apparent violations, calculation of the applicable statutory maximum civil monetary penalty, and identification of applicable mitigating and aggravating factors under the OFAC Economic Sanctions Enforcement Guidelines; and
(d) A comprehensive review and classification of all products and equipment traded or exported by Dunmore entities under the EAR Commerce Control List, with specific attention to items classified under ECCN 2B350 and ECCN 2B999.
Marlowe Asset Management's work was conducted over a period of approximately nine months, from January 2023 through September 2023. Dr. Bremer and his team conducted on-site reviews at Dunmore's Houston headquarters, DTI's Dubai office, Dunmore Renewables' Hamburg office, and Dunmore Exploration West Africa's Lagos office. Marlowe Asset Management's team interviewed more than sixty Dunmore employees across all major functions, reviewed hundreds of transactional files, and analyzed the output of the forensic investigation conducted by Calderwood & Harkness and Ridgeline Advisory Group LLC.
On September 15, 2023, Marlowe Asset Management delivered its final remediation report and the framework for the Enhanced Sanctions & Export Controls Compliance Program (the "Marlowe Asset Management Report"). The Marlowe Asset Management Report was approximately 280 pages, exclusive of exhibits, and included detailed policy and procedure templates, organizational design recommendations, screening system specifications, training materials outlines, and a multi-year implementation roadmap.
B. Benchmarking Against DOJ Standards
The Enhanced Program was designed from the outset to satisfy the rigorous standards articulated in the DOJ Evaluation of Corporate Compliance Programs (updated March 2023). Calderwood & Harkness prepared a detailed benchmarking memorandum, authored by Jasmine Thornton and dated September 1, 2023, which mapped each element of the Enhanced Program against all three prongs of the DOJ guidance:
Prong One: Is the Compliance Program Well-Designed? The Enhanced Program addresses all of the topics identified by the DOJ under this prong, including: risk assessment; policies and procedures; training and communications; confidential reporting structure and investigation process; third-party management; and mergers and acquisitions due diligence. As detailed in Section V of this Report, each of these areas has been substantially upgraded or newly implemented.
Prong Two: Is the Compliance Program Being Applied Earnestly and in Good Faith? The Enhanced Program includes structural features designed to demonstrate earnest application, including: the CCO's direct reporting line to the Board; the CCO's independent authority to halt transactions; a dedicated and appropriately resourced compliance function; compliance metrics in compensation determinations; and a robust disciplinary framework. These features are not merely aspirational; they have been implemented and are operational, as documented herein.
Prong Three: Does the Compliance Program Work in Practice? The Enhanced Program incorporates ongoing monitoring, testing, and continuous improvement mechanisms designed to ensure that the program is effective in practice and adapts to evolving risks. These mechanisms include annual independent program assessments, quarterly transaction sampling, semi-annual screening effectiveness testing, internal audit integration, and root cause analysis for any compliance incidents. These mechanisms are described in detail in Section IX of this Report.
The Calderwood & Harkness benchmarking memorandum also analyzed the Enhanced Program's alignment with the DOJ Corporate Enforcement Policy (updated September 2022), particularly the Policy's emphasis on timely and appropriate remediation as a prerequisite for a declination of prosecution. The memorandum concluded that the Enhanced Program, in combination with Dunmore's voluntary self-disclosure, full cooperation, and voluntary disgorgement, satisfies all of the criteria articulated in the Policy.
C. Board Resolution
On October 1, 2023, the Board of Directors of Dunmore Energy Holdings Ltd. convened a special meeting at which the Board unanimously adopted the Enhanced Sanctions & Export Controls Compliance Program by formal resolution. A copy of the Board Resolution is attached as Appendix C to this Report.
The Board Resolution accomplished three principal objectives. First, it formally adopted the Enhanced Program in its entirety, including all policies, procedures, and organizational structures described in the Marlowe Asset Management Report, as modified by input from Calderwood & Harkness, CCO Priya Nayar, and General Counsel Marcus Wellbourne. Second, it authorized and directed CCO Priya Nayar to implement all elements of the Enhanced Program on behalf of the company, with full authority to allocate resources, retain service providers, and modify procedures as necessary to ensure effective implementation. Third, it established the Compliance Committee of the Board, comprising three independent directors and CEO Callum Renshaw serving in an ex officio capacity, with a mandate to provide Board-level oversight of the compliance function and to receive quarterly reports from the CCO on compliance metrics, incident reports, and program effectiveness.
