1016-00009 · Dunmore Energy Holdings · Witness Interviews

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ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006

MEMORANDUM OF INTERVIEW

Note Regarding Witness Counsel: At the time of the interview on May 25, 2022, Derek Hargrave had not yet retained separate personal counsel. James Overstreet of Overstreet & McClain PLLC, 2200 Ross Avenue, Suite 3600, Dallas, TX 75201, subsequently entered an appearance on Hargrave's behalf on July 5, 2022. For the record, Hargrave was placed on administrative leave by Dunmore Energy Holdings Ltd. effective July 1, 2022, and was separated from the company effective October 1, 2022. All future communications with Hargrave should be directed through Mr. Overstreet.

This memorandum summarizes the substance of the interview of Derek Hargrave conducted on May 25, 2022. It was memorialized two days after the interview based on contemporaneous notes taken by Nicholas Ferreira during the session. The memorandum has been reviewed and approved by Victoria Chambers and Jasmine Thornton. It reflects the interviewers' best understanding of Mr. Hargrave's statements but is not a verbatim transcript. Direct quotations attributed to Hargrave herein are based on the notetaker's contemporaneous written record and may not capture his precise words in every instance. This memorandum is prepared in furtherance of the internal investigation being conducted at the direction of Dunmore Energy Holdings Ltd.'s General Counsel, Marcus Wellbourne, and is intended to be protected by the attorney-client privilege and the work product doctrine.

I. Upjohn / Corporate Miranda Warning

At the outset of the interview, Victoria Chambers administered the standard Upjohn corporate Miranda warning to Derek Hargrave in accordance with the firm's Witness Interview Protocol dated April 18, 2022, which was adopted for this engagement. Ms. Chambers delivered the following advisements orally and confirmed Hargrave's understanding of each:

1. Calderwood & Harkness LLP represents Dunmore Energy Holdings Ltd. and its subsidiaries (collectively, "Dunmore" or the "Company") in connection with this matter. The firm does not represent Derek Hargrave in his individual capacity.

2. The purpose of the interview is to gather facts in connection with the internal investigation being conducted at the direction of Marcus Wellbourne, General Counsel of Dunmore Energy Holdings Ltd. The investigation concerns potential sanctions and export controls compliance issues involving certain Dunmore subsidiaries, including Dunmore Trading International Ltd.

3. Communications during the interview are protected by the attorney-client privilege. However, the privilege belongs to the Company, not to Hargrave personally. Hargrave does not have the ability to assert or waive the privilege with respect to the substance of this interview.

4. The Company may, in its sole discretion, elect to waive the attorney-client privilege and disclose the substance of this interview — including Hargrave's statements — to third parties, including but not limited to the U.S. Department of Justice, the Office of Foreign Assets Control of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce, or other governmental authorities.

5. Hargrave has the right to retain his own personal counsel at any time, including before or during this interview. If he wishes to retain personal counsel, the interview can be paused or rescheduled.

6. The interview is voluntary. Hargrave is not required to participate but is asked to provide truthful and complete answers to all questions if he chooses to participate. Providing false or misleading information to counsel conducting this investigation could have adverse consequences.

Following the delivery of these advisements, Ms. Chambers asked Hargrave whether he understood each point. Hargrave confirmed that he understood the advisements and stated that he was willing to proceed with the interview without personal counsel present. When specifically asked whether he wished to retain separate personal counsel before proceeding, Hargrave responded that he did not believe he needed separate representation "at this time." He stated that he wanted to cooperate fully with the investigation and that he had "nothing to hide."

Ms. Chambers reiterated that the Company's interests and Hargrave's personal interests might not always be aligned and that Hargrave should feel free to stop the interview at any point to reconsider whether he wished to retain counsel. Hargrave acknowledged this and confirmed his desire to proceed.

II. Background and Employment History

Hargrave provided the following background information at the beginning of the interview.

Personal Information. Hargrave's full legal name is Derek Robert Hargrave. His date of birth is noted in the investigation file but has been redacted from this memorandum. He is a British citizen and a U.S. permanent resident (green card holder). He maintains residences in both Dubai, United Arab Emirates, and Houston, Texas. He has resided primarily in Dubai since January 2017, when he assumed his current role, but returns to Houston periodically for business and personal purposes. He stated that he was in Houston for the interview at the request of the investigation team and that he had traveled from Dubai for this purpose.

Current Position. Hargrave has served as President of Dunmore Trading International Ltd. ("DTI") since January 2017. DTI is a wholly owned subsidiary of Dunmore Energy Holdings Ltd. and is organized and licensed in the Dubai International Financial Centre ("DIFC"). DTI's registered office is located at Level 14, Gate Building 3, Dubai International Financial Centre, P.O. Box 506774, Dubai, UAE. The entity holds DIFC License No. CL-4827. As President, Hargrave is the senior-most executive at DTI and has overall responsibility for the entity's trading operations, personnel, and commercial activities.

Reporting Line. Hargrave reports directly to Callum Renshaw, Chief Executive Officer of Dunmore Energy Holdings Ltd., who is based in Houston, Texas. Hargrave stated that he communicates with Renshaw regularly, typically through weekly video calls and more frequent email and telephone communications. He described the reporting relationship as one in which he had "significant autonomy" over DTI's day-to-day operations, with Renshaw focused on "strategic direction and major capital decisions."

Prior Roles at Dunmore. Before assuming the DTI presidency, Hargrave served as Vice President of Trading at Dunmore upstream Americas LLC in Houston from 2013 to 2016. In that capacity, he was responsible for crude oil and natural gas trading in North and South American markets. He described this role as the position that gave him "deep familiarity with Dunmore's trading culture and risk management frameworks."

Prior Industry Experience. Before joining Dunmore in 2013, Hargrave spent approximately eight years at a major commodity trading firm, where he held progressively senior trading roles focused on European and Middle Eastern crude oil markets. He did not identify the prior employer by name during the interview, though the investigation team is aware from human resources records that the employer was Halcyon Corporation. Hargrave stated that his prior experience gave him "extensive relationships in the Middle East and Central Asian commodity markets," which was one of the reasons Dunmore recruited him to lead the DTI operation.

Direct Reports at DTI. Hargrave identified the following individuals as his direct reports at DTI as of the time of the interview:

• Natasha Sorokin, Senior Trader — responsible for day-to-day management of the trading desk and the team of approximately eight to ten traders.

• Omar Al-Rashidi, Head of Middle East Operations — responsible for business development and client relationships in the Gulf Cooperation Council states and the broader Middle East.

• Yves Leclerc, Director of Logistics & Shipping — responsible for all logistics, shipping, and freight arrangements for DTI's commodity trades and equipment procurement activities.

• Rajesh Malhotra, Controller — responsible for financial reporting, accounts payable and receivable, treasury functions, and payment processing for DTI.

Hargrave stated that DTI employed approximately 45 total staff, including traders, operations personnel, administrative staff, and support functions. He noted that DTI did not have a dedicated compliance officer stationed in Dubai during the relevant period, a point discussed further in Section VIII below.

III. Overview of DTI Trading Desk Operations

Hargrave was asked to describe the general nature and scope of DTI's business activities. He provided the following overview.

Primary Business Lines. Hargrave described DTI's primary business as crude oil and refined petroleum products trading. DTI operated as the principal international trading arm for Dunmore Energy Holdings Ltd. outside of the Americas. He stated that DTI's trading activities encompassed spot and term purchases and sales of crude oil, as well as derivative transactions including swaps and options linked to benchmark crude oil indices (principally ICE Brent). In addition to commodity trading, DTI maintained a secondary business line focused on oilfield equipment procurement and logistics for Dunmore's global operations, including sourcing drilling equipment, well-completion tools, and related components from manufacturers and suppliers worldwide and arranging for their delivery to Dunmore operating sites.

Annual Trading Volume. Hargrave estimated that DTI handled approximately $1.5 billion to $2 billion in annual commodity transaction volume in fiscal year 2021. He described this as representing roughly 30 to 40 percent of Dunmore Energy Holdings Ltd.'s total consolidated revenue. He stated that the trading volume had grown significantly since he assumed the DTI presidency in 2017, driven by expansion into new markets and the addition of trading personnel, including Natasha Sorokin's hire in 2018.

Key Markets. Hargrave identified DTI's key geographic markets as the Middle East (including the Gulf Cooperation Council states, Iraq, and Iran's non-sanctioned petroleum activities), Central Asia (principally Kazakhstan and Turkmenistan), West Africa (Nigeria, Angola, and Ghana), and European markets (including the Netherlands, the United Kingdom, and Germany). He stated that Russian-origin crude oil became an increasingly important part of DTI's portfolio beginning in approximately 2019 to 2020, driven in large part by Sorokin's market knowledge and relationships.

Trading Desk Structure. The DTI trading desk employed approximately eight to ten traders at any given time, all of whom reported to Natasha Sorokin as Senior Trader. Sorokin in turn reported directly to Hargrave. Hargrave described the desk as organized by product and geography, with individual traders assigned responsibility for specific crude oil grades or geographic markets. He stated that Sorokin maintained primary responsibility for Russian and CIS-origin crude oil trading, leveraging her language skills, market relationships, and prior professional experience.

