1016-00009 · Dunmore Energy Holdings · Subpoena Response & DOJ Correspondence

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT VOLUNTARY PROFFER — SELECTIVE WAIVER TO DOJ ONLY

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

Victoria Chambers Partner, White Collar & Investigations Direct: (202) 555-7438 vchambers@calderwoodharkness.com

Calderwood & Harkness Matter No. 1016-00009

November 20, 2022

BY HAND DELIVERY AND ELECTRONIC TRANSMISSION

Meredith Calloway, Esq. Assistant United States Attorney National Security Division Counterintelligence and Export Control Section U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530

Re: Supplemental Proffer — Dunmore Energy Holdings Ltd.; Grand Jury Subpoena No. GJ No. 22-418; U.S. District Court for the District of Columbia, Grand Jury 22-2

Dear Ms. Calloway:

I. Introduction and Purpose

This letter supplements the initial proffer letter dated July 15, 2022, transmitted by the undersigned on behalf of Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH") to your office in connection with the ongoing inquiry by the U.S. Department of Justice ("DOJ" or the "Department") into certain transactions involving Dunmore's Dubai-based trading subsidiary, Dunmore Trading International Ltd. ("DTI"). Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") represents Dunmore, a Cayman Islands–domiciled exempted company with limited liability (Registration No. MC-334821), with operational headquarters located at 1200 McKinney Street, Suite 3400, Houston, Texas 77010.

This supplemental proffer is submitted in connection with the DOJ inquiry opened on April 19, 2022, and the grand jury subpoena designated GJ No. 22-418, issued by the U.S. District Court for the District of Columbia (Grand Jury 22-2). The purpose of this letter is to provide your office with a summary of the forensic accounting findings of Ridgeline Advisory Group LLC ("Ridgeline"), Dunmore's forensic accounting consultant, which was retained on May 2, 2022, at the direction of Calderwood & Harkness, under engagement number RAG-2022-0319. These findings relate to certain crude oil swap transactions, payment structuring activity, and oilfield equipment exports that are the subject of the ongoing inquiry.

Dunmore reaffirms and continues its full cooperation with the DOJ National Security Division's Counterintelligence and Export Control Section ("CES") in connection with this matter. The forensic findings summarized herein are supported by the documentary record contained in the first document production transmitted to your office on November 1, 2022, consisting of 287,412 documents bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412. Additional documentary support will be provided in a forthcoming second production, as discussed in further detail below.

Consistent with the protocol established in Calderwood & Harkness's memorandum to your office dated July 1, 2022, Dunmore reserves all applicable privileges and protections, including attorney-client privilege and work product protections. This supplemental proffer constitutes a selective waiver of work product protections to the DOJ only and is not intended to effect, nor shall it be construed as effecting, a waiver of any privilege or protection as against any third party, whether in litigation, regulatory proceedings, or otherwise.

II. Background — Scope of the Forensic Investigation

A. Retention of Ridgeline Advisory Group LLC

At the direction of Calderwood & Harkness, Dunmore retained Ridgeline Advisory Group LLC, located at 1825 Connecticut Avenue NW, Suite 400, Washington, DC 20009, on May 2, 2022, to conduct a forensic accounting investigation into certain transaction flows involving DTI. The engagement is being led by Dr. Margaret Liu, CPA, CFE, a Managing Director at Ridgeline with over twenty years of experience in forensic accounting, financial investigations, and sanctions-related transaction tracing. The engagement was assigned Ridgeline engagement number RAG-2022-0319.

The scope of Ridgeline's engagement encompasses the forensic tracing and analysis of transaction flows involving DTI (DIFC License No. CL-4827; principal office at Level 14, Gate Building 3, Dubai International Financial Centre, P.O. Box 506774, Dubai, UAE), Dunmore's Dubai-based energy trading subsidiary. Ridgeline's analysis has focused on DTI's transactions with the following entities and their affiliates:

(i) Petronova Trading FZE ("Petronova"), a Free Zone Establishment registered in the Jebel Ali Free Zone Authority, with offices at Office 1407, Al Shafar Tower, Dubai Internet City, Dubai, UAE;

(ii) Zenith Petroleum DMCC ("Zenith Petroleum"), a company registered in the Dubai Multi Commodities Centre, with offices at Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE;

(iii) Caspian Logistik GmbH ("Caspian Logistik"), a German limited liability company with offices at Mönckebergstraße 22, 20095 Hamburg, Germany; and

(iv) any entities connected to, owned or controlled by, or acting on behalf of Volkhov Industrial Group JSC ("Volkhov" or "VIG"), a Russian Federation joint-stock company headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russia.

B. Data Sources Reviewed by Ridgeline

In conducting its forensic analysis, Ridgeline reviewed and analyzed data from the following principal sources:

1. Trading Desk Records. Transaction records, trade confirmations, and settlement documentation from DTI's Dubai-based trading desk covering the period from March 2020 through April 2022. These records encompass the full universe of DTI's crude oil, refined products, and derivatives trading activity during the relevant period.

2. Banking Records. Wire transfer records and SWIFT messages from Crescent Commercial Bank PJSC ("Crescent" or "CCB"), located at Al Maktoum Tower, DIFC, P.O. Box 335102, Dubai, UAE. Crescent served as DTI's primary trade finance bank during the relevant period, with relationship management provided by Khalid Mansour, a Vice President in Crescent's Trade Finance Division. Ridgeline obtained and analyzed complete transaction histories for all DTI accounts held at Crescent, including operating accounts, trade settlement accounts, and margin accounts.

3. Internal Financial Records. Accounts payable and accounts receivable ledgers maintained by Rajesh Malhotra, Controller of DTI. These records include journal entries, intercompany transfer documentation, and supporting invoices for the relevant period.

4. Shipping and Logistics Documentation. Shipping records, bills of lading, vessel charter party agreements, port clearance documents, and logistics coordination files maintained by Yves Leclerc, Director of Logistics & Shipping at DTI. These records document the physical movement of crude oil cargoes and oilfield equipment relevant to the transactions under review.

5. Corporate Registry and KYC Files. Corporate registry filings, beneficial ownership records, and know-your-customer ("KYC") files maintained by DTI's compliance function with respect to Petronova, Zenith Petroleum, and Caspian Logistik. These records include entity formation documents, shareholder registries, director appointments, and due diligence questionnaires completed by these counterparties.

6. E-discovery Corpus. An electronic discovery corpus collected and processed by Nexagen Analytics Inc. ("Nexagen") under Project No. NX-DEH-2204 (project manager: Brian Cavanaugh). Nexagen performed technology-assisted review ("TAR") of 2,347,812 documents collected from custodians and data sources across six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. The TAR process and its results are described in further detail in Section VI.B below.

C. Individuals of Interest

Ridgeline's forensic analysis, in conjunction with Calderwood & Harkness's broader internal investigation, has identified the following individuals as persons of interest in connection with the transactions under review:

1. Derek Hargrave, former President of DTI. Mr. Hargrave was placed on administrative leave effective July 1, 2022, and was subsequently separated from Dunmore effective October 1, 2022. Mr. Hargrave is represented by James Overstreet of Overstreet & McClain PLLC, located in Dallas, Texas. Mr. Hargrave exercised direct supervisory authority over DTI's trading operations during the entirety of the relevant period and approved each of the 14 flagged transactions identified herein.

2. Natasha Sorokin, former Senior Trader at DTI, a Russian-American dual national. Ms. Sorokin was placed on administrative leave effective May 16, 2022, and was separated from Dunmore effective September 15, 2022. Ms. Sorokin is represented by Philip Keane of Wexford Keane LLP, located in Washington, D.C. Ms. Sorokin served as the primary trader on the transactions at issue and maintained direct communications with counterparty personnel, including Sergei Volkov of Petronova.

3. Omar Al-Rashidi, Head of Middle East Operations, DTI. Mr. Al-Rashidi remains employed by Dunmore and has been identified as a cooperating witness. Mr. Al-Rashidi has participated in witness interviews conducted by Calderwood & Harkness and has indicated his willingness to participate in a proffer session with your office at an appropriate time.

4. Rajesh Malhotra, Controller, DTI. Mr. Malhotra remains employed by Dunmore and has participated in witness interviews. Mr. Malhotra processed and authorized wire transfers that are the subject of the payment structuring analysis described in Section IV below.

5. Yves Leclerc, Director of Logistics & Shipping, DTI. Mr. Leclerc remains employed by Dunmore and has participated in witness interviews. Mr. Leclerc coordinated shipping and logistics arrangements for the oilfield equipment exports described in Section V below.