The Board Resolution represents a watershed moment in Dunmore's approach to compliance. It demonstrates an unambiguous commitment at the highest level of the organization to a culture of compliance, and it provides the structural foundation for the ongoing operation and evolution of the Enhanced Program.
V. IMPLEMENTATION OF ENHANCED PROGRAM — COMPONENT-BY-COMPONENT
This Section provides a detailed, component-by-component description of the implementation of the Enhanced Sanctions & Export Controls Compliance Program. For each component, we describe the design of the measure, the implementation steps taken, the current operational status, and the relationship to the specific deficiency or deficiencies the measure is intended to address.
A. Governance and Organizational Structure
1. Chief Compliance Officer — Priya Nayar
As noted in Section I.B.1, Priya Nayar was appointed as Dunmore's Chief Compliance Officer effective August 1, 2022. Ms. Nayar was selected following an extensive search conducted with the assistance of an executive search firm. She brought to Dunmore more than fifteen years of experience in sanctions and export controls compliance, including senior compliance roles at a Fortune 100 energy company and a global financial institution. She holds a J.D. from the Georgetown University Law Center and an LL.M. in International Economic Law from the London School of Economics and Political Science. She is admitted to the bar in the District of Columbia and the State of Texas.
Ms. Nayar's appointment was made with several structural features that distinguish her role from that of her predecessor:
(a) Direct Reporting to the Board. Unlike her predecessor Gerald Fisk, who reported solely to General Counsel Marcus Wellbourne, Ms. Nayar reports directly to the Board of Directors through the newly established Board Compliance Committee. This direct reporting line ensures that the CCO has unfiltered access to the Board and that compliance matters are elevated to the Board level without intermediation. For operational matters requiring day-to-day coordination, Ms. Nayar maintains a dual reporting line to CEO Callum Renshaw, but her primary accountability is to the Board Compliance Committee.
(b) Independent Authority to Halt Transactions. Ms. Nayar has been vested with the independent authority to halt, block, or reject any transaction pending compliance review. This authority is exercised at her sole discretion and cannot be overridden by the trading desk, business unit leadership, or any other function without the express approval of the Board Compliance Committee. This authority directly addresses the cultural dynamic at DTI's Dubai trading desk, where compliance concerns were historically subordinated to revenue imperatives.
(c) Dedicated Budget. The annual compliance budget has been increased from $1.2 million under the prior regime to $4.5 million, representing an approximately fourfold increase. This budget funds the expanded compliance team, the automated screening platform, external consultants, training programs, and other compliance infrastructure. The compliance budget is set annually by the Board Compliance Committee and is not subject to reduction by operating management without Board approval.
(d) Expanded Compliance Team. Under Ms. Nayar's leadership, the compliance team has grown from three professionals under Gerald Fisk to twelve compliance professionals. The expanded team includes sanctions compliance analysts, export controls specialists, due diligence investigators, and training coordinators. Team members are located in Houston, Dubai, Hamburg, and Lagos, providing regional coverage across Dunmore's principal operating jurisdictions.
2. Compliance Committee of the Board
The Compliance Committee of the Board was established by the Board Resolution of October 1, 2023. The Committee comprises three independent directors—Margaret Atherton (Chair), Robert Nakamura, and Patricia Delacroix—and CEO Callum Renshaw, who serves in an ex officio capacity. None of the independent directors has any involvement in Dunmore's day-to-day trading or operational activities, ensuring their objectivity and independence.
The Committee's mandate includes the following responsibilities:
(a) Receiving and reviewing quarterly reports from CCO Priya Nayar on compliance metrics, screening statistics, incident reports, escalated matters, training completion rates, and overall program effectiveness;
(b) Reviewing and approving the annual compliance budget proposed by the CCO;
(c) Overseeing the annual independent assessment of the Enhanced Program conducted by Marlowe Asset Management or another qualified third-party consultant;
(d) Reviewing the results of transaction sampling, screening effectiveness testing, and internal audit reviews of the compliance function;
(e) Approving substantive policy changes to the Enhanced Program; and
(f) Providing strategic guidance to the CCO on compliance priorities and resource allocation.