Approval Authority and Internal Controls. Hargrave stated that all commodity trades with a notional value exceeding $5 million required his personal sign-off before execution. He described the approval process as involving a review of the trade ticket, which set forth the counterparty, commodity grade, volume, pricing, delivery terms, and settlement instructions. Hargrave stated that he would review the trade ticket, confirm that the counterparty had been onboarded and screened, and then provide his approval either by initialing a physical document or by electronic approval through DTI's trading platform.

For trades with a notional value exceeding $25 million, Hargrave stated that additional approval was required from either CEO Callum Renshaw or CFO Sandra Whitfield in Houston. He described this as a "dual-approval" process designed to ensure that large-value transactions received appropriate senior management oversight. Hargrave stated that the $25 million threshold was established in a trading authority matrix approved by Dunmore's board of directors, though he could not recall the precise date of the most recent version of that matrix.

Banking Relationships. Hargrave confirmed that DTI's primary trade finance bank was Crescent Commercial Bank PJSC, a UAE-based commercial bank headquartered in Dubai. He identified Khalid Mansour as DTI's relationship manager at Crescent Bank. Hargrave stated that Crescent Bank provided DTI with a range of trade finance services, including letters of credit, pre-export finance facilities, documentary collections, and wire transfer services. Virtually all of DTI's trade-related payments were processed through accounts maintained at Crescent Bank. Hargrave stated that the banking relationship predated his arrival at DTI and that Crescent Bank was selected based on its strong presence in Middle Eastern commodity trade finance.

IV. Relationship with Petronova Trading FZE

A. How the Relationship Began

Hargrave was asked in detail about DTI's relationship with Petronova Trading FZE. He stated that the relationship originated in approximately late 2019 or early 2020, when Natasha Sorokin introduced Petronova to DTI as a potential counterparty. According to Hargrave, Sorokin described Petronova as a Dubai-based commodity trading house that specialized in Russian and Central Asian crude oil. Sorokin told Hargrave that Petronova had access to competitively priced Urals-grade crude oil and could offer DTI favorable pricing relative to prevailing benchmarks.

Hargrave stated that he met Petronova's Managing Director, Sergei Volkov, at what he described as a "brief introductory meeting" in Dubai in approximately February 2020. He recalled the meeting taking place at a hotel or restaurant in the DIFC area but could not recall the specific venue. He stated that the meeting lasted approximately 30 to 45 minutes and was also attended by Sorokin. Hargrave described the meeting as a "standard get-to-know-you session" in which Volkov described Petronova's trading capabilities and supply access, and Hargrave described DTI's appetite for competitively priced Russian-origin crude oil.

Hargrave described Volkov as a "typical Dubai trader — well-connected, aggressive on pricing." He stated that Volkov appeared to have established relationships with Russian oil producers and was confident in his ability to deliver large volumes at attractive prices. Hargrave did not recall discussing the specific identity of Petronova's upstream suppliers during the introductory meeting.

Following the introductory meeting, Hargrave stated that Sorokin handled the day-to-day relationship with Volkov and Petronova. He described Sorokin as the "point person" for the Petronova account and stated that he did not have regular direct communications with Volkov beyond the initial introduction and occasional encounters at industry events.

B. Due Diligence on Petronova

Hargrave was questioned at length regarding the due diligence conducted on Petronova Trading FZE prior to the commencement of trading. His responses on this topic were notable for their generality and his repeated deflection of responsibility to other personnel and functions within the organization.

When asked what specific due diligence steps were taken before DTI began transacting with Petronova, Hargrave stated that he "relied on the compliance team in Houston" to screen counterparties. He explained that Dunmore maintained a standard counterparty onboarding process that required new trading counterparties to be submitted through a centralized compliance review before they could be approved for trading. Hargrave stated that he understood this process to include, at a minimum, OFAC screening of the counterparty entity and its principals, collection of corporate registration documents and beneficial ownership information, and a review of the counterparty's financial standing.

Hargrave recalled that Petronova was submitted through Dunmore's standard counterparty onboarding process. He stated that the process was typically initiated by the trader proposing the new counterparty — in this case, Sorokin — who would complete a counterparty onboarding form and submit it to the compliance function in Houston for review and approval. Hargrave stated that he understood the onboarding form to require disclosure of the counterparty's legal name, jurisdiction of organization, registered address, principal officers, and beneficial owners.

When asked who was responsible for approving the counterparty once the onboarding process was complete, Hargrave identified Gerald Fisk, then-Chief Compliance Officer of Dunmore Energy Holdings Ltd., as the person with final approval authority over counterparty onboarding. He stated that Fisk would review the onboarding materials, run or review OFAC and other sanctions screening results, and issue a compliance clearance before the counterparty could be added to DTI's approved counterparty list.

Hargrave stated explicitly that he did not personally review the Petronova counterparty onboarding file. He stated that he did not review any OFAC screening results for Petronova or its principals. He said he relied on the fact that Petronova had been cleared through the standard onboarding process and that no compliance holds or flags had been communicated to him.

When asked whether he was aware that Petronova Trading FZE had any connection to Volkhov Industrial Group JSC, Hargrave stated: "Not at the time, no. Sorokin brought them in, and I trusted her assessment. She knew the Russian market." He stated that Sorokin had not disclosed any such connection to him and that he had no independent basis to suspect one.

Hargrave was specifically asked whether he was aware that Sergei Volkov, the Managing Director of Petronova, was related to or affiliated with Arkady Volkhov, the Chairman of Volkhov Industrial Group JSC. Hargrave stated that he was not aware of any such relationship. When the interviewers noted the phonetic and orthographic similarity between the surnames "Volkov" and "Volkhov," Hargrave stated that the similarity "didn't register" with him because, in his words, "Volkov and Volkhov are common Russian surnames." He stated that he did not give the matter any thought and that, in the Dubai commodity trading market, "you deal with hundreds of names and entities." He maintained that the similarity in surnames did not prompt him to make any further inquiries.

When asked whether he ever asked Sorokin about the beneficial ownership of Petronova Trading FZE beyond what was reflected on the counterparty onboarding form, Hargrave stated that he could not recall doing so. He said he "assumed" that the onboarding process had captured the relevant beneficial ownership information and that, if there were any issues, the compliance team would have flagged them.

C. Crude Oil Swap Transactions with Petronova

Hargrave confirmed that DTI executed crude oil swap transactions with Petronova Trading FZE over the period from approximately June 2020 through February 2022. When asked to estimate the total number of transactions, Hargrave stated there were "roughly a dozen, maybe more." This estimate is broadly consistent with the investigation team's findings, which have identified 14 total transactions between DTI and Petronova during this period, with an aggregate notional value of approximately $218.7 million.

During the interview, Hargrave was presented with a summary schedule of the 14 transactions identified by the investigation team. He reviewed the schedule and did not dispute its accuracy. He confirmed that he had signed off on each transaction that exceeded the $5 million approval threshold — which encompassed all 14 transactions — and that he recognized his initials or electronic approval notation on the associated trade tickets.

Hargrave described the nature of the transactions as purchases of Urals-grade crude oil and Brent-linked swap transactions. He explained that in a typical transaction, Petronova would sell crude oil to DTI at a negotiated price linked to the ICE Brent benchmark, and DTI would either take physical delivery of the crude or enter into offsetting swaps to manage its price exposure. Hargrave stated that the transactions were documented under standard ISDA and industry trade confirmation protocols.

When asked about the commercial rationale for the Petronova transactions, Hargrave stated that Petronova offered "very competitive pricing, typically 50–75 cents below benchmark," which generated favorable margins for DTI. He described the pricing as "the primary attraction" of the Petronova relationship and stated that the below-market pricing allowed DTI to generate significant trading profits. He did not express concern during the interview that the aggressive pricing might itself have been a red flag warranting additional scrutiny of the counterparty or its supply chain.

Hargrave was asked about the source of Petronova's crude oil supply. He stated that he understood the crude oil was sourced from "Russian producers" but that he did not inquire further into the specific identity of those producers. He stated that in the international crude oil trading market, it was not unusual for intermediary trading houses to source crude from multiple producers and that the identity of the upstream supplier was not always disclosed to the purchaser. He acknowledged that DTI did not conduct independent verification of Petronova's upstream supply chain.

Hargrave stated that he was not aware that any of the crude oil transacted with Petronova was sourced from or destined for Volkhov Industrial Group-controlled entities until after OFAC added Volkhov Industrial Group JSC to the Specially Designated Nationals and blocked Persons List on April 6, 2022. He maintained that he had no reason to suspect any such connection during the relevant trading period.

V. Relationship with Zenith Petroleum DMCC

Hargrave confirmed that DTI also transacted with Zenith Petroleum DMCC, a Dubai-registered entity managed by Farhan Qureshi, a Pakistani national resident in the UAE. Hargrave stated that Zenith Petroleum was registered at Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE. He described Zenith Petroleum as a "smaller player" in the Dubai petroleum trading market, operating at a significantly smaller scale than Petronova.