III. Summary of Forensic Findings — Crude Oil Swap Transactions

A. Overview of the 14 Flagged Transactions

Between June 2020 and February 2022, DTI's Dubai-based trading desk executed fourteen (14) crude oil swap transactions with a combined notional value of approximately $218.7 million. These transactions were identified in our initial proffer letter of July 15, 2022, as potentially problematic. Ridgeline's forensic analysis, now substantially complete with respect to these transactions, has provided the detailed findings summarized below.

The counterparties to these fourteen transactions were Petronova Trading FZE and Zenith Petroleum DMCC. Petronova was managed by Sergei Volkov, a Russian national resident in the UAE. Zenith Petroleum was managed by Farhan Qureshi, a Pakistani national resident in the UAE. All fourteen transactions were executed under the direct supervision of Derek Hargrave, in his capacity as President of DTI, and with the direct involvement of Natasha Sorokin as the primary trader responsible for structuring, negotiating, and executing the swap contracts. A summary transaction schedule identifying each of the fourteen transactions by date, counterparty, and notional value is enclosed herewith as Enclosure A.

B. Identification of Nine Tainted Transactions

Ridgeline's forensic analysis has determined that at least nine (9) of the fourteen (14) crude oil swap transactions involved crude oil that was ultimately sourced from, or destined for, entities controlled by Volkhov Industrial Group JSC. The combined notional value of these nine tainted transactions is approximately $156.3 million, representing the sum of the individual transaction values as detailed in Ridgeline's forensic report and as set forth in the summary transaction schedule enclosed as Enclosure A.

Ridgeline employed the following methodology to reach this determination. Ridgeline traced physical cargo movements through bills of lading, vessel charter party agreements, vessel tracking data (AIS records), port call logs, and cargo inspection reports. Ridgeline then correlated these physical cargo movements with corresponding payment flows, including trade settlement payments, margin deposits, and intermediary account transfers. Through this multi-layered tracing analysis, Ridgeline established that the ultimate counterparties in these nine transactions were Volkhov-controlled entities, with Petronova Trading FZE serving as an intermediary and nominal counterparty—effectively functioning as a front for Volkhov in these transactions.

Specifically, Ridgeline's analysis demonstrated that crude oil cargoes associated with these nine transactions were loaded at Russian Black Sea and Baltic ports (principally Novorossiysk and Ust-Luga) from storage facilities operated by Volkhov subsidiaries, transported via vessels chartered through intermediary brokers, and delivered to or through Petronova's nominated discharge ports. Payment flows corresponding to these cargo movements were routed through intermediary accounts in a manner designed to obscure the connection to Volkhov, as described in further detail in Section IV below.

The significance of these findings relates to the sanctions status of Volkhov Industrial Group JSC. Volkhov was subject to sectoral sanctions pursuant to OFAC Directive 2 under Executive Order 13662, effective November 15, 2019. Directive 2 prohibited United States persons from transacting in, providing financing for, or otherwise dealing in certain categories of debt of longer than sixty (60) days' maturity or new equity of Volkhov and its subsidiaries. Volkhov was subsequently added to the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024 on April 6, 2022, subjecting it to full blocking sanctions.

The nine tainted transactions occurred during the period in which Volkhov was subject to Directive 2 sectoral sanctions. To the extent that the crude oil swap transactions constituted prohibited financial transactions with Volkhov or its subsidiaries—transactions that Ridgeline's tracing analysis indicates were effectively with Volkhov despite Petronova's role as nominal counterparty—these transactions potentially violated the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the OFAC regulations codified at 31 C.F.R. Part 589 (Ukraine-/Russia-Related Sanctions Regulations). The specific nature and scope of any such violations remain subject to further analysis as Ridgeline completes its final report and as Calderwood & Harkness continues its internal investigation.

C. The Remaining Five Transactions

The remaining five (5) of the fourteen flagged transactions, with a combined notional value of approximately $62.4 million, involved Zenith Petroleum DMCC and/or Petronova Trading FZE as counterparties. However, with respect to these five transactions, Ridgeline has been unable to trace a direct connection to Volkhov-controlled entities in the physical commodity flow. In certain cases, the bill-of-lading records and vessel tracking data were insufficient to establish the ultimate origin or destination of the crude oil cargoes with the degree of certainty required for the forensic conclusions set forth herein. These five transactions remain under active review by Ridgeline, and any additional findings will be reported to your office in a subsequent supplemental proffer. These transactions are not the focus of this supplemental proffer.

D. Petronova Trading FZE — Role as Intermediary

Ridgeline's transaction tracing analysis, supplemented by the beneficial ownership analysis prepared by Liam Donahue of Calderwood & Harkness (set forth in a memorandum dated June 15, 2022, which is maintained as attorney work product), confirms that Petronova Trading FZE served as an intermediary and front entity for Volkhov Industrial Group JSC in connection with the nine tainted transactions.

Petronova is a Free Zone Establishment registered in the Jebel Ali Free Zone Authority. It was managed by Sergei Volkov, a Russian national resident in the UAE who, according to corporate registry records and open-source intelligence reviewed by Calderwood & Harkness and Ridgeline, maintained longstanding personal and business relationships with Arkady Volkhov, the chairman of Volkhov Industrial Group JSC. Mr. Volkov previously served as a deputy general director of Volkhov Petroleum Trading LLC, a wholly owned subsidiary of VIG, from 2012 to 2018, before establishing Petronova in 2019.

Analysis under OFAC's fifty percent (50%) rule, as set forth in OFAC's Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are blocked (August 13, 2014), was conducted by Conrad Reeves, Senior Counsel (Export Controls & Sanctions) at Calderwood & Harkness, in a memorandum dated June 20, 2022. That analysis indicates that Petronova was, at relevant times, owned or controlled by Volkhov Industrial Group JSC and/or its affiliates, either directly or through intermediary shareholding structures, such that transactions with Petronova constituted transactions with a blocked person or, during the Directive 2 period, a person subject to sectoral sanctions. The specific ownership percentages and control indicators identified in Mr. Reeves's analysis are maintained as attorney work product and can be discussed in further detail at an in-person meeting at your convenience.

Natasha Sorokin was identified as the primary point of contact with Sergei Volkov at Petronova. E-mail communications recovered during the e-discovery process and reviewed by Calderwood & Harkness indicate that Ms. Sorokin communicated directly and frequently with Mr. Volkov regarding the structuring and execution of the crude oil swap transactions, including discussions of cargo origins, vessel nominations, and pricing terms. Certain of these communications were conducted through personal (non-corporate) e-mail accounts and encrypted messaging applications, which is a subject of continuing investigation.

IV. Summary of Forensic Findings — Payment Structuring Through Crescent Commercial Bank

A. Overview of Structured Payments

In connection with its analysis of the crude oil swap transactions described in Section III above, Ridgeline identified approximately $34.2 million in payments that were routed through a series of intermediary accounts at Crescent Commercial Bank PJSC, Dubai. These payments spanned the period from March 2020 through March 2022 and were distributed across one hundred twenty-seven (127) individual wire transfer transactions. A summary payment flow chart depicting these transactions is enclosed herewith as Enclosure B.

The structured payments represent a significant and concerning pattern of financial activity that, in Ridgeline's assessment, was designed to obscure the connection between DTI's trading activity and Volkhov-controlled entities.

B. Structuring Methodology

Ridgeline's analysis revealed a multi-layered payment structuring scheme through which funds were directed to and from Volkhov-connected entities while concealing the ultimate beneficial ownership of the parties receiving payment. The structuring methodology identified by Ridgeline operated as follows:

(i) Tier 1 — DTI Operating and Settlement Accounts. Payments originated from DTI's operating and trade settlement accounts at Crescent Commercial Bank. These payments were initiated by DTI's Controller, Rajesh Malhotra, and authorized through DTI's standard payment authorization protocols, which required dual authorization for wire transfers exceeding $50,000.

(ii) Tier 2 — Intermediary Holding Accounts. Payments from DTI accounts were directed to intermediary holding accounts at Crescent Commercial Bank, held in the names of entities that Ridgeline identified as shell companies with no apparent independent business purpose. These intermediary entities included, among others, Meridian Gulf Trading LLC and Apex Maritime Consulting FZE. Ridgeline's analysis indicates that these intermediary accounts were used to aggregate, split, and redirect payment flows in a manner designed to break the traceable connection between DTI and the ultimate beneficiaries.

(iii) Tier 3 — Petronova and Volkhov-Connected Accounts. Funds from the intermediary holding accounts were subsequently transferred to accounts held by Petronova Trading FZE and, in certain instances, to accounts at banks in jurisdictions including Turkey and the Republic of Georgia that Ridgeline linked, through correspondent banking records and beneficial ownership analysis, to Volkhov-controlled entities.