The Committee held its inaugural meeting on October 20, 2023, at which CCO Nayar presented the implementation plan for the Enhanced Program and the Committee approved the compliance budget and the timeline for completion of the initial training program. Subsequent quarterly meetings are scheduled for January, April, July, and October of each year.
3. Reporting Lines
The restructured reporting lines are a foundational element of the Enhanced Program. The organizational design ensures that compliance considerations are embedded at every level of the organization and that information flows freely between the compliance function, senior management, and the Board.
At the corporate level, CCO Priya Nayar reports directly to the Board Compliance Committee for all compliance-related matters and maintains a dual reporting line to CEO Callum Renshaw for operational coordination. At the regional level, Dunmore has appointed regional compliance officers in each of its four principal operating jurisdictions:
• Houston: Daniel Ortega, Regional Compliance Officer — Americas
• Dubai: Aisha Khoury, Regional Compliance Officer — Middle East
• Hamburg: Markus Berger, Regional Compliance Officer — Europe
• Lagos: Chidinma Okafor, Regional Compliance Officer — West Africa
Each regional compliance officer reports directly to CCO Nayar and is responsible for day-to-day compliance oversight in their respective jurisdiction. The regional compliance officers have the authority to escalate matters directly to the CCO and, in urgent circumstances, to halt transactions pending CCO review. The appointment of a Regional Compliance Officer in Dubai is of particular significance, given that DTI's Dubai trading desk was the locus of the conduct at issue. Ms. Khoury, who joined Dunmore in March 2023, has extensive experience in DIFC-regulated compliance and Middle East sanctions risk.
An updated organizational chart showing the compliance function's reporting lines and structure is attached as Appendix F to this Report.
B. Enhanced OFAC Screening Protocols
1. Automated Screening System
The implementation of an automated sanctions screening platform represents one of the most significant technological upgrades undertaken as part of the Enhanced Program. The prior manual screening process—which relied on compliance staff manually searching outdated databases against counterparty legal names—has been entirely replaced by an automated, enterprise-wide screening solution.
The automated screening platform was developed and configured by Pemberton Investors Solutions LLC as part of its remediation engagement. The platform is integrated with the following sanctions and restricted party lists:
• OFAC Specially Designated Nationals and blocked Persons List (SDN List)
• OFAC Consolidated Sanctions List (Non-SDN Lists)
• OFAC Sectoral Sanctions Identifications List (SSI List)
• Bureau of Industry and Security ("BIS") Entity List
• BIS Denied Persons List
• BIS Unverified List
• EU Consolidated List of Persons, Groups, and Entities Subject to EU Financial Sanctions
• UK HM Treasury Consolidated List of Financial Sanctions Targets
• UN Security Council Consolidated List
The platform performs real-time screening of all counterparties, beneficial owners, directors, officers, agents, and other associated parties at the point of transaction initiation. Screening is conducted using advanced fuzzy-matching algorithms that account for transliterations, aliases, name variations, and typographical inconsistencies. The system generates alerts for any potential matches, which are then reviewed and adjudicated by compliance personnel through the tiered escalation process described in Section V.B.4 below.
The platform is configured to perform automated daily refreshes against all supported sanctions and restricted party lists. When OFAC publishes updates to the SDN List or any other list, the platform downloads and integrates the updates within 24 hours, triggering automatic re-screening of all active counterparties and associated parties against the updated data. This ensures that new designations are identified and acted upon promptly.
2. Beneficial Ownership and 50% Rule Screening
Addressing one of the most critical deficiencies identified in the pre-existing program, the Enhanced Program requires all counterparties to provide certified beneficial ownership information at the time of onboarding and to recertify such information on an annual basis. The beneficial ownership certification requires disclosure of all natural persons who, directly or indirectly, own or control 25% or more of the equity interests in the counterparty, as well as all persons who exercise effective control over the counterparty's management or operations.