Hargrave stated that DTI executed two crude oil swap transactions with Zenith Petroleum DMCC, which he described as "smaller deals, maybe $20–30 million combined." He stated that both transactions involved Brent-linked crude oil swaps and were executed during the same general timeframe as the Petronova transactions, though he could not recall the exact dates without reference to the trade records.

When asked how Zenith Petroleum was introduced to DTI, Hargrave stated that he believed either Sorokin or Omar Al-Rashidi had prior dealings with Qureshi and had recommended Zenith Petroleum as a counterparty. He stated he could not recall which of the two made the introduction. Hargrave stated that he met Qureshi only briefly and did not have a significant personal relationship with him.

Hargrave was asked directly whether he was aware of any connection between Zenith Petroleum DMCC and Volkhov Industrial Group JSC, or between Zenith Petroleum and Petronova Trading FZE. He stated that he was not aware of any such connection. He maintained that, to his knowledge, Zenith Petroleum was an independent trading entity with no ties to either Petronova or Volkhov.

Hargrave confirmed that Zenith Petroleum would have been subject to the same counterparty onboarding and compliance screening process as Petronova. He stated that he did not personally review the Zenith Petroleum onboarding file and relied on the compliance function to screen the counterparty in the ordinary course.

VI. Oilfield Equipment Exports via Caspian Logistik GmbH

A. Background on Equipment Transactions

Hargrave was asked about DTI's involvement in oilfield equipment procurement and export activities. He described DTI's role as facilitating the sourcing and shipment of oilfield drilling equipment and components for Dunmore's global operations. He explained that, in addition to its commodity trading activities, DTI served as a procurement hub for equipment needed by Dunmore operating subsidiaries in various jurisdictions, including Central Asia and the Middle East.

Hargrave identified Yves Leclerc, Director of Logistics & Shipping at DTI, as the person primarily responsible for managing logistics, shipping arrangements, freight forwarding, and customs documentation for equipment exports. He stated that Leclerc had significant experience in international shipping and logistics and that Hargrave relied on Leclerc to ensure that shipments were properly documented and compliant with applicable export control regulations.

Hargrave confirmed that DTI facilitated exports of oilfield drilling equipment and components valued at approximately $12.4 million through Caspian Logistik GmbH, a German-registered logistics and freight forwarding company. He identified Klaus Weidemann as the manager of Caspian Logistik GmbH, with offices at Mönckebergstraße 22, 20095 Hamburg, Germany. He stated that Caspian Logistik was used as a logistics intermediary for shipments transiting through European ports, primarily Hamburg, en route to destinations in Central Asia and Russia.

B. Nature of Equipment and End Users

When asked about the specific types of equipment involved in the Caspian Logistik shipments, Hargrave stated that the shipments included drilling components, well-completion tools, and related parts. He described the equipment in general terms but stated he was not an expert in the technical classifications of the goods.

Hargrave was asked specifically whether he was familiar with the Export Administration Regulations ("EAR") classifications applicable to the equipment, including Export Control Classification Numbers ("ECCNs") 2B350 and 2B999, which relate to certain chemical manufacturing and processing equipment and specialized oilfield equipment, respectively. Hargrave stated that he was not familiar with specific ECCN classifications but acknowledged that some of the equipment "might require export licenses depending on the destination." He stated that the determination of export license requirements was a function handled by Leclerc in coordination with the compliance team, not something he personally assessed.

Hargrave stated that the equipment was destined for "operations in Central Asia and the Russian market," which he described as consistent with Dunmore's broader operational footprint in those regions. He stated that the specific end-users for the equipment were identified on end-user certificates that accompanied the shipments, but that these certificates were prepared and reviewed by Leclerc and the logistics team, not by Hargrave personally.

When asked directly whether he reviewed end-user certificates for the Caspian Logistik shipments, Hargrave stated that he did not. He stated that he relied on Leclerc and the compliance function to ensure that end-user certificates were accurate and that shipments were not directed to prohibited end-users or destinations.

Hargrave stated unequivocally that he did not know whether any of the end-user certifications contained false or misleading information. When shown certain documents obtained by the investigation team suggesting that specific shipments facilitated through Caspian Logistik GmbH were destined for entities connected to Volkhov Industrial Group JSC, Hargrave stated: "I don't recall seeing those documents before, and I wouldn't have approved shipments to a sanctioned entity knowingly." He was visibly taken aback when presented with these documents and paused before responding. He maintained that he had no prior knowledge of any Volkhov connection to the end-users identified in the shipping documentation.

C. Involvement of Dunmore Renewables GmbH

The interviewers asked Hargrave about one specific transaction that appeared to involve both Dunmore Renewables GmbH, a Dunmore subsidiary based in Hamburg, Germany, and Caspian Logistik GmbH. Hargrave stated that he was only "peripherally aware" of this transaction and that it did not originate from DTI's trading desk. He characterized it as "Engel's deal, not mine," referring to Tobias Engel, the Managing Director of Dunmore Renewables GmbH.

Hargrave stated that Engel would have more detailed information about the transaction and its purpose. He said he understood that Dunmore Renewables GmbH had some commercial relationship with Caspian Logistik GmbH independent of DTI and that he did not supervise or direct that relationship. He declined to speculate about the substance of the transaction beyond what he had described and suggested that the investigation team direct its questions to Engel.

VII. Payment Flows through Crescent Commercial Bank PJSC

Hargrave was asked in detail about the payment structure and flows associated with DTI's transactions with Petronova Trading FZE and Zenith Petroleum DMCC. He confirmed that payments for these transactions were processed through DTI's accounts at Crescent Commercial Bank PJSC in Dubai, which was managed by relationship banker Khalid Mansour.

During this portion of the interview, Hargrave was presented with preliminary findings prepared by Ridgeline Advisory Group, the forensic accounting firm retained by Calderwood & Harkness in connection with the investigation (Engagement No. RAG-2022-0319). The Ridgeline preliminary analysis identified approximately $34.2 million in payments across 127 individual transactions between March 2020 and March 2022 that were routed through intermediary accounts at Crescent Commercial Bank before reaching the ultimate beneficiary accounts. The analysis indicated that the payment structuring pattern — involving the use of multiple intermediary accounts with no apparent commercial purpose — was consistent with techniques used to obscure the beneficial ownership of funds or to circumvent sanctions screening protocols.

When presented with these findings, Hargrave stated that he was not aware of the specific structuring pattern identified by Ridgeline. He stated that payment instructions for DTI's transactions were typically prepared by Rajesh Malhotra, DTI's Controller, and were approved by either Hargrave or Sorokin, depending on the transaction amount and the applicable approval authority. Hargrave stated that for payments above certain thresholds — which he recalled as $1 million or $2 million, though he was not certain of the exact figure — his approval was required.

Hargrave acknowledged that he signed wire transfer authorization forms for transactions exceeding the applicable threshold. However, he stated that his review of payment instructions was generally limited to confirming the amount, the counterparty name, and the bank account details on the face of the authorization form. He stated that he did not trace funds to their ultimate beneficiaries and did not inquire into whether intermediary accounts were being used in the payment chain.

When asked why he did not question the use of intermediary accounts in the payment structure, Hargrave stated: "In Dubai, multi-layered payment structures are common in commodity trading." He described the use of intermediary accounts as a feature of the Middle Eastern banking and commodity trading environment and stated that he did not view it as inherently suspicious. He noted that many commodity trading counterparties in the region maintained multiple accounts at different banks for various commercial and operational reasons.

The interviewers pressed Hargrave on whether he was aware that the intermediary account structure may have been designed to obscure the beneficial ownership of Volkhov-connected entities, thereby facilitating transactions that might otherwise have been flagged by sanctions screening systems. Hargrave responded firmly: "Absolutely not. I had no reason to think that." He stated that he was unaware of any connection between the intermediary accounts and Volkhov Industrial Group and that, to his knowledge, the payment flows reflected standard commercial arrangements.

Hargrave was asked whether Rajesh Malhotra ever raised concerns about the payment structuring or the use of intermediary accounts. Hargrave stated that Malhotra did not raise any concerns with him on this topic. He stated that Malhotra was a "detail-oriented" controller who would have flagged irregularities if he had identified them.

The interviewers noted for the record that Hargrave appeared to become less forthcoming during this portion of the interview. While he provided direct answers to most questions, his responses regarding the intermediary account structure were marked by longer pauses, more frequent hedging (e.g., "I don't recall," "I'm not sure"), and a tendency to redirect questions to Malhotra or the compliance function. This observation is noted in Section XII below.

VIII. Knowledge of Sanctions and Compliance Framework

A. OFAC and Sanctions Awareness

Hargrave was asked about his general awareness of U.S. sanctions laws and their applicability to DTI's operations. He stated that he was "generally aware" that U.S. sanctions applied to Dunmore entities and their subsidiaries, including DTI, because of the company's U.S. nexus. He identified several factors that he understood to create U.S. sanctions jurisdiction, including Dunmore Energy Holdings Ltd.'s operational headquarters in Houston, Texas; the existence of Dunmore upstream Americas LLC as a U.S. subsidiary; the employment of U.S. persons within the Dunmore group; and the use of U.S. dollar-denominated transactions that clear through U.S. correspondent banks.