The amounts and timing of the individual wire transfers were structured in a manner that appeared designed to avoid automated compliance screening thresholds at the banking level. Ridgeline observed a pattern of payments clustered just below reporting and review thresholds, with multiple transfers executed on the same day or within short time intervals, and with inconsistent or vague payment references in the SWIFT message fields.

Rajesh Malhotra, in his capacity as Controller of DTI, processed and authorized many of these wire transfers. The extent of Mr. Malhotra's knowledge of the structuring purpose and his awareness that the ultimate beneficiaries included Volkhov-connected entities is a subject of continuing investigation and is addressed in a separate attorney work product memorandum prepared by Nicholas Ferreira of Calderwood & Harkness, dated October 20, 2022. That memorandum analyzes the evidence bearing on Mr. Malhotra's state of mind and is available for discussion at an in-person meeting.

C. Connection to the Nine Tainted Crude Oil Swap Transactions

Ridgeline correlated the $34.2 million in structured payments to the settlement and margin flows associated with the nine tainted crude oil swap transactions identified in Section III.B above, which had a combined notional value of approximately $156.3 million. The $34.2 million in structured payments represents a subset of the total settlement flows associated with those nine transactions—specifically, those portions of the payment flows that Ridgeline was able to trace, with a reasonable degree of forensic certainty, as ultimately flowing to or from accounts beneficially owned or controlled by Volkhov-connected persons or entities. Additional settlement flows associated with the nine tainted transactions transited through other banking channels and are the subject of Ridgeline's ongoing analysis.

V. Summary of Forensic Findings — Oilfield Equipment Exports

A. Overview. In addition to the crude oil swap transactions and associated payment structuring described above, Ridgeline's forensic analysis identified a separate but related category of potentially problematic activity: the export of oilfield drilling equipment and components facilitated by DTI between August 2020 and January 2022.

During this period, DTI facilitated the export of oilfield drilling equipment and components with a total value of approximately $12.4 million. The equipment at issue was classified under the Export Administration Regulations ("EAR") at Export Control Classification Numbers ("ECCNs") 2B350 (chemical manufacturing equipment and components) and 2B999 (specific processing equipment not controlled by 2B350). These exports were routed to end users in the Russian Federation through Caspian Logistik GmbH ("Caspian Logistik"), a German limited liability company with offices at Mönckebergstraße 22, 20095 Hamburg, Germany. Caspian Logistik's managing director is Klaus Weidemann, a German national. A summary of the oilfield equipment export shipments is enclosed herewith as Enclosure C.

B. Potential Violations

These shipments potentially violated Section 746.5 of the EAR (15 C.F.R. § 746.5), which imposes license requirements for exports and reexports of specified items to Russia and Belarus, as well as applicable OFAC prohibitions on transactions involving blocked persons and their property and interests in property. No export licenses were obtained for these shipments.

Of particular concern, Ridgeline identified documentation in DTI's files suggesting that end-user certifications submitted in connection with these exports may have contained materially false statements regarding the ultimate end users and end use of the equipment. Specifically, certain end-user certificates identified end users in Turkey and Kazakhstan, whereas shipping documentation and post-shipment records reviewed by Ridgeline indicate that the equipment was ultimately transshipped to destinations in the Russian Federation, including facilities associated with Volkhov Industrial Group JSC and its subsidiaries.

Yves Leclerc, Director of Logistics & Shipping at DTI, coordinated the logistics arrangements with Caspian Logistik for these shipments. Mr. Leclerc's communications with Klaus Weidemann of Caspian Logistik, recovered during the e-discovery process, reflect detailed coordination regarding shipping routes, transshipment points, and customs documentation. The question of whether Mr. Leclerc knew or had reason to know that the equipment was destined for end users in Russia is a subject of Calderwood & Harkness's continuing investigation.

Additionally, Tobias Engel, Managing Director of Dunmore Renewables GmbH (Überseeallee 12, 20457 Hamburg, Germany), a German subsidiary of Dunmore engaged in renewable energy operations, was tangentially involved in at least one transaction that utilized Dunmore Renewables' Hamburg logistics infrastructure, including warehouse facilities and customs brokerage arrangements. Mr. Engel's involvement appears to have been limited, and the extent of his knowledge regarding the ultimate destination and end use of the equipment is being investigated.

C. Forensic Tracing of Equipment Export Payments

Ridgeline traced the payment flows associated with the $12.4 million in oilfield equipment exports and identified that portions of these payments also transited through intermediary accounts at Crescent Commercial Bank PJSC, consistent with the structuring pattern identified in Section IV above. Specifically, Ridgeline identified that approximately $4.8 million in payments associated with the equipment exports followed the same multi-tiered layering structure, utilizing the same or similar intermediary holding accounts, as the payments associated with the crude oil swap transactions. This commonality of payment infrastructure further supports the conclusion that a coordinated scheme existed to obscure the connection between DTI's commercial activities and Volkhov-controlled entities.

VI. Status of the Internal Investigation

A. Witness Interviews

Calderwood & Harkness's internal investigation has included an extensive program of witness interviews. As of the date of this letter, the Firm has completed the first round of witness interviews, consisting of twenty-two (22) interviews conducted between May 18 and June 30, 2022. The Firm is well into the second round of interviews, which commenced on August 5, 2022, and has included fifteen (15) interviews to date. In total, forty-seven (47) current and former employees of Dunmore and its subsidiaries across six jurisdictions are being or will be interviewed as part of the internal investigation.

The following notable developments have occurred since the initial proffer letter of July 15, 2022:

(i) Gerald Fisk, former Chief Compliance Officer of Dunmore, departed the company on June 10, 2022. Mr. Fisk is now represented by Catherine Blackthorn of Blackthorn & Associates LLP, located in Houston, Texas. Mr. Fisk's interview was conducted on June 8, 2022, with Ms. Blackthorn present. The substance of Mr. Fisk's interview is addressed in work product memoranda and can be discussed at an in-person meeting. Mr. Fisk's departure from Dunmore and the circumstances surrounding it, including the adequacy of the compliance function during his tenure, are subjects of the ongoing investigation.

(ii) Natasha Sorokin was separated from Dunmore on September 15, 2022, and is now represented by Philip Keane of Wexford Keane LLP, located in Washington, D.C. Ms. Sorokin participated in one interview prior to her separation. She declined a second interview on the advice of counsel. Calderwood & Harkness has communicated Ms. Sorokin's counsel's contact information to your office.

(iii) Derek Hargrave was separated from Dunmore on October 1, 2022, and is represented by James Overstreet of Overstreet & McClain PLLC, located in Dallas, Texas. Mr. Hargrave participated in one interview prior to his separation. He declined a second interview on the advice of counsel. Calderwood & Harkness has communicated Mr. Hargrave's counsel's contact information to your office.

(iv) Omar Al-Rashidi, Head of Middle East Operations at DTI, continues to cooperate fully with the internal investigation and has been identified as a potential witness for a DOJ proffer session. Mr. Al-Rashidi has provided valuable information regarding DTI's trading operations and the roles of Mr. Hargrave and Ms. Sorokin in the transactions at issue. Dunmore is prepared to make Mr. Al-Rashidi available for a proffer session with your office at a mutually convenient time.

B. Document Review and Production

Nexagen Analytics Inc. (Project No. NX-DEH-2204; project manager: Brian Cavanaugh) completed its technology-assisted review on October 15, 2022. The scope and results of the document review are as follows:

• Documents Collected: 2,347,812 documents collected from custodians and data sources across six jurisdictions (Cayman Islands, UAE, USA, Germany, Nigeria, UK).

• Documents Deemed Responsive: 438,916 documents identified as responsive to the grand jury subpoena and the categories of documents agreed upon with your office.

• Documents Withheld on Privilege: 12,847 documents withheld on the basis of attorney-client privilege and/or work product protection.

• First Production: 287,412 documents, bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412, were transmitted to your office on November 1, 2022, via secure electronic transfer. A privilege log identifying the 12,847 withheld documents accompanied the first production.

• Second Production: The remaining 151,504 responsive documents, to be designated Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916, are being prepared for production and are anticipated to be transmitted to your office in early 2023, subject to completion of the final privilege review.

C. Personnel Actions and Remediation Steps Already Taken

In addition to the personnel actions described above with respect to Mr. Hargrave, Ms. Sorokin, and Mr. Fisk, Dunmore has taken the following proactive remediation steps:

(i) Appointment of New Chief Compliance Officer. Priya Nayar was appointed as the new Chief Compliance Officer of Dunmore effective August 1, 2022, replacing Gerald Fisk. Ms. Nayar previously served as Deputy General Counsel (Compliance) at a major international energy company and brings extensive experience in sanctions compliance, export controls, and anti-corruption programs.