In addition, and critically, the Enhanced Program's screening protocols now fully incorporate OFAC's 50 Percent Rule. Under this rule, any entity that is owned 50% or more, directly or indirectly, individually or in the aggregate, by one or more blocked persons is itself treated as blocked, regardless of whether the entity appears on the SDN List. The automated screening platform is configured to apply the 50 Percent Rule by screening not only the counterparty itself but also its disclosed beneficial owners, directors, and officers. Where the counterparty's ownership structure includes intermediate holding entities, those entities are also screened to the extent ownership information is available.
As a further measure, Dunmore has completed a retroactive re-screening of all existing counterparties. This comprehensive re-screening exercise, completed by December 1, 2023, covered more than 4,700 active and recently active counterparties across all Dunmore entities. Each counterparty was re-screened against all supported sanctions and restricted party lists, and beneficial ownership information was requested and reviewed. The results of the re-screening exercise are summarized in Appendix E to this Report. The re-screening identified a small number of counterparties requiring enhanced due diligence or relationship termination, all of which have been addressed.
3. Periodic Re-Screening
Under the Enhanced Program, all active counterparties are re-screened against updated sanctions and restricted party lists on a quarterly basis, at minimum. This quarterly re-screening is performed automatically by the screening platform and does not require manual initiation by compliance personnel.
In addition to the scheduled quarterly re-screening, the Enhanced Program provides for event-driven re-screening in the following circumstances:
(a) When OFAC or any other supported list administrator publishes new designations that may be relevant to Dunmore's counterparty portfolio;
(b) When adverse media monitoring services identify negative news or investigative reporting concerning a Dunmore counterparty;
(c) When Dunmore becomes aware of any change in the beneficial ownership, control, or management of a counterparty; and
(d) When any other information comes to the attention of the compliance function that may indicate a change in the sanctions risk profile of a counterparty.
The combination of scheduled quarterly re-screening and event-driven re-screening ensures that Dunmore's counterparty population is subject to continuous and dynamic sanctions risk monitoring.
4. Escalation Protocol for Screening Hits
The Enhanced Program includes a formal, documented escalation protocol for the adjudication of sanctions screening alerts. The protocol operates on a three-tier escalation framework:
Tier 1 — Initial Review by Compliance Analyst. All screening alerts generated by the automated platform are initially reviewed by a compliance analyst, who conducts a preliminary assessment to determine whether the alert represents a potential true hit or a false positive. False positives—which commonly arise from name similarities, transliteration variants, and other incidental matches—are documented and cleared. Potential true hits are escalated to Tier 2.
Tier 2 — Secondary Review by Regional Compliance Officer. The regional compliance officer conducts a more detailed review of the potential true hit, drawing upon additional information sources including commercial databases, corporate registry filings, open-source intelligence, and any available beneficial ownership information. The regional compliance officer may request additional information from the counterparty or the business unit. If the regional compliance officer determines that the alert represents a true hit or cannot be resolved, the matter is escalated to Tier 3.
Tier 3 — Final Determination by CCO Priya Nayar. The CCO reviews the matter and makes the final determination regarding the appropriate course of action, which may include blocking the transaction, terminating the counterparty relationship, filing a blocking report with OFAC, or referring the matter to outside counsel for further legal analysis. The CCO has the authority to block any transaction at this stage and to take any other action necessary to ensure compliance. Matters requiring further investigation are escalated to General Counsel Marcus Wellbourne and to Calderwood & Harkness or other outside counsel as appropriate.
All screening alerts and their dispositions are documented in a centralized incident log maintained by the compliance function. The incident log records the alert identifier, the counterparty or party screened, the list(s) generating the alert, the tier at which the alert was resolved, the identity of the reviewer at each tier, the date and time of each review action, and the final disposition. The incident log is reviewed quarterly by the Board Compliance Committee as part of the CCO's quarterly reporting.
C. Export Control Compliance Enhancements
1. Export Classification Review
As part of the Enhanced Program, Dunmore conducted a comprehensive review and classification of all products, equipment, and technology traded or exported by Dunmore entities under the EAR Commerce Control List. This review was performed by Pemberton Investors Solutions LLC in coordination with Conrad Reeves and the compliance team, and was informed by the product specifications, technical data sheets, and transactional records maintained by Dunmore's trading and logistics functions.