Hargrave stated that he received "annual compliance training" on sanctions and export controls topics. When asked to identify the date or content of the most recent training session he attended, Hargrave could not recall specific details. He stated that the training was typically delivered via an online platform and covered "the basics of OFAC sanctions, anti-money laundering, and anti-corruption." He could not recall whether the training addressed sector-specific sanctions under Executive Order 13662 or the specific compliance obligations arising from DTI's trading activities with Russian-nexus counterparties.

Hargrave was asked specifically whether he was aware that Volkhov Industrial Group JSC was subject to OFAC Directive 2 sectoral sanctions as of November 15, 2019, pursuant to Executive Order 13662, which imposed restrictions on the provision of financing and other support to entities in specified sectors of the Russian economy. Hargrave stated that he was "not specifically aware of that designation" and that he "relied on the compliance team to flag sanctioned parties." He stated that his understanding of the sanctions landscape was at a "high level" and that he did not monitor OFAC designations or updates himself.

Hargrave was further asked whether he was aware of Executive Order 14024, issued on April 15, 2021, which expanded the scope of U.S. sanctions on Russia and provided additional authority for the designation of persons operating in specified sectors of the Russian economy. Hargrave stated that he was not aware of Executive Order 14024 or its specific implications for DTI's trading activities until after the OFAC SDN designation of Volkhov Industrial Group on April 6, 2022. He stated that he became aware of the SDN designation through industry news reports, not through any internal Dunmore communication or compliance alert.

B. Relationship with Gerald Fisk (Former CCO)

Hargrave described his relationship with Gerald Fisk, who served as Chief Compliance Officer of Dunmore Energy Holdings Ltd. during the relevant period, as "cordial but distant." He stated that Fisk was based in Houston and that there was "limited day-to-day interaction" between the DTI trading desk in Dubai and the compliance function in Houston. He attributed this in part to the time zone difference between Dubai and Houston and in part to the organizational structure, which positioned the compliance function as a Houston-based corporate function rather than an embedded function within the trading subsidiary.

Hargrave stated that Fisk visited the DTI Dubai office "perhaps once or twice a year." He described these visits as primarily focused on general compliance program updates and on-site reviews, rather than detailed transaction-level compliance assessments. He could not recall the date of Fisk's most recent visit to Dubai prior to April 2022.

When asked whether Fisk ever raised concerns with Hargrave about the Petronova relationship or any other Russian-nexus transactions, Hargrave stated: "Not that I recall. If he had concerns, he didn't share them with me directly." He stated that he was not aware of any compliance red flags or escalations regarding Petronova Trading FZE or Zenith Petroleum DMCC prior to April 2022. He further stated that he did not receive any communications from Fisk or anyone else in the compliance function suggesting that the Petronova or Zenith Petroleum onboarding files contained any deficiencies or warranted additional scrutiny.

C. OFAC Screening at DTI

Hargrave was asked about the adequacy of DTI's counterparty screening and compliance infrastructure. In a notable moment of candor, Hargrave acknowledged that DTI's counterparty screening was "not as robust as it should have been." He stated that the Dubai office relied primarily on an automated screening tool that was managed and administered from Dunmore's Houston headquarters, with screening results reviewed by Fisk's compliance team in Houston. Hargrave stated that DTI in Dubai did not have its own standalone compliance screening capability and was dependent on the Houston function to process and review screening results.

Hargrave confirmed that there was no dedicated compliance officer stationed at the DTI Dubai office during the relevant period of March 2020 through April 2022. He stated that compliance oversight for DTI was provided remotely from Houston, which he acknowledged created "gaps" in real-time compliance monitoring and oversight. He noted that the absence of a local compliance officer meant that traders such as Sorokin were effectively making counterparty recommendations without the benefit of on-site compliance review or challenge.

When asked whether he had ever recommended or advocated for the hiring of a dedicated compliance officer for the DTI Dubai office, Hargrave stated that he had raised the issue "informally" with CEO Callum Renshaw in approximately late 2021. He stated that he communicated to Renshaw that the DTI office would benefit from a local compliance presence, given the growing volume and complexity of DTI's trading activities. Hargrave stated that Renshaw was receptive to the idea in principle but that "budget constraints" had delayed the hire. He stated that the matter was still under discussion at the time of the Volkhov SDN designation in April 2022. Hargrave did not have written documentation of his recommendation to Renshaw and stated that the conversation occurred verbally, either in person or by phone.

IX. Relationship with Natasha Sorokin

Hargrave was asked about his relationship with and supervision of Natasha Sorokin, DTI's Senior Trader. He described Sorokin as "the best trader on the desk — aggressive, well-connected in the Russian and CIS markets." He stated that Sorokin was a Russian-American dual national who joined DTI in 2018 and quickly established herself as the top revenue producer on the trading desk. He spoke highly of her trading acumen and market knowledge, noting that she brought significant relationships and expertise in the Russian and Central Asian crude oil markets that DTI had previously lacked.

Hargrave confirmed that Sorokin was the "primary architect" of the Petronova Trading FZE relationship. He stated that Sorokin identified Petronova as a potential counterparty, introduced Volkov to Hargrave, and handled the majority of day-to-day communications with Volkov and other Petronova personnel throughout the trading relationship. Hargrave stated that Sorokin was the principal point of contact for trade negotiations, pricing discussions, and logistical coordination with Petronova.

When asked whether he supervised Sorokin's activities closely, Hargrave stated: "I gave her latitude. She produced results. I reviewed the trade tickets and financials, but I didn't monitor her day-to-day communications." He described his supervisory approach as focusing on "outputs rather than inputs" — reviewing trade performance, profitability, and compliance with internal trading limits, rather than closely monitoring the content of Sorokin's communications with counterparties.

Hargrave acknowledged that he was aware Sorokin used encrypted messaging applications, including Meridian Services Inc. and Kestrel Data Systems, for some communications with counterparties and market contacts. He stated that this was "common practice among traders in the region" and that he did not view it as inherently problematic. He stated that he did not instruct Sorokin to refrain from using encrypted messaging applications and did not take steps to ensure that communications conducted through such applications were preserved or archived in accordance with Dunmore's record retention policies. He acknowledged that he was not sure whether Dunmore's record retention policy specifically addressed the use of encrypted messaging applications for business communications.

When asked whether he was aware that Sorokin may have had knowledge of Petronova's connection to Volkhov Industrial Group JSC, Hargrave stated: "If she knew, she didn't tell me." He did not elaborate further on this point and did not speculate about what Sorokin may or may not have known. He maintained that he relied on Sorokin's judgment and that she did not disclose any information that would have caused him to question the Petronova relationship.

X. Events Following April 6, 2022 (OFAC SDN Designation of Volkhov Industrial Group)

Hargrave was asked to describe his actions and awareness in the period following the April 6, 2022 OFAC designation of Volkhov Industrial Group JSC as a Specially Designated National. He provided the following chronology.

Hargrave stated that he first learned of the Volkhov Industrial Group SDN designation from a general industry news alert — he believed it was a notification from an industry newsletter or a news wire service — on or about April 6 or April 7, 2022. He stated that he did not learn of the designation from Dunmore's compliance function or from any internal company communication. He acknowledged that this fact was concerning in retrospect and suggested that it reflected a gap in the company's internal escalation procedures.

Hargrave stated that when he first read the news of the Volkhov SDN designation, he did not immediately connect the designation to DTI's trading relationship with Petronova. He stated that, in his mind, Petronova was an independent Dubai-based trading company managed by Sergei Volkov, and he did not associate Petronova with Volkhov Industrial Group or its chairman, Arkady Volkhov.

Hargrave stated that Gerald Fisk, the Chief Compliance Officer, contacted him on approximately April 12, 2022. He stated that Fisk told him that a screening refresh conducted on April 11, 2022, had identified potential Volkhov exposure in DTI's counterparty portfolio and that Fisk wanted to discuss DTI's transactions with Petronova Trading FZE. Hargrave stated that during this conversation, he told Fisk that Petronova was "a Dubai-based counterparty" and that he was "not aware of any Volkhov connection." He stated that Fisk did not provide him with specific details about the nature of the potential exposure identified in the screening refresh and that the conversation was relatively brief.

Hargrave stated that he was subsequently contacted by Marcus Wellbourne, General Counsel of Dunmore Energy Holdings Ltd., on or about April 14, 2022. Wellbourne informed Hargrave that the company was retaining outside counsel — Calderwood & Harkness LLP — to conduct an internal investigation into potential sanctions and export controls issues, including DTI's transactions with Petronova and related counterparties. Wellbourne instructed Hargrave to cooperate fully with the investigation and to preserve all documents and communications potentially relevant to the matters under review.

Hargrave confirmed that he received a formal litigation hold notice from Dunmore's legal department on April 20, 2022. He stated that he reviewed the litigation hold notice and confirmed his understanding of its requirements. He stated that he took steps to preserve all responsive documents in his possession, custody, or control, including emails, trade records, electronic files, and physical documents maintained at his office in Dubai.