(ii) Retention of Compliance Consultant. Dunmore's Board of Directors has authorized Calderwood & Harkness to engage a sanctions and export controls compliance consultant to design and implement a comprehensive remediation program for Dunmore's sanctions and export controls compliance framework. The engagement of Pemberton Investors Solutions LLC, led by Dr. Anton Bremer, a recognized expert in sanctions and export controls compliance, is anticipated in December 2022. The scope of the remediation program will be shared with your office upon engagement.

(iii) Enhanced Transaction Monitoring. Sandra Whitfield, Chief Financial Officer of Dunmore, has directed the Controller's office to implement enhanced transaction monitoring protocols on an interim basis, pending the completion of the full remediation program. These interim measures include heightened due diligence requirements for counterparties in jurisdictions of concern, reduced thresholds for escalation of suspicious transactions, and mandatory secondary review of all wire transfers exceeding $25,000 involving counterparties in the UAE, Russia, Turkey, Georgia, and Kazakhstan.

VII. Cooperation and Continued Commitment

Dunmore wishes to reaffirm its unwavering commitment to full and transparent cooperation with the DOJ National Security Division and the Office of Foreign Assets Control ("OFAC") in connection with this matter. Since the inception of the DOJ inquiry in April 2022, Dunmore has demonstrated its commitment to cooperation through the following actions, among others:

(i) Dunmore has made, and will continue to make, timely and complete document productions to the Department, as evidenced by the first production of 287,412 documents on November 1, 2022, and the preparation of the second production of 151,504 documents for early 2023.

(ii) Dunmore has not impeded the Department's access to any current or former employee. To the contrary, Dunmore has facilitated access to cooperating witnesses and has communicated the contact information for the counsel of former employees who have declined further interviews.

(iii) Dunmore has advanced defense costs for former employees Gerald Fisk, Natasha Sorokin, and Derek Hargrave, pursuant to its indemnification obligations under applicable corporate governance documents and employment agreements, and has done so without imposing conditions on the willingness of those individuals to cooperate with the Department's investigation.

(iv) Dunmore intends to file a voluntary self-disclosure with OFAC upon completion of its internal investigation and Ridgeline's forensic analysis, which is expected during the first half of 2023. Dunmore believes that a timely voluntary self-disclosure will further demonstrate its good faith and cooperation.

(v) Dunmore is prepared to discuss voluntary disgorgement of net profits derived from the tainted transactions at the appropriate time. Dunmore recognizes that disgorgement may be an important component of any resolution and is committed to engaging constructively with your office on this topic when the forensic analysis is sufficiently advanced to permit a reliable calculation of net profits.

Dunmore respectfully submits that its cooperation to date satisfies the criteria for favorable consideration under the DOJ Corporate Enforcement Policy, as updated in September 2022. Dunmore has provided voluntary and timely disclosure of the relevant conduct, has cooperated fully and proactively with the Department's investigation, and has undertaken meaningful remediation measures, including the separation of culpable individuals, the appointment of new compliance leadership, and the engagement of an independent compliance consultant. Dunmore intends to continue this cooperation throughout the remainder of the investigation and any subsequent proceedings.

VIII. Reservation of Rights

Dunmore reserves all applicable rights, privileges, and defenses, including but not limited to attorney-client privilege, attorney work product protections, joint defense and common interest protections, and any other protections afforded under applicable law. Nothing in this supplemental proffer letter or in Dunmore's cooperation with the Department shall be construed as a waiver of any such right, privilege, or defense, except to the limited extent expressly stated herein.

This supplemental proffer is made on a selective-waiver basis to the DOJ only and is not intended to waive, nor shall it be construed as waiving, any privilege or protection as against any third party, whether in civil litigation, arbitration, regulatory proceedings, or otherwise. This selective waiver is consistent with the protocol established in Calderwood & Harkness's memorandum to your office dated July 1, 2022, which was accepted by your office without objection.

The forensic findings summarized in this letter are preliminary in certain respects. Ridgeline's investigation is ongoing, and its final forensic report is expected to be completed during the first half of 2023. Dunmore reserves the right to supplement, amend, or clarify any of the findings or representations contained herein as additional information becomes available through the continuing investigation. Nothing in this letter shall be construed as an admission of liability, wrongdoing, or violation of law by Dunmore or any of its officers, directors, employees, or affiliates.

IX. Closing and Contact Information

We appreciate your office's continued professionalism and constructive engagement with Dunmore and Calderwood & Harkness throughout this investigation. We are prepared to meet with you and your colleagues at your earliest convenience to discuss the forensic findings summarized herein in further detail. We believe that an in-person meeting would be productive and would enable us to walk through the enclosed summary materials and address any questions your office may have.

In addition, we would be pleased to make Dr. Margaret Liu of Ridgeline Advisory Group LLC available for a presentation to the Department and, if appropriate, to the Federal Bureau of Investigation, to discuss Ridgeline's forensic methodology and findings in greater detail. Dr. Liu and her team are prepared to present their analysis with supporting documentation at a time and place convenient to your office.

Please direct all communications regarding this matter to the undersigned at Calderwood & Harkness LLP, 1750 Pennsylvania Avenue NW, Suite 800, Washington, DC 20006. My direct telephone number is (202) 555-7438 and my email address is vchambers@calderwoodharkness.com. In addition, the following members of the Calderwood & Harkness team are available and authorized to communicate with your office regarding this matter:

• Jasmine Thornton, Lead Associate, White Collar & Investigations

• Direct: (202) 555-7452

• Email: jthornton@calderwoodharkness.com

• Conrad Reeves, Senior Counsel, Export Controls & Sanctions

• Direct: (202) 555-7461

• Email: creeves@calderwoodharkness.com

We also note that Dunmore will continue to cooperate, as appropriate and consistent with applicable legal requirements, with Special Agent Paul Reinhardt of the FBI Counterintelligence Division, Washington Field Office, and with OFAC Compliance Analyst Erin Matsuda, who have been involved in the government's investigation of this matter.

We look forward to continuing to work with your office toward a resolution of this matter that is fair and appropriate under the circumstances.

X. Signature block

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Victoria Chambers Partner, White Collar & Investigations 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7438

Email: vchambers@calderwoodharkness.com

XI. Enclosures

The following materials are enclosed herewith. All enclosed materials are designated as attorney work product, prepared at the direction of counsel in furtherance of Dunmore's cooperation with the Department, and are provided on a selective-waiver basis to DOJ only, consistent with the protocol established on July 1, 2022.

Enclosure A: Summary Transaction Schedule — Crude Oil Swap Transactions with Petronova Trading FZE and Zenith Petroleum DMCC (14 transactions; 9 identified as tainted; dates, counterparties, and notional values; total notional value: $218.7 million; tainted notional value: $156.3 million).

Enclosure B: Summary Payment Flow Chart — Structured Wire Transfers Through Crescent Commercial Bank PJSC (127 individual wire transfers totaling approximately $34.2 million; March 2020 through March 2022; depicting three-tiered intermediary account structure).

Enclosure C: Summary of Oilfield Equipment Export Shipments — Exports via Caspian Logistik GmbH (total value: approximately $12.4 million; ECCNs 2B350 and 2B999; August 2020 through January 2022; shipment dates, descriptions, values, and identified routing).

XII. Distribution

cc (via electronic transmission):

Samuel Kovacs, Trial Attorney Counterintelligence and Export Control Section DOJ National Security Division

Diana Pressman, Trial Attorney Counterintelligence and Export Control Section DOJ National Security Division

bcc (internal distribution only — not transmitted to DOJ): Howard Quinn, Billing Partner, Calderwood & Harkness LLP Jasmine Thornton, Lead Associate, Calderwood & Harkness LLP Conrad Reeves, Senior Counsel, Calderwood & Harkness LLP Liam Donahue, Associate, Calderwood & Harkness LLP Marcus Wellbourne, General Counsel, Dunmore Energy Holdings Ltd.

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter constitutes a voluntary proffer in furtherance of Dunmore Energy Holdings Ltd.'s cooperation with the U.S. Department of Justice. Selective waiver of work product protections as to DOJ and not as to third parties, consistent with the protocol established July 1, 2022. Any unauthorized review, use, disclosure, or distribution of this letter or its enclosures is strictly prohibited. If you have received this letter in error, please notify Calderwood & Harkness LLP immediately at (202) 555-7400.