The review gave specific attention to the items that were the subject of the oilfield equipment exports at issue—namely, items classifiable under ECCN 2B350 (chemical manufacturing equipment and components, including certain types of valves, pumps, heat exchangers, and distillation columns) and ECCN 2B999 (specific processing equipment not elsewhere specified on the CCL, including certain oilfield drilling components). The review confirmed that these items are subject to EAR jurisdiction and require a license for export to Russia and Belarus under EAR §746.5.
The results of the classification review have been compiled into a centralized classification database, which is maintained and updated on an ongoing basis by the regional compliance officers. The database assigns an EAR classification to each product or equipment type traded or exported by Dunmore, along with a notation of any applicable license requirements based on destination country and end-user considerations. The database is accessible to all trading, logistics, and compliance personnel through Dunmore's compliance intranet portal.
2. License Determination Procedures
Under the Enhanced Program, a mandatory license determination must be completed prior to any export, re-export, or in-country transfer of any controlled item by any Dunmore entity. The license determination process requires the following steps:
(a) Classification Verification. The item to be exported is classified under the EAR Commerce Control List using the centralized classification database. If the item has not previously been classified, a new classification is performed by a qualified export controls specialist and reviewed by the regional compliance officer before the transaction proceeds.
(b) Country Chart Analysis. The item's classification is cross-referenced against the EAR Country Chart (Supplement No. 1 to Part 738) and any applicable country-specific restrictions, including EAR §746.5 (Russia/Belarus), to determine whether a license is required for the proposed destination country.
(c) End-User and End-Use Analysis. The identity of the end-user and the stated end-use are evaluated to determine whether any end-user-based restrictions apply, including the Entity List (Supplement No. 4 to Part 744), the Denied Persons List, or the Unverified List.
(d) License Exception Analysis. Where a license is required, the compliance team evaluates whether any available license exception applies.
(e) CCO Approval. For any export to Russia, Belarus, or any entity on the SDN List, Entity List, or Denied Persons List, the transaction requires express written authorization from CCO Priya Nayar following legal review by qualified export controls counsel. As a matter of policy, Dunmore does not export controlled items to Russia or Belarus and does not intend to seek export licenses for such destinations.
The license determination is documented on a standardized form and retained in the centralized compliance document management system. No export may proceed without a completed and approved license determination form.
3. End-User Verification
The Enhanced Program includes a substantially strengthened end-user verification process, designed to address the specific failure that allowed the false end-user certificates provided by Caspian Logistik GmbH to go undetected.
Under the new procedures, end-user verification requires independent corroboration of the end-user's identity and stated end-use. The compliance team is required to:
(a) Verify the existence of the stated end-user as a legal entity by reference to corporate registry filings, commercial databases (such as Dunmore Enterprises, Bureau van Dijk Orbis, or equivalent), and other publicly available sources;
(b) Confirm that the end-user's stated business activities are consistent with the stated end-use of the exported items;
(c) Verify the end-user's physical address and confirm that it corresponds to an actual operational facility;
(d) Screen the end-user against all supported sanctions and restricted party lists, as well as adverse media sources;
(e) Evaluate the proposed shipping route for consistency with the stated destination and end-user location, and flag any unusual transshipment points, routing, or logistics arrangements; and
(f) Document all verification steps and findings in the transaction file.
Critically, the Enhanced Program expressly prohibits reliance solely on counterparty-provided end-user certifications. While end-user certificates remain a component of the documentation process, they are treated as one input among many and are subject to independent verification. This prohibition directly addresses the circumstance in which Caspian Logistik GmbH provided false end-user certificates identifying end-users in Turkey and Kazakhstan, which were accepted by Dunmore without independent verification.
4. Red Flag Indicators
A comprehensive list of red flag indicators for

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I. EXECUTIVE SUMMARY

II. BACKGROUND AND CONTEXT

III. ASSESSMENT OF PRE-EXISTING COMPLIANCE PROGRAM DEFICIENCIES

IV. DESIGN OF THE ENHANCED PROGRAM

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