XI. Hargrave's Characterization of His Conduct

Throughout the interview, Hargrave maintained that he did not knowingly transact with sanctioned entities or their affiliates. He was consistent in this position and returned to it multiple times, particularly when confronted with specific documentary evidence or lines of questioning that suggested a greater degree of knowledge or involvement than he acknowledged.

Hargrave attributed the current situation to three principal factors:

1. Sorokin's failure to disclose the Petronova-Volkhov connection. Hargrave stated that Sorokin was the person with the closest relationship to Petronova and Sergei Volkov, and that if anyone within DTI was aware of a connection between Petronova and Volkhov Industrial Group, it would have been Sorokin. He maintained that Sorokin did not disclose any such connection to him at any time.

2. Inadequate compliance infrastructure at DTI in Dubai. Hargrave acknowledged that the absence of a dedicated compliance officer at the DTI Dubai office created a gap in the company's ability to monitor and oversee compliance in real time. He stated that the reliance on remote compliance oversight from Houston was insufficient given the volume and complexity of DTI's trading activities.

3. Gerald Fisk's failure to implement effective OFAC screening protocols and third-party due diligence for DTI counterparties. Hargrave stated that Fisk, as Chief Compliance Officer, bore responsibility for ensuring that the company's sanctions screening and counterparty due diligence processes were adequate. He suggested that Fisk's failure to identify the Petronova-Volkhov connection during the counterparty onboarding process, and his failure to flag the Volkhov Directive 2 sectoral sanctions designation in November 2019 as relevant to DTI's existing counterparty relationships, were significant compliance failures.

Hargrave summarized his position as follows: "I ran the trading desk. I trusted my team and I trusted compliance. If the screening came back clean, I approved the deals." He stated that he viewed his role as focused on the commercial and operational aspects of the trading business and that he relied on the compliance function to serve as a check on counterparty risk.

When asked whether he felt any personal responsibility for the current situation, Hargrave stated: "In hindsight, I should have asked more questions. But at the time, nothing raised a red flag for me." He did not elaborate further on what specific questions he wished he had asked or what information he wished he had sought.

XII. Credibility Assessment and Observations

The following credibility assessment and observations are provided by Victoria Chambers, Responsible Partner, for the internal use of the investigation team and are based on her evaluation of Hargrave's demeanor, responsiveness, and the consistency of his statements with the documentary record developed to date. These observations are attorney work product and are not intended for disclosure outside the investigation team.

General Cooperation. Hargrave was generally cooperative throughout the four-hour-and-fifteen-minute interview. He arrived on time, did not request breaks beyond those offered by the interview team, and answered the majority of questions without objection. He did not invoke any privilege or refuse to answer any question.

Minimization of Oversight Responsibilities. Notwithstanding his general cooperation, Hargrave appeared to minimize his own oversight responsibilities as President of DTI. He repeatedly deflected responsibility for counterparty due diligence, sanctions screening, end-user verification, and payment structuring to subordinates (Sorokin, Leclerc, Malhotra) and to the Houston-based compliance function (Fisk). While it is not uncommon for senior executives to rely on specialized functions for compliance tasks, Hargrave's consistent pattern of deflection — particularly given his position as the most senior executive at DTI with personal sign-off authority over all material transactions — warrants careful scrutiny.

Petronova-Volkhov Connection. Hargrave's claims that he had no knowledge of Petronova's connection to Volkhov Industrial Group are difficult to reconcile with certain documentary evidence identified during the document review. Specifically, trade documents referencing Russian-origin crude oil sourced by "VIG-affiliated producers" have been identified in Hargrave's custodial email collection. These references, if confirmed to relate to Volkhov Industrial Group ("VIG"), would suggest that Hargrave had at least documentary notice of a Petronova-Volkhov connection. This issue must be cross-referenced with the ongoing document review findings, and Hargrave should be confronted with these specific documents in a follow-up interview.

Name Similarity. Hargrave's claim that the phonetic and orthographic similarity between "Volkov" (Petronova's Managing Director) and "Volkhov" (the sanctioned entity's chairman) "didn't register" warrants further scrutiny. While it is true that both surnames are common in Russian, a reasonable executive in Hargrave's position — dealing in Russian-nexus commodity trades and aware of U.S. sanctions on Russian entities — might reasonably be expected to have noticed the similarity and made further inquiries. The credibility of this claim will be tested against the broader body of evidence as the investigation proceeds.

Evasiveness on Payment Flows. Hargrave appeared forthcoming about the general operations of the DTI trading desk and provided detailed answers regarding the organizational structure, trading processes, and commercial rationale for the Petronova transactions. However, he became noticeably less forthcoming and more evasive when questioned about the specific payment routing through Crescent Commercial Bank intermediary accounts. His responses in this area were marked by longer pauses, hedging language, and a pronounced tendency to redirect questions to Rajesh Malhotra (Controller) rather than providing direct answers. This shift in demeanor suggests either a lack of genuine knowledge about the payment flows or discomfort with the line of questioning. Further investigation of the payment flows — including review of Malhotra's records and testimony — will be essential to assessing the accuracy of Hargrave's statements.

Reliance on Sorokin. Hargrave's heavy reliance on Sorokin as both the originator and day-to-day manager of the Petronova relationship, combined with his admitted lack of supervision over Sorokin's communications, raises significant questions about the adequacy of his oversight. His acknowledgment that Sorokin used encrypted messaging applications for counterparty communications, without any effort to monitor or archive those communications, is of particular concern and suggests a supervisory environment in which a subordinate trader could maintain undisclosed relationships or information without detection.

Recommendation. It is recommended that Hargrave be re-interviewed after completion of the document review (being conducted by Nexagen Analytics, Project No. NX-DEH-2204) and the forensic accounting analysis being performed by Ridgeline Advisory Group (Engagement No. RAG-2022-0319). A second interview will allow the investigation team to test Hargrave's statements against the full documentary record, including the "VIG-affiliated producers" references, payment flow analyses, and any communications recovered from Sorokin's custodial collection.

Note Regarding Personal Counsel. Based on the trajectory of the investigation and the information gathered to date, it appears increasingly likely that the interests of Derek Hargrave and those of Dunmore Energy Holdings Ltd. may diverge as the investigation proceeds. Hargrave may benefit significantly from retaining personal counsel to advise him in connection with any further interviews and with respect to his potential individual exposure. Consistent with the Upjohn protocol, this observation was not communicated to Hargrave during the interview. The investigation team should consult with Marcus Wellbourne regarding whether and how to address this issue going forward.

XIII. Documents Reviewed During the Interview

The following documents were shown to or discussed with Hargrave during the course of the May 25, 2022 interview:

1. Summary Schedule of Crude Oil Swap Transactions. A tabular summary prepared by the investigation team identifying 14 crude oil swap transactions between DTI and Petronova Trading FZE, and 2 crude oil swap transactions between DTI and Zenith Petroleum DMCC, executed during the period from June 2020 through February 2022, with an aggregate notional value of approximately $218.7 million. The schedule included transaction dates, counterparty names, commodity grades, notional values, and settlement terms.

2. Sample Trade Tickets. Representative trade tickets for selected transactions from the above schedule, bearing Hargrave's electronic approval notations or initials. Hargrave confirmed recognition of his approval markings on each trade ticket presented.

3. Petronova Trading FZE Counterparty Onboarding File. The counterparty onboarding file for Petronova Trading FZE, including the completed counterparty onboarding form, corporate registration documents, and OFAC screening results dated approximately early 2020. Hargrave confirmed he had not previously reviewed this file personally.

4. Preliminary Excerpts from Crescent Commercial Bank PJSC Wire Transfer Records. Preliminary extracts of wire transfer records obtained from Crescent Commercial Bank PJSC and provided to the investigation team by Ridgeline Advisory Group. The excerpts highlighted the intermediary account structure identified in Ridgeline's preliminary analysis, including the $34.2 million in payments across 127 individual transactions.

5. Sample End-User Certificates for Caspian Logistik GmbH Equipment Shipments. End-user certificates associated with selected oilfield equipment shipments facilitated through Caspian Logistik GmbH. Certain certificates contained references to end-users that the investigation team has identified as potentially connected to Volkhov Industrial Group JSC.

6. DTI Organizational Chart (Q1 2022). The organizational chart for Dunmore Trading International Ltd. as of the first quarter of 2022, reflecting the reporting structure described by Hargrave during the interview.

All documents presented to Hargrave during the interview are maintained in the investigation team's secure document repository under Matter No. 1016-00009, Interview Subfolder (Hargrave — May 25, 2022).

XIV. Follow-Up Items and Open Questions

Based on the substance of Hargrave's interview, the following follow-up items and open questions have been identified for further investigation:

1. Cross-reference with Natasha Sorokin interview. Hargrave's statements regarding Sorokin's role as the "primary architect" of the Petronova relationship, her handling of day-to-day communications with Sergei Volkov, and her alleged failure to disclose any Petronova-Volkhov connection must be tested against Sorokin's own account. Sorokin's interview is currently scheduled for June 2, 2022.