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT VOLUNTARY PROFFER — SELECTIVE WAIVER TO DOJ ONLY
CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7400 Facsimile: (202) 555-7401
Victoria Chambers Partner, White Collar & Investigations Direct: (202) 555-7438 vchambers@calderwoodharkness.com
Calderwood & Harkness Matter No. 1016-00009
November 20, 2022
BY HAND DELIVERY AND ELECTRONIC TRANSMISSION
Meredith Calloway, Esq. Assistant United States Attorney National Security Division Counterintelligence and Export Control Section U.S. Department of Justice 950 Pennsylvania Avenue NW Washington, D.C. 20530
Re: Supplemental Proffer — Dunmore Energy Holdings Ltd.; Grand Jury Subpoena No. GJ No. 22-418; U.S. District Court for the District of Columbia, Grand Jury 22-2
Dear Ms. Calloway:
I. Introduction and Purpose
This letter supplements the initial proffer letter dated July 15, 2022, transmitted by the undersigned on behalf of Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH") to your office in connection with the ongoing inquiry by the U.S. Department of Justice ("DOJ" or the "Department") into certain transactions involving Dunmore's Dubai-based trading subsidiary, Dunmore Trading International Ltd. ("DTI"). Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") represents Dunmore, a Cayman Islands–domiciled exempted company with limited liability (Registration No. MC-334821), with operational headquarters located at 1200 McKinney Street, Suite 3400, Houston, Texas 77010.
This supplemental proffer is submitted in connection with the DOJ inquiry opened on April 19, 2022, and the grand jury subpoena designated GJ No. 22-418, issued by the U.S. District Court for the District of Columbia (Grand Jury 22-2). The purpose of this letter is to provide your office with a summary of the forensic accounting findings of Ridgeline Advisory Group LLC ("Ridgeline"), Dunmore's forensic accounting consultant, which was retained on May 2, 2022, at the direction of Calderwood & Harkness, under engagement number RAG-2022-0319. These findings relate to certain crude oil swap transactions, payment structuring activity, and oilfield equipment exports that are the subject of the ongoing inquiry.
Dunmore reaffirms and continues its full cooperation with the DOJ National Security Division's Counterintelligence and Export Control Section ("CES") in connection with this matter. The forensic findings summarized herein are supported by the documentary record contained in the first document production transmitted to your office on November 1, 2022, consisting of 287,412 documents bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412. Additional documentary support will be provided in a forthcoming second production, as discussed in further detail below.
Consistent with the protocol established in Calderwood & Harkness's memorandum to your office dated July 1, 2022, Dunmore reserves all applicable privileges and protections, including attorney-client privilege and work product protections. This supplemental proffer constitutes a selective waiver of work product protections to the DOJ only and is not intended to effect, nor shall it be construed as effecting, a waiver of any privilege or protection as against any third party, whether in litigation, regulatory proceedings, or otherwise.
II. Background — Scope of the Forensic Investigation
A. Retention of Ridgeline Advisory Group LLC
At the direction of Calderwood & Harkness, Dunmore retained Ridgeline Advisory Group LLC, located at 1825 Connecticut Avenue NW, Suite 400, Washington, DC 20009, on May 2, 2022, to conduct a forensic accounting investigation into certain transaction flows involving DTI. The engagement is being led by Dr. Margaret Liu, CPA, CFE, a Managing Director at Ridgeline with over twenty years of experience in forensic accounting, financial investigations, and sanctions-related transaction tracing. The engagement was assigned Ridgeline engagement number RAG-2022-0319.
The scope of Ridgeline's engagement encompasses the forensic tracing and analysis of transaction flows involving DTI (DIFC License No. CL-4827; principal office at Level 14, Gate Building 3, Dubai International Financial Centre, P.O. Box 506774, Dubai, UAE), Dunmore's Dubai-based energy trading subsidiary. Ridgeline's analysis has focused on DTI's transactions with the following entities and their affiliates:
(i) Petronova Trading FZE ("Petronova"), a Free Zone Establishment registered in the Jebel Ali Free Zone Authority, with offices at Office 1407, Al Shafar Tower, Dubai Internet City, Dubai, UAE;
(ii) Zenith Petroleum DMCC ("Zenith Petroleum"), a company registered in the Dubai Multi Commodities Centre, with offices at Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE;
(iii) Caspian Logistik GmbH ("Caspian Logistik"), a German limited liability company with offices at Mönckebergstraße 22, 20095 Hamburg, Germany; and
(iv) any entities connected to, owned or controlled by, or acting on behalf of Volkhov Industrial Group JSC ("Volkhov" or "VIG"), a Russian Federation joint-stock company headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russia.
B. Data Sources Reviewed by Ridgeline
In conducting its forensic analysis, Ridgeline reviewed and analyzed data from the following principal sources:
1. Trading Desk Records. Transaction records, trade confirmations, and settlement documentation from DTI's Dubai-based trading desk covering the period from March 2020 through April 2022. These records encompass the full universe of DTI's crude oil, refined products, and derivatives trading activity during the relevant period.
2. Banking Records. Wire transfer records and SWIFT messages from Crescent Commercial Bank PJSC ("Crescent" or "CCB"), located at Al Maktoum Tower, DIFC, P.O. Box 335102, Dubai, UAE. Crescent served as DTI's primary trade finance bank during the relevant period, with relationship management provided by Khalid Mansour, a Vice President in Crescent's Trade Finance Division. Ridgeline obtained and analyzed complete transaction histories for all DTI accounts held at Crescent, including operating accounts, trade settlement accounts, and margin accounts.
3. Internal Financial Records. Accounts payable and accounts receivable ledgers maintained by Rajesh Malhotra, Controller of DTI. These records include journal entries, intercompany transfer documentation, and supporting invoices for the relevant period.
4. Shipping and Logistics Documentation. Shipping records, bills of lading, vessel charter party agreements, port clearance documents, and logistics coordination files maintained by Yves Leclerc, Director of Logistics & Shipping at DTI. These records document the physical movement of crude oil cargoes and oilfield equipment relevant to the transactions under review.
5. Corporate Registry and KYC Files. Corporate registry filings, beneficial ownership records, and know-your-customer ("KYC") files maintained by DTI's compliance function with respect to Petronova, Zenith Petroleum, and Caspian Logistik. These records include entity formation documents, shareholder registries, director appointments, and due diligence questionnaires completed by these counterparties.
6. E-discovery Corpus. An electronic discovery corpus collected and processed by Nexagen Analytics Inc. ("Nexagen") under Project No. NX-DEH-2204 (project manager: Brian Cavanaugh). Nexagen performed technology-assisted review ("TAR") of 2,347,812 documents collected from custodians and data sources across six jurisdictions: the Cayman Islands, the United Arab Emirates, the United States, Germany, Nigeria, and the United Kingdom. The TAR process and its results are described in further detail in Section VI.B below.
C. Individuals of Interest
Ridgeline's forensic analysis, in conjunction with Calderwood & Harkness's broader internal investigation, has identified the following individuals as persons of interest in connection with the transactions under review:
1. Derek Hargrave, former President of DTI. Mr. Hargrave was placed on administrative leave effective July 1, 2022, and was subsequently separated from Dunmore effective October 1, 2022. Mr. Hargrave is represented by James Overstreet of Overstreet & McClain PLLC, located in Dallas, Texas. Mr. Hargrave exercised direct supervisory authority over DTI's trading operations during the entirety of the relevant period and approved each of the 14 flagged transactions identified herein.
2. Natasha Sorokin, former Senior Trader at DTI, a Russian-American dual national. Ms. Sorokin was placed on administrative leave effective May 16, 2022, and was separated from Dunmore effective September 15, 2022. Ms. Sorokin is represented by Philip Keane of Wexford Keane LLP, located in Washington, D.C. Ms. Sorokin served as the primary trader on the transactions at issue and maintained direct communications with counterparty personnel, including Sergei Volkov of Petronova.
3. Omar Al-Rashidi, Head of Middle East Operations, DTI. Mr. Al-Rashidi remains employed by Dunmore and has been identified as a cooperating witness. Mr. Al-Rashidi has participated in witness interviews conducted by Calderwood & Harkness and has indicated his willingness to participate in a proffer session with your office at an appropriate time.
4. Rajesh Malhotra, Controller, DTI. Mr. Malhotra remains employed by Dunmore and has participated in witness interviews. Mr. Malhotra processed and authorized wire transfers that are the subject of the payment structuring analysis described in Section IV below.
5. Yves Leclerc, Director of Logistics & Shipping, DTI. Mr. Leclerc remains employed by Dunmore and has participated in witness interviews. Mr. Leclerc coordinated shipping and logistics arrangements for the oilfield equipment exports described in Section V below.
III. Summary of Forensic Findings — Crude Oil Swap Transactions
A. Overview of the 14 Flagged Transactions
Between June 2020 and February 2022, DTI's Dubai-based trading desk executed fourteen (14) crude oil swap transactions with a combined notional value of approximately $218.7 million. These transactions were identified in our initial proffer letter of July 15, 2022, as potentially problematic. Ridgeline's forensic analysis, now substantially complete with respect to these transactions, has provided the detailed findings summarized below.