2. Hargrave's personal communications with Sergei Volkov. Obtain and review Hargrave's personal email, text messages, and encrypted messaging application records (including Meridian Services Inc. and Kestrel Data Systems) for any direct communications with Sergei Volkov that bypassed Sorokin. Hargrave's claim that he did not have regular direct communications with Volkov should be verified against the electronic record.

3. "VIG-affiliated producers" references in Hargrave's custodial collection. Review and analyze the specific documents found in Hargrave's custodial email collection that reference "VIG-affiliated producers" as the source of crude oil in connection with Petronova transactions. These documents are potentially the most significant evidence bearing on Hargrave's claimed lack of knowledge of the Petronova-Volkhov connection. The results of this analysis should be used to prepare targeted questions for Hargrave's re-interview.

4. Gerald Fisk interview — compliance escalations. Confirm with Gerald Fisk whether Fisk raised any compliance concerns with Hargrave regarding Petronova Trading FZE, Zenith Petroleum DMCC, or Russian-nexus transactions at any time prior to April 2022. Fisk's interview is currently scheduled for June 8, 2022. Catherine Blackthorn of Blackthorn & Associates LLP will attend as Fisk's personal counsel.

5. Rajesh Malhotra — payment authorization protocols. Obtain Rajesh Malhotra's records regarding payment authorization protocols at DTI, including the specific procedures for preparing and approving wire transfer instructions. Determine whether Malhotra provided Hargrave with reports or documentation that disclosed the use of intermediary accounts in the payment chain for Petronova and Zenith Petroleum transactions.

6. Callum Renshaw — compliance officer recommendation. Analyze Hargrave's claim that he raised the need for a dedicated compliance officer at DTI's Dubai office with CEO Callum Renshaw in approximately late 2021. Cross-check this claim against Renshaw's interview memorandum. Renshaw's interview was conducted on May 23, 2022, and the memorandum should be reviewed for any corroboration or contradiction of Hargrave's account.

7. Schedule re-interview of Hargrave. A second-round interview of Hargrave should be scheduled for August or September 2022. By that time, the forensic accounting results from Ridgeline Advisory Group (Engagement No. RAG-2022-0319) should be available, and the document review being conducted by Nexagen Analytics (Project No. NX-DEH-2204) should be substantially complete. The re-interview should be designed to test Hargrave's statements against the full body of documentary and financial evidence.

8. Individual exposure assessment. Assess Hargrave's potential individual exposure under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act of 2018 ("ECRA"), 50 U.S.C. §§ 4801–4852, in light of his U.S. permanent resident status, his personal approval authority over the DTI transactions at issue, and the evidence developed to date. This assessment should be conducted in coordination with the broader DOJ engagement strategy for the investigat

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006
MEMORANDUM OF INTERVIEW
Note Regarding Witness Counsel: At the time of the interview on May 25, 2022, Derek Hargrave had not yet retained separate personal counsel. James Overstreet of Overstreet & McClain PLLC, 2200 Ross Avenue, Suite 3600, Dallas, TX 75201, subsequently entered an appearance on Hargrave's behalf on July 5, 2022. For the record, Hargrave was placed on administrative leave by Dunmore Energy Holdings Ltd. effective July 1, 2022, and was separated from the company effective October 1, 2022. All future communications with Hargrave should be directed through Mr. Overstreet.
This memorandum summarizes the substance of the interview of Derek Hargrave conducted on May 25, 2022. It was memorialized two days after the interview based on contemporaneous notes taken by Nicholas Ferreira during the session. The memorandum has been reviewed and approved by Victoria Chambers and Jasmine Thornton. It reflects the interviewers' best understanding of Mr. Hargrave's statements but is not a verbatim transcript. Direct quotations attributed to Hargrave herein are based on the notetaker's contemporaneous written record and may not capture his precise words in every instance. This memorandum is prepared in furtherance of the internal investigation being conducted at the direction of Dunmore Energy Holdings Ltd.'s General Counsel, Marcus Wellbourne, and is intended to be protected by the attorney-client privilege and the work product doctrine.
I. Upjohn / Corporate Miranda Warning
At the outset of the interview, Victoria Chambers administered the standard Upjohn corporate Miranda warning to Derek Hargrave in accordance with the firm's Witness Interview Protocol dated April 18, 2022, which was adopted for this engagement. Ms. Chambers delivered the following advisements orally and confirmed Hargrave's understanding of each:
1. Calderwood & Harkness LLP represents Dunmore Energy Holdings Ltd. and its subsidiaries (collectively, "Dunmore" or the "Company") in connection with this matter. The firm does not represent Derek Hargrave in his individual capacity.
2. The purpose of the interview is to gather facts in connection with the internal investigation being conducted at the direction of Marcus Wellbourne, General Counsel of Dunmore Energy Holdings Ltd. The investigation concerns potential sanctions and export controls compliance issues involving certain Dunmore subsidiaries, including Dunmore Trading International Ltd.
3. Communications during the interview are protected by the attorney-client privilege. However, the privilege belongs to the Company, not to Hargrave personally. Hargrave does not have the ability to assert or waive the privilege with respect to the substance of this interview.
4. The Company may, in its sole discretion, elect to waive the attorney-client privilege and disclose the substance of this interview — including Hargrave's statements — to third parties, including but not limited to the U.S. Department of Justice, the Office of Foreign Assets Control of the U.S. Department of the Treasury, the Bureau of Industry and Security of the U.S. Department of Commerce, or other governmental authorities.
5. Hargrave has the right to retain his own personal counsel at any time, including before or during this interview. If he wishes to retain personal counsel, the interview can be paused or rescheduled.
6. The interview is voluntary. Hargrave is not required to participate but is asked to provide truthful and complete answers to all questions if he chooses to participate. Providing false or misleading information to counsel conducting this investigation could have adverse consequences.
Following the delivery of these advisements, Ms. Chambers asked Hargrave whether he understood each point. Hargrave confirmed that he understood the advisements and stated that he was willing to proceed with the interview without personal counsel present. When specifically asked whether he wished to retain separate personal counsel before proceeding, Hargrave responded that he did not believe he needed separate representation "at this time." He stated that he wanted to cooperate fully with the investigation and that he had "nothing to hide."
Ms. Chambers reiterated that the Company's interests and Hargrave's personal interests might not always be aligned and that Hargrave should feel free to stop the interview at any point to reconsider whether he wished to retain counsel. Hargrave acknowledged this and confirmed his desire to proceed.
II. Background and Employment History
Hargrave provided the following background information at the beginning of the interview.
Personal Information. Hargrave's full legal name is Derek Robert Hargrave. His date of birth is noted in the investigation file but has been redacted from this memorandum. He is a British citizen and a U.S. permanent resident (green card holder). He maintains residences in both Dubai, United Arab Emirates, and Houston, Texas. He has resided primarily in Dubai since January 2017, when he assumed his current role, but returns to Houston periodically for business and personal purposes. He stated that he was in Houston for the interview at the request of the investigation team and that he had traveled from Dubai for this purpose.
Current Position. Hargrave has served as President of Dunmore Trading International Ltd. ("DTI") since January 2017. DTI is a wholly owned subsidiary of Dunmore Energy Holdings Ltd. and is organized and licensed in the Dubai International Financial Centre ("DIFC"). DTI's registered office is located at Level 14, Gate Building 3, Dubai International Financial Centre, P.O. Box 506774, Dubai, UAE. The entity holds DIFC License No. CL-4827. As President, Hargrave is the senior-most executive at DTI and has overall responsibility for the entity's trading operations, personnel, and commercial activities.
Reporting Line. Hargrave reports directly to Callum Renshaw, Chief Executive Officer of Dunmore Energy Holdings Ltd., who is based in Houston, Texas. Hargrave stated that he communicates with Renshaw regularly, typically through weekly video calls and more frequent email and telephone communications. He described the reporting relationship as one in which he had "significant autonomy" over DTI's day-to-day operations, with Renshaw focused on "strategic direction and major capital decisions."
Prior Roles at Dunmore. Before assuming the DTI presidency, Hargrave served as Vice President of Trading at Dunmore upstream Americas LLC in Houston from 2013 to 2016. In that capacity, he was responsible for crude oil and natural gas trading in North and South American markets. He described this role as the position that gave him "deep familiarity with Dunmore's trading culture and risk management frameworks."
Prior Industry Experience. Before joining Dunmore in 2013, Hargrave spent approximately eight years at a major commodity trading firm, where he held progressively senior trading roles focused on European and Middle Eastern crude oil markets. He did not identify the prior employer by name during the interview, though the investigation team is aware from human resources records that the employer was Halcyon Corporation. Hargrave stated that his prior experience gave him "extensive relationships in the Middle East and Central Asian commodity markets," which was one of the reasons Dunmore recruited him to lead the DTI operation.
Direct Reports at DTI. Hargrave identified the following individuals as his direct reports at DTI as of the time of the interview:
• Natasha Sorokin, Senior Trader — responsible for day-to-day management of the trading desk and the team of approximately eight to ten traders.
• Omar Al-Rashidi, Head of Middle East Operations — responsible for business development and client relationships in the Gulf Cooperation Council states and the broader Middle East.
• Yves Leclerc, Director of Logistics & Shipping — responsible for all logistics, shipping, and freight arrangements for DTI's commodity trades and equipment procurement activities.
• Rajesh Malhotra, Controller — responsible for financial reporting, accounts payable and receivable, treasury functions, and payment processing for DTI.
Hargrave stated that DTI employed approximately 45 total staff, including traders, operations personnel, administrative staff, and support functions. He noted that DTI did not have a dedicated compliance officer stationed in Dubai during the relevant period, a point discussed further in Section VIII below.
III. Overview of DTI Trading Desk Operations
Hargrave was asked to describe the general nature and scope of DTI's business activities. He provided the following overview.
Primary Business Lines. Hargrave described DTI's primary business as crude oil and refined petroleum products trading. DTI operated as the principal international trading arm for Dunmore Energy Holdings Ltd. outside of the Americas. He stated that DTI's trading activities encompassed spot and term purchases and sales of crude oil, as well as derivative transactions including swaps and options linked to benchmark crude oil indices (principally ICE Brent). In addition to commodity trading, DTI maintained a secondary business line focused on oilfield equipment procurement and logistics for Dunmore's global operations, including sourcing drilling equipment, well-completion tools, and related components from manufacturers and suppliers worldwide and arranging for their delivery to Dunmore operating sites.
Annual Trading Volume. Hargrave estimated that DTI handled approximately $1.5 billion to $2 billion in annual commodity transaction volume in fiscal year 2021. He described this as representing roughly 30 to 40 percent of Dunmore Energy Holdings Ltd.'s total consolidated revenue. He stated that the trading volume had grown significantly since he assumed the DTI presidency in 2017, driven by expansion into new markets and the addition of trading personnel, including Natasha Sorokin's hire in 2018.
Key Markets. Hargrave identified DTI's key geographic markets as the Middle East (including the Gulf Cooperation Council states, Iraq, and Iran's non-sanctioned petroleum activities), Central Asia (principally Kazakhstan and Turkmenistan), West Africa (Nigeria, Angola, and Ghana), and European markets (including the Netherlands, the United Kingdom, and Germany). He stated that Russian-origin crude oil became an increasingly important part of DTI's portfolio beginning in approximately 2019 to 2020, driven in large part by Sorokin's market knowledge and relationships.
Trading Desk Structure. The DTI trading desk employed approximately eight to ten traders at any given time, all of whom reported to Natasha Sorokin as Senior Trader. Sorokin in turn reported directly to Hargrave. Hargrave described the desk as organized by product and geography, with individual traders assigned responsibility for specific crude oil grades or geographic markets. He stated that Sorokin maintained primary responsibility for Russian and CIS-origin crude oil trading, leveraging her language skills, market relationships, and prior professional experience.
Approval Authority and Internal Controls. Hargrave stated that all commodity trades with a notional value exceeding $5 million required his personal sign-off before execution. He described the approval process as involving a review of the trade ticket, which set forth the counterparty, commodity grade, volume, pricing, delivery terms, and settlement instructions. Hargrave stated that he would review the trade ticket, confirm that the counterparty had been onboarded and screened, and then provide his approval either by initialing a physical document or by electronic approval through DTI's trading platform.
For trades with a notional value exceeding $25 million, Hargrave stated that additional approval was required from either CEO Callum Renshaw or CFO Sandra Whitfield in Houston. He described this as a "dual-approval" process designed to ensure that large-value transactions received appropriate senior management oversight. Hargrave stated that the $25 million threshold was established in a trading authority matrix approved by Dunmore's board of directors, though he could not recall the precise date of the most recent version of that matrix.
Banking Relationships. Hargrave confirmed that DTI's primary trade finance bank was Crescent Commercial Bank PJSC, a UAE-based commercial bank headquartered in Dubai. He identified Khalid Mansour as DTI's relationship manager at Crescent Bank. Hargrave stated that Crescent Bank provided DTI with a range of trade finance services, including letters of credit, pre-export finance facilities, documentary collections, and wire transfer services. Virtually all of DTI's trade-related payments were processed through accounts maintained at Crescent Bank. Hargrave stated that the banking relationship predated his arrival at DTI and that Crescent Bank was selected based on its strong presence in Middle Eastern commodity trade finance.
IV. Relationship with Petronova Trading FZE
A. How the Relationship Began
Hargrave was asked in detail about DTI's relationship with Petronova Trading FZE. He stated that the relationship originated in approximately late 2019 or early 2020, when Natasha Sorokin introduced Petronova to DTI as a potential counterparty. According to Hargrave, Sorokin described Petronova as a Dubai-based commodity trading house that specialized in Russian and Central Asian crude oil. Sorokin told Hargrave that Petronova had access to competitively priced Urals-grade crude oil and could offer DTI favorable pricing relative to prevailing benchmarks.
Hargrave stated that he met Petronova's Managing Director, Sergei Volkov, at what he described as a "brief introductory meeting" in Dubai in approximately February 2020. He recalled the meeting taking place at a hotel or restaurant in the DIFC area but could not recall the specific venue. He stated that the meeting lasted approximately 30 to 45 minutes and was also attended by Sorokin. Hargrave described the meeting as a "standard get-to-know-you session" in which Volkov described Petronova's trading capabilities and supply access, and Hargrave described DTI's appetite for competitively priced Russian-origin crude oil.
Hargrave described Volkov as a "typical Dubai trader — well-connected, aggressive on pricing." He stated that Volkov appeared to have established relationships with Russian oil producers and was confident in his ability to deliver large volumes at attractive prices. Hargrave did not recall discussing the specific identity of Petronova's upstream suppliers during the introductory meeting.
Following the introductory meeting, Hargrave stated that Sorokin handled the day-to-day relationship with Volkov and Petronova. He described Sorokin as the "point person" for the Petronova account and stated that he did not have regular direct communications with Volkov beyond the initial introduction and occasional encounters at industry events.
B. Due Diligence on Petronova
Hargrave was questioned at length regarding the due diligence conducted on Petronova Trading FZE prior to the commencement of trading. His responses on this topic were notable for their generality and his repeated deflection of responsibility to other personnel and functions within the organization.