The counterparties to these fourteen transactions were Petronova Trading FZE and Zenith Petroleum DMCC. Petronova was managed by Sergei Volkov, a Russian national resident in the UAE. Zenith Petroleum was managed by Farhan Qureshi, a Pakistani national resident in the UAE. All fourteen transactions were executed under the direct supervision of Derek Hargrave, in his capacity as President of DTI, and with the direct involvement of Natasha Sorokin as the primary trader responsible for structuring, negotiating, and executing the swap contracts. A summary transaction schedule identifying each of the fourteen transactions by date, counterparty, and notional value is enclosed herewith as Enclosure A.
B. Identification of Nine Tainted Transactions
Ridgeline's forensic analysis has determined that at least nine (9) of the fourteen (14) crude oil swap transactions involved crude oil that was ultimately sourced from, or destined for, entities controlled by Volkhov Industrial Group JSC. The combined notional value of these nine tainted transactions is approximately $156.3 million, representing the sum of the individual transaction values as detailed in Ridgeline's forensic report and as set forth in the summary transaction schedule enclosed as Enclosure A.
Ridgeline employed the following methodology to reach this determination. Ridgeline traced physical cargo movements through bills of lading, vessel charter party agreements, vessel tracking data (AIS records), port call logs, and cargo inspection reports. Ridgeline then correlated these physical cargo movements with corresponding payment flows, including trade settlement payments, margin deposits, and intermediary account transfers. Through this multi-layered tracing analysis, Ridgeline established that the ultimate counterparties in these nine transactions were Volkhov-controlled entities, with Petronova Trading FZE serving as an intermediary and nominal counterparty—effectively functioning as a front for Volkhov in these transactions.
Specifically, Ridgeline's analysis demonstrated that crude oil cargoes associated with these nine transactions were loaded at Russian Black Sea and Baltic ports (principally Novorossiysk and Ust-Luga) from storage facilities operated by Volkhov subsidiaries, transported via vessels chartered through intermediary brokers, and delivered to or through Petronova's nominated discharge ports. Payment flows corresponding to these cargo movements were routed through intermediary accounts in a manner designed to obscure the connection to Volkhov, as described in further detail in Section IV below.
The significance of these findings relates to the sanctions status of Volkhov Industrial Group JSC. Volkhov was subject to sectoral sanctions pursuant to OFAC Directive 2 under Executive Order 13662, effective November 15, 2019. Directive 2 prohibited United States persons from transacting in, providing financing for, or otherwise dealing in certain categories of debt of longer than sixty (60) days' maturity or new equity of Volkhov and its subsidiaries. Volkhov was subsequently added to the OFAC Specially Designated Nationals and blocked Persons List ("SDN List") under Executive Order 14024 on April 6, 2022, subjecting it to full blocking sanctions.
The nine tainted transactions occurred during the period in which Volkhov was subject to Directive 2 sectoral sanctions. To the extent that the crude oil swap transactions constituted prohibited financial transactions with Volkhov or its subsidiaries—transactions that Ridgeline's tracing analysis indicates were effectively with Volkhov despite Petronova's role as nominal counterparty—these transactions potentially violated the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the OFAC regulations codified at 31 C.F.R. Part 589 (Ukraine-/Russia-Related Sanctions Regulations). The specific nature and scope of any such violations remain subject to further analysis as Ridgeline completes its final report and as Calderwood & Harkness continues its internal investigation.
C. The Remaining Five Transactions
The remaining five (5) of the fourteen flagged transactions, with a combined notional value of approximately $62.4 million, involved Zenith Petroleum DMCC and/or Petronova Trading FZE as counterparties. However, with respect to these five transactions, Ridgeline has been unable to trace a direct connection to Volkhov-controlled entities in the physical commodity flow. In certain cases, the bill-of-lading records and vessel tracking data were insufficient to establish the ultimate origin or destination of the crude oil cargoes with the degree of certainty required for the forensic conclusions set forth herein. These five transactions remain under active review by Ridgeline, and any additional findings will be reported to your office in a subsequent supplemental proffer. These transactions are not the focus of this supplemental proffer.
D. Petronova Trading FZE — Role as Intermediary
Ridgeline's transaction tracing analysis, supplemented by the beneficial ownership analysis prepared by Liam Donahue of Calderwood & Harkness (set forth in a memorandum dated June 15, 2022, which is maintained as attorney work product), confirms that Petronova Trading FZE served as an intermediary and front entity for Volkhov Industrial Group JSC in connection with the nine tainted transactions.
Petronova is a Free Zone Establishment registered in the Jebel Ali Free Zone Authority. It was managed by Sergei Volkov, a Russian national resident in the UAE who, according to corporate registry records and open-source intelligence reviewed by Calderwood & Harkness and Ridgeline, maintained longstanding personal and business relationships with Arkady Volkhov, the chairman of Volkhov Industrial Group JSC. Mr. Volkov previously served as a deputy general director of Volkhov Petroleum Trading LLC, a wholly owned subsidiary of VIG, from 2012 to 2018, before establishing Petronova in 2019.
Analysis under OFAC's fifty percent (50%) rule, as set forth in OFAC's Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are blocked (August 13, 2014), was conducted by Conrad Reeves, Senior Counsel (Export Controls & Sanctions) at Calderwood & Harkness, in a memorandum dated June 20, 2022. That analysis indicates that Petronova was, at relevant times, owned or controlled by Volkhov Industrial Group JSC and/or its affiliates, either directly or through intermediary shareholding structures, such that transactions with Petronova constituted transactions with a blocked person or, during the Directive 2 period, a person subject to sectoral sanctions. The specific ownership percentages and control indicators identified in Mr. Reeves's analysis are maintained as attorney work product and can be discussed in further detail at an in-person meeting at your convenience.
Natasha Sorokin was identified as the primary point of contact with Sergei Volkov at Petronova. E-mail communications recovered during the e-discovery process and reviewed by Calderwood & Harkness indicate that Ms. Sorokin communicated directly and frequently with Mr. Volkov regarding the structuring and execution of the crude oil swap transactions, including discussions of cargo origins, vessel nominations, and pricing terms. Certain of these communications were conducted through personal (non-corporate) e-mail accounts and encrypted messaging applications, which is a subject of continuing investigation.
IV. Summary of Forensic Findings — Payment Structuring Through Crescent Commercial Bank
A. Overview of Structured Payments
In connection with its analysis of the crude oil swap transactions described in Section III above, Ridgeline identified approximately $34.2 million in payments that were routed through a series of intermediary accounts at Crescent Commercial Bank PJSC, Dubai. These payments spanned the period from March 2020 through March 2022 and were distributed across one hundred twenty-seven (127) individual wire transfer transactions. A summary payment flow chart depicting these transactions is enclosed herewith as Enclosure B.
The structured payments represent a significant and concerning pattern of financial activity that, in Ridgeline's assessment, was designed to obscure the connection between DTI's trading activity and Volkhov-controlled entities.
B. Structuring Methodology
Ridgeline's analysis revealed a multi-layered payment structuring scheme through which funds were directed to and from Volkhov-connected entities while concealing the ultimate beneficial ownership of the parties receiving payment. The structuring methodology identified by Ridgeline operated as follows:
(i) Tier 1 — DTI Operating and Settlement Accounts. Payments originated from DTI's operating and trade settlement accounts at Crescent Commercial Bank. These payments were initiated by DTI's Controller, Rajesh Malhotra, and authorized through DTI's standard payment authorization protocols, which required dual authorization for wire transfers exceeding $50,000.
(ii) Tier 2 — Intermediary Holding Accounts. Payments from DTI accounts were directed to intermediary holding accounts at Crescent Commercial Bank, held in the names of entities that Ridgeline identified as shell companies with no apparent independent business purpose. These intermediary entities included, among others, Meridian Gulf Trading LLC and Apex Maritime Consulting FZE. Ridgeline's analysis indicates that these intermediary accounts were used to aggregate, split, and redirect payment flows in a manner designed to break the traceable connection between DTI and the ultimate beneficiaries.
(iii) Tier 3 — Petronova and Volkhov-Connected Accounts. Funds from the intermediary holding accounts were subsequently transferred to accounts held by Petronova Trading FZE and, in certain instances, to accounts at banks in jurisdictions including Turkey and the Republic of Georgia that Ridgeline linked, through correspondent banking records and beneficial ownership analysis, to Volkhov-controlled entities.