When asked what specific due diligence steps were taken before DTI began transacting with Petronova, Hargrave stated that he "relied on the compliance team in Houston" to screen counterparties. He explained that Dunmore maintained a standard counterparty onboarding process that required new trading counterparties to be submitted through a centralized compliance review before they could be approved for trading. Hargrave stated that he understood this process to include, at a minimum, OFAC screening of the counterparty entity and its principals, collection of corporate registration documents and beneficial ownership information, and a review of the counterparty's financial standing.
Hargrave recalled that Petronova was submitted through Dunmore's standard counterparty onboarding process. He stated that the process was typically initiated by the trader proposing the new counterparty — in this case, Sorokin — who would complete a counterparty onboarding form and submit it to the compliance function in Houston for review and approval. Hargrave stated that he understood the onboarding form to require disclosure of the counterparty's legal name, jurisdiction of organization, registered address, principal officers, and beneficial owners.
When asked who was responsible for approving the counterparty once the onboarding process was complete, Hargrave identified Gerald Fisk, then-Chief Compliance Officer of Dunmore Energy Holdings Ltd., as the person with final approval authority over counterparty onboarding. He stated that Fisk would review the onboarding materials, run or review OFAC and other sanctions screening results, and issue a compliance clearance before the counterparty could be added to DTI's approved counterparty list.
Hargrave stated explicitly that he did not personally review the Petronova counterparty onboarding file. He stated that he did not review any OFAC screening results for Petronova or its principals. He said he relied on the fact that Petronova had been cleared through the standard onboarding process and that no compliance holds or flags had been communicated to him.
When asked whether he was aware that Petronova Trading FZE had any connection to Volkhov Industrial Group JSC, Hargrave stated: "Not at the time, no. Sorokin brought them in, and I trusted her assessment. She knew the Russian market." He stated that Sorokin had not disclosed any such connection to him and that he had no independent basis to suspect one.
Hargrave was specifically asked whether he was aware that Sergei Volkov, the Managing Director of Petronova, was related to or affiliated with Arkady Volkhov, the Chairman of Volkhov Industrial Group JSC. Hargrave stated that he was not aware of any such relationship. When the interviewers noted the phonetic and orthographic similarity between the surnames "Volkov" and "Volkhov," Hargrave stated that the similarity "didn't register" with him because, in his words, "Volkov and Volkhov are common Russian surnames." He stated that he did not give the matter any thought and that, in the Dubai commodity trading market, "you deal with hundreds of names and entities." He maintained that the similarity in surnames did not prompt him to make any further inquiries.
When asked whether he ever asked Sorokin about the beneficial ownership of Petronova Trading FZE beyond what was reflected on the counterparty onboarding form, Hargrave stated that he could not recall doing so. He said he "assumed" that the onboarding process had captured the relevant beneficial ownership information and that, if there were any issues, the compliance team would have flagged them.
C. Crude Oil Swap Transactions with Petronova
Hargrave confirmed that DTI executed crude oil swap transactions with Petronova Trading FZE over the period from approximately June 2020 through February 2022. When asked to estimate the total number of transactions, Hargrave stated there were "roughly a dozen, maybe more." This estimate is broadly consistent with the investigation team's findings, which have identified 14 total transactions between DTI and Petronova during this period, with an aggregate notional value of approximately $218.7 million.
During the interview, Hargrave was presented with a summary schedule of the 14 transactions identified by the investigation team. He reviewed the schedule and did not dispute its accuracy. He confirmed that he had signed off on each transaction that exceeded the $5 million approval threshold — which encompassed all 14 transactions — and that he recognized his initials or electronic approval notation on the associated trade tickets.
Hargrave described the nature of the transactions as purchases of Urals-grade crude oil and Brent-linked swap transactions. He explained that in a typical transaction, Petronova would sell crude oil to DTI at a negotiated price linked to the ICE Brent benchmark, and DTI would either take physical delivery of the crude or enter into offsetting swaps to manage its price exposure. Hargrave stated that the transactions were documented under standard ISDA and industry trade confirmation protocols.
When asked about the commercial rationale for the Petronova transactions, Hargrave stated that Petronova offered "very competitive pricing, typically 50–75 cents below benchmark," which generated favorable margins for DTI. He described the pricing as "the primary attraction" of the Petronova relationship and stated that the below-market pricing allowed DTI to generate significant trading profits. He did not express concern during the interview that the aggressive pricing might itself have been a red flag warranting additional scrutiny of the counterparty or its supply chain.
Hargrave was asked about the source of Petronova's crude oil supply. He stated that he understood the crude oil was sourced from "Russian producers" but that he did not inquire further into the specific identity of those producers. He stated that in the international crude oil trading market, it was not unusual for intermediary trading houses to source crude from multiple producers and that the identity of the upstream supplier was not always disclosed to the purchaser. He acknowledged that DTI did not conduct independent verification of Petronova's upstream supply chain.
Hargrave stated that he was not aware that any of the crude oil transacted with Petronova was sourced from or destined for Volkhov Industrial Group-controlled entities until after OFAC added Volkhov Industrial Group JSC to the Specially Designated Nationals and blocked Persons List on April 6, 2022. He maintained that he had no reason to suspect any such connection during the relevant trading period.
V. Relationship with Zenith Petroleum DMCC
Hargrave confirmed that DTI also transacted with Zenith Petroleum DMCC, a Dubai-registered entity managed by Farhan Qureshi, a Pakistani national resident in the UAE. Hargrave stated that Zenith Petroleum was registered at Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE. He described Zenith Petroleum as a "smaller player" in the Dubai petroleum trading market, operating at a significantly smaller scale than Petronova.
Hargrave stated that DTI executed two crude oil swap transactions with Zenith Petroleum DMCC, which he described as "smaller deals, maybe $20–30 million combined." He stated that both transactions involved Brent-linked crude oil swaps and were executed during the same general timeframe as the Petronova transactions, though he could not recall the exact dates without reference to the trade records.
When asked how Zenith Petroleum was introduced to DTI, Hargrave stated that he believed either Sorokin or Omar Al-Rashidi had prior dealings with Qureshi and had recommended Zenith Petroleum as a counterparty. He stated he could not recall which of the two made the introduction. Hargrave stated that he met Qureshi only briefly and did not have a significant personal relationship with him.
Hargrave was asked directly whether he was aware of any connection between Zenith Petroleum DMCC and Volkhov Industrial Group JSC, or between Zenith Petroleum and Petronova Trading FZE. He stated that he was not aware of any such connection. He maintained that, to his knowledge, Zenith Petroleum was an independent trading entity with no ties to either Petronova or Volkhov.
Hargrave confirmed that Zenith Petroleum would have been subject to the same counterparty onboarding and compliance screening process as Petronova. He stated that he did not personally review the Zenith Petroleum onboarding file and relied on the compliance function to screen the counterparty in the ordinary course.
VI. Oilfield Equipment Exports via Caspian Logistik GmbH
A. Background on Equipment Transactions
Hargrave was asked about DTI's involvement in oilfield equipment procurement and export activities. He described DTI's role as facilitating the sourcing and shipment of oilfield drilling equipment and components for Dunmore's global operations. He explained that, in addition to its commodity trading activities, DTI served as a procurement hub for equipment needed by Dunmore operating subsidiaries in various jurisdictions, including Central Asia and the Middle East.
Hargrave identified Yves Leclerc, Director of Logistics & Shipping at DTI, as the person primarily responsible for managing logistics, shipping arrangements, freight forwarding, and customs documentation for equipment exports. He stated that Leclerc had significant experience in international shipping and logistics and that Hargrave relied on Leclerc to ensure that shipments were properly documented and compliant with applicable export control regulations.
Hargrave confirmed that DTI facilitated exports of oilfield drilling equipment and components valued at approximately $12.4 million through Caspian Logistik GmbH, a German-registered logistics and freight forwarding company. He identified Klaus Weidemann as the manager of Caspian Logistik GmbH, with offices at Mönckebergstraße 22, 20095 Hamburg, Germany. He stated that Caspian Logistik was used as a logistics intermediary for shipments transiting through European ports, primarily Hamburg, en route to destinations in Central Asia and Russia.
B. Nature of Equipment and End Users
When asked about the specific types of equipment involved in the Caspian Logistik shipments, Hargrave stated that the shipments included drilling components, well-completion tools, and related parts. He described the equipment in general terms but stated he was not an expert in the technical classifications of the goods.
Hargrave was asked specifically whether he was familiar with the Export Administration Regulations ("EAR") classifications applicable to the equipment, including Export Control Classification Numbers ("ECCNs") 2B350 and 2B999, which relate to certain chemical manufacturing and processing equipment and specialized oilfield equipment, respectively. Hargrave stated that he was not familiar with specific ECCN classifications but acknowledged that some of the equipment "might require export licenses depending on the destination." He stated that the determination of export license requirements was a function handled by Leclerc in coordination with the compliance team, not something he personally assessed.
Hargrave stated that the equipment was destined for "operations in Central Asia and the Russian market," which he described as consistent with Dunmore's broader operational footprint in those regions. He stated that the specific end-users for the equipment were identified on end-user certificates that accompanied the shipments, but that these certificates were prepared and reviewed by Leclerc and the logistics team, not by Hargrave personally.
When asked directly whether he reviewed end-user certificates for the Caspian Logistik shipments, Hargrave stated that he did not. He stated that he relied on Leclerc and the compliance function to ensure that end-user certificates were accurate and that shipments were not directed to prohibited end-users or destinations.
Hargrave stated unequivocally that he did not know whether any of the end-user certifications contained false or misleading information. When shown certain documents obtained by the investigation team suggesting that specific shipments facilitated through Caspian Logistik GmbH were destined for entities connected to Volkhov Industrial Group JSC, Hargrave stated: "I don't recall seeing those documents before, and I wouldn't have approved shipments to a sanctioned entity knowingly." He was visibly taken aback when presented with these documents and paused before responding. He maintained that he had no prior knowledge of any Volkhov connection to the end-users identified in the shipping documentation.
C. Involvement of Dunmore Renewables GmbH
The interviewers asked Hargrave about one specific transaction that appeared to involve both Dunmore Renewables GmbH, a Dunmore subsidiary based in Hamburg, Germany, and Caspian Logistik GmbH. Hargrave stated that he was only "peripherally aware" of this transaction and that it did not originate from DTI's trading desk. He characterized it as "Engel's deal, not mine," referring to Tobias Engel, the Managing Director of Dunmore Renewables GmbH.
Hargrave stated that Engel would have more detailed information about the transaction and its purpose. He said he understood that Dunmore Renewables GmbH had some commercial relationship with Caspian Logistik GmbH independent of DTI and that he did not supervise or direct that relationship. He declined to speculate about the substance of the transaction beyond what he had described and suggested that the investigation team direct its questions to Engel.
VII. Payment Flows through Crescent Commercial Bank PJSC
Hargrave was asked in detail about the payment structure and flows associated with DTI's transactions with Petronova Trading FZE and Zenith Petroleum DMCC. He confirmed that payments for these transactions were processed through DTI's accounts at Crescent Commercial Bank PJSC in Dubai, which was managed by relationship banker Khalid Mansour.
During this portion of the interview, Hargrave was presented with preliminary findings prepared by Ridgeline Advisory Group, the forensic accounting firm retained by Calderwood & Harkness in connection with the investigation (Engagement No. RAG-2022-0319). The Ridgeline preliminary analysis identified approximately $34.2 million in payments across 127 individual transactions between March 2020 and March 2022 that were routed through intermediary accounts at Crescent Commercial Bank before reaching the ultimate beneficiary accounts. The analysis indicated that the payment structuring pattern — involving the use of multiple intermediary accounts with no apparent commercial purpose — was consistent with techniques used to obscure the beneficial ownership of funds or to circumvent sanctions screening protocols.
When presented with these findings, Hargrave stated that he was not aware of the specific structuring pattern identified by Ridgeline. He stated that payment instructions for DTI's transactions