The amounts and timing of the individual wire transfers were structured in a manner that appeared designed to avoid automated compliance screening thresholds at the banking level. Ridgeline observed a pattern of payments clustered just below reporting and review thresholds, with multiple transfers executed on the same day or within short time intervals, and with inconsistent or vague payment references in the SWIFT message fields.
Rajesh Malhotra, in his capacity as Controller of DTI, processed and authorized many of these wire transfers. The extent of Mr. Malhotra's knowledge of the structuring purpose and his awareness that the ultimate beneficiaries included Volkhov-connected entities is a subject of continuing investigation and is addressed in a separate attorney work product memorandum prepared by Nicholas Ferreira of Calderwood & Harkness, dated October 20, 2022. That memorandum analyzes the evidence bearing on Mr. Malhotra's state of mind and is available for discussion at an in-person meeting.
C. Connection to the Nine Tainted Crude Oil Swap Transactions
Ridgeline correlated the $34.2 million in structured payments to the settlement and margin flows associated with the nine tainted crude oil swap transactions identified in Section III.B above, which had a combined notional value of approximately $156.3 million. The $34.2 million in structured payments represents a subset of the total settlement flows associated with those nine transactions—specifically, those portions of the payment flows that Ridgeline was able to trace, with a reasonable degree of forensic certainty, as ultimately flowing to or from accounts beneficially owned or controlled by Volkhov-connected persons or entities. Additional settlement flows associated with the nine tainted transactions transited through other banking channels and are the subject of Ridgeline's ongoing analysis.
V. Summary of Forensic Findings — Oilfield Equipment Exports
A. Overview. In addition to the crude oil swap transactions and associated payment structuring described above, Ridgeline's forensic analysis identified a separate but related category of potentially problematic activity: the export of oilfield drilling equipment and components facilitated by DTI between August 2020 and January 2022.
During this period, DTI facilitated the export of oilfield drilling equipment and components with a total value of approximately $12.4 million. The equipment at issue was classified under the Export Administration Regulations ("EAR") at Export Control Classification Numbers ("ECCNs") 2B350 (chemical manufacturing equipment and components) and 2B999 (specific processing equipment not controlled by 2B350). These exports were routed to end users in the Russian Federation through Caspian Logistik GmbH ("Caspian Logistik"), a German limited liability company with offices at Mönckebergstraße 22, 20095 Hamburg, Germany. Caspian Logistik's managing director is Klaus Weidemann, a German national. A summary of the oilfield equipment export shipments is enclosed herewith as Enclosure C.
B. Potential Violations
These shipments potentially violated Section 746.5 of the EAR (15 C.F.R. § 746.5), which imposes license requirements for exports and reexports of specified items to Russia and Belarus, as well as applicable OFAC prohibitions on transactions involving blocked persons and their property and interests in property. No export licenses were obtained for these shipments.
Of particular concern, Ridgeline identified documentation in DTI's files suggesting that end-user certifications submitted in connection with these exports may have contained materially false statements regarding the ultimate end users and end use of the equipment. Specifically, certain end-user certificates identified end users in Turkey and Kazakhstan, whereas shipping documentation and post-shipment records reviewed by Ridgeline indicate that the equipment was ultimately transshipped to destinations in the Russian Federation, including facilities associated with Volkhov Industrial Group JSC and its subsidiaries.
Yves Leclerc, Director of Logistics & Shipping at DTI, coordinated the logistics arrangements with Caspian Logistik for these shipments. Mr. Leclerc's communications with Klaus Weidemann of Caspian Logistik, recovered during the e-discovery process, reflect detailed coordination regarding shipping routes, transshipment points, and customs documentation. The question of whether Mr. Leclerc knew or had reason to know that the equipment was destined for end users in Russia is a subject of Calderwood & Harkness's continuing investigation.
Additionally, Tobias Engel, Managing Director of Dunmore Renewables GmbH (Überseeallee 12, 20457 Hamburg, Germany), a German subsidiary of Dunmore engaged in renewable energy operations, was tangentially involved in at least one transaction that utilized Dunmore Renewables' Hamburg logistics infrastructure, including warehouse facilities and customs brokerage arrangements. Mr. Engel's involvement appears to have been limited, and the extent of his knowledge regarding the ultimate destination and end use of the equipment is being investigated.
C. Forensic Tracing of Equipment Export Payments
Ridgeline traced the payment flows associated with the $12.4 million in oilfield equipment exports and identified that portions of these payments also transited through intermediary accounts at Crescent Commercial Bank PJSC, consistent with the structuring pattern identified in Section IV above. Specifically, Ridgeline identified that approximately $4.8 million in payments associated with the equipment exports followed the same multi-tiered layering structure, utilizing the same or similar intermediary holding accounts, as the payments associated with the crude oil swap transactions. This commonality of payment infrastructure further supports the conclusion that a coordinated scheme existed to obscure the connection between DTI's commercial activities and Volkhov-controlled entities.
VI. Status of the Internal Investigation
A. Witness Interviews
Calderwood & Harkness's internal investigation has included an extensive program of witness interviews. As of the date of this letter, the Firm has completed the first round of witness interviews, consisting of twenty-two (22) interviews conducted between May 18 and June 30, 2022. The Firm is well into the second round of interviews, which commenced on August 5, 2022, and has included fifteen (15) interviews to date. In total, forty-seven (47) current and former employees of Dunmore and its subsidiaries across six jurisdictions are being or will be interviewed as part of the internal investigation.
The following notable developments have occurred since the initial proffer letter of July 15, 2022:
(i) Gerald Fisk, former Chief Compliance Officer of Dunmore, departed the company on June 10, 2022. Mr. Fisk is now represented by Catherine Blackthorn of Blackthorn & Associates LLP, located in Houston, Texas. Mr. Fisk's interview was conducted on June 8, 2022, with Ms. Blackthorn present. The substance of Mr. Fisk's interview is addressed in work product memoranda and can be discussed at an in-person meeting. Mr. Fisk's departure from Dunmore and the circumstances surrounding it, including the adequacy of the compliance function during his tenure, are subjects of the ongoing investigation.
(ii) Natasha Sorokin was separated from Dunmore on September 15, 2022, and is now represented by Philip Keane of Wexford Keane LLP, located in Washington, D.C. Ms. Sorokin participated in one interview prior to her separation. She declined a second interview on the advice of counsel. Calderwood & Harkness has communicated Ms. Sorokin's counsel's contact information to your office.
(iii) Derek Hargrave was separated from Dunmore on October 1, 2022, and is represented by James Overstreet of Overstreet & McClain PLLC, located in Dallas, Texas. Mr. Hargrave participated in one interview prior to his separation. He declined a second interview on the advice of counsel. Calderwood & Harkness has communicated Mr. Hargrave's counsel's contact information to your office.
(iv) Omar Al-Rashidi, Head of Middle East Operations at DTI, continues to cooperate fully with the internal investigation and has been identified as a potential witness for a DOJ proffer session. Mr. Al-Rashidi has provided valuable information regarding DTI's trading operations and the roles of Mr. Hargrave and Ms. Sorokin in the transactions at issue. Dunmore is prepared to make Mr. Al-Rashidi available for a proffer session with your office at a mutually convenient time.
B. Document Review and Production
Nexagen Analytics Inc. (Project No. NX-DEH-2204; project manager: Brian Cavanaugh) completed its technology-assisted review on October 15, 2022. The scope and results of the document review are as follows:
• Documents Collected: 2,347,812 documents collected from custodians and data sources across six jurisdictions (Cayman Islands, UAE, USA, Germany, Nigeria, UK).
• Documents Deemed Responsive: 438,916 documents identified as responsive to the grand jury subpoena and the categories of documents agreed upon with your office.
• Documents Withheld on Privilege: 12,847 documents withheld on the basis of attorney-client privilege and/or work product protection.
• First Production: 287,412 documents, bearing Bates numbers DEH-DOJ-000001 through DEH-DOJ-287412, were transmitted to your office on November 1, 2022, via secure electronic transfer. A privilege log identifying the 12,847 withheld documents accompanied the first production.
• Second Production: The remaining 151,504 responsive documents, to be designated Bates numbers DEH-DOJ-287413 through DEH-DOJ-438916, are being prepared for production and are anticipated to be transmitted to your office in early 2023, subject to completion of the final privilege review.
C. Personnel Actions and Remediation Steps Already Taken
In addition to the personnel actions described above with respect to Mr. Hargrave, Ms. Sorokin, and Mr. Fisk, Dunmore has taken the following proactive remediation steps:
(i) Appointment of New Chief Compliance Officer. Priya Nayar was appointed as the new Chief Compliance Officer of Dunmore effective August 1, 2022, replacing Gerald Fisk. Ms. Nayar previously served as Deputy General Counsel (Compliance) at a major international energy company and brings extensive experience in sanctions compliance, export controls, and anti-corruption programs.
(ii) Retention of Compliance Consultant. Dunmore's Board of Directors has authorized Calderwood & Harkness to engage a sanctions and export controls compliance consultant to design and implement a comprehensive remediation program for Dunmore's sanctions and export controls compliance framework. The engagement of Pemberton Investors Solutions LLC, led by Dr. Anton Bremer, a recognized expert in sanctions and export controls compliance, is anticipated in December 2022. The scope of the remediation program will be shared with your office upon engagement.
(iii) Enhanced Transaction Monitoring. Sandra Whitfield, Chief Financial Officer of Dunmore, has directed the Controller's office to implement enhanced transaction monitoring protocols on an interim basis, pending the completion of the full remediation program. These interim measures include heightened due diligence requirements for counterparties in jurisdictions of concern, reduced thresholds for escalation of suspicious transactions, and mandatory secondary review of all wire transfers exceeding $25,000 involving counterparties in the UAE, Russia, Turkey, Georgia, and Kazakhstan.
VII. Cooperation and Continued Commitment
Dunmore wishes to reaffirm its unwavering commitment to full and transparent cooperation with the DOJ National Security Division and the Office of Foreign Assets Control ("OFAC") in connection with this matter. Since the inception of the DOJ inquiry in April 2022, Dunmore has demonstrated its commitment to cooperation through the following actions, among others:
(i) Dunmore has made, and will continue to make, timely and complete document productions to the Department, as evidenced by the first production of 287,412 documents on November 1, 2022, and the preparation of the second production of 151,504 documents for early 2023.
(ii) Dunmore has not impeded the Department's access to any current or former employee. To the contrary, Dunmore has facilitated access to cooperating witnesses and has communicated the contact information for the counsel of former employees who have declined further interviews.
(iii) Dunmore has advanced defense costs for former employees Gerald Fisk, Natasha Sorokin, and Derek Hargrave, pursuant to its indemnification obligations under applicable corporate governance documents and employment agreements, and has done so without imposing conditions on the willingness of those individuals to cooperate with the Department's investigation.
(iv) Dunmore intends to file a voluntary self-disclosure with OFAC upon completion of its internal investigation and Ridgeline's forensic analysis, which is expected during the first half of 2023. Dunmore believes that a timely voluntary self-disclosure will further demonstrate its good faith and cooperation.
(v) Dunmore is prepared to discuss voluntary disgorgement of net profits derived from the tainted transactions at the appropriate time. Dunmore recognizes that disgorgement may be an important component of any resolution and is committed to engaging constructively with your office on this topic when the forensic analysis is sufficiently advanced to permit a reliable calculation of net profits.
Dunmore respectfully submits that its cooperation to date satisfies the criteria for favorable consideration under the DOJ Corporate Enforcement Policy, as updated in September 2022. Dunmore has provided voluntary and timely disclosure of the relevant conduct, has cooperated fully and proactively with the Department's investigation, and has undertaken meaningful remediation measures, including the separation of culpable individuals, the appointment of new compliance leadership, and the engagement of an independent compliance consultant. Dunmore intends to continue this cooperation throughout the remainder of the investigation and any subsequent proceedings.
VIII. Reservation of Rights
Dunmore reserves all applicable rights, privileges, and defenses, including but not limited to attorney-client privilege, attorney work product protections, joint defense and common interest protections, and any other protections afforded under applicable law. Nothing in this supplemental proffer letter or in Dunmore's cooperation with the Department shall be construed as a waiver of any such right, privilege, or defense, except to the limited extent expressly stated herein.
This supplemental proffer is made on a selective-waiver basis to the DOJ only and is not intended to waive, nor shall it be construed as waiving, any privilege or protection as against any third party, whether in civil litigation, arbitration, regulatory proceedings, or otherwise. This selective waiver is consistent with the protocol established in Calderwood & Harkness's memorandum to your office dated July 1, 2022, which was accepted by your office without objection.
The forensic findings summarized in this letter are preliminary in certain respects. Ridgeline's investigation is ongoing, and its final forensic report is expected to be completed during the first half of 2023. Dunmore reserves the right to supplement, amend, or clarify any of the findings or representations contained herein as additional information becomes available through the continuing investigation. Nothing in this letter shall be construed as an admission of liability, wrongdoing, or violation of law by Dunmore or any of its officers, directors, employees, or affiliates.
IX. Closing and Contact Information
We appreciate your office's continued professionalism and constructive engagement with Dunmore and Calderwood & Harkness throughout this investigation. We are prepared to meet with you and your colleagues at your earliest convenience to discuss the forensic findings summarized herein in further detail. We believe that an in-person meeting would be productive and would enable us to walk through the enclosed summary materials and address any questions your office may have.
In addition, we would be pleased to make Dr. Margaret Liu of Ridgeline Advisory Group LLC available for a presentation to the Department and, if appropriate, to the Federal Bureau of Investigation, to discuss Ridgeline's forensic methodology and findings in greater detail. Dr. Liu and her team are prepared to present their analysis with supporting documentation at a time and place convenient to your office.
Please direct all communications regarding this matter to the undersigned at Calderwood & Harkness LLP, 1750 Pennsylvania Avenue NW, Suite 800, Washington, DC 20006. My direct telephone number is (202) 555-7438 and my email address is vchambers@calderwoodharkness.com. In addition, the following members of the Calderwood & Harkness team are available and authorized to communicate with your office regarding this matter:
• Jasmine Thornton, Lead Associate, White Collar & Investigations
• Direct: (202) 555-7452
• Email: jthornton@calderwoodharkness.com
• Conrad Reeves, Senior Counsel, Export Controls & Sanctions
• Direct: (202) 555-7461
• Email: creeves@calderwoodharkness.com
We also note that Dunmore will continue to cooperate, as appropriate and consistent with applicable legal requirements, with Special Agent Paul Reinhardt of the FBI Counterintelligence Division, Washington Field Office, and with OFAC Compliance Analyst Erin Matsuda, who have been involved in the government's investigation of this matter.
We look forward to continuing to work with your office toward a resolution of this matter that is fair and appropriate under the circumstances.
X. Signature block
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Victoria Chambers Partner, White Collar & Investigations 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006 Telephone: (202) 555-7438
Email: vchambers@calderwoodharkness.com
XI. Enclosures
The following materials are enclosed herewith. All enclosed materials are designated as attorney work product, prepared at the direction of counsel in furtherance of Dunmore's cooperation with the Department, and are provided on a selective-waiver basis to DOJ only, consistent with the protocol established on July 1, 2022.
Enclosure A: Summary Transaction Schedule — Crude Oil Swap Transactions with Petronova Trading FZE and Zenith Petroleum DMCC (14 transactions; 9 identified as tainted; dates, counterparties, and notional values; total notional value: $218.7 million; tainted notional value: $156.3 million).
Enclosure B: Summary Payment Flow Chart — Structured Wire Transfers Through Crescent Commercial Bank PJSC (127 individual wire transfers totaling approximately $34.2 million; March 2020 through March 2022; depicting three-tiered intermediary account structure).
Enclosure C: Summary of Oilfield Equipment Export Shipments — Exports via Caspian Logistik GmbH (total value: approximately $12.4 million; ECCNs 2B350 and 2B999; August 2020 through January 2022; shipment dates, descriptions, values, and identified routing).
XII. Distribution
cc (via electronic transmission):
Samuel Kovacs, Trial Attorney Counterintelligence and Export Control Section DOJ National Security Division
Diana Pressman, Trial Attorney Counterintelligence and Export Control Section DOJ National Security Division
bcc (internal distribution only — not transmitted to DOJ): Howard Quinn, Billing Partner, Calderwood & Harkness LLP Jasmine Thornton, Lead Associate, Calderwood & Harkness LLP Conrad Reeves, Senior Counsel, Calderwood & Harkness LLP Liam Donahue, Associate, Calderwood & Harkness LLP Marcus Wellbourne, General Counsel, Dunmore Energy Holdings Ltd.
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This letter constitutes a voluntary proffer in furtherance of Dunmore Energy Holdings Ltd.'s cooperation with the U.S. Department of Justice. Selective waiver of work product protections as to DOJ and not as to third parties, consistent with the protocol established July 1, 2022. Any unauthorized review, use, disclosure, or distribution of this letter or its enclosures is strictly prohibited. If you have received this letter in error, please notify Calderwood & Harkness LLP immediately at (202) 555-7400.

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT VOLUNTARY PROFFER — SELECTIVE WAIVER TO DOJ ONLY

BY HAND DELIVERY AND ELECTRONIC TRANSMISSION

CALDERWOOD & HARKNESS LLP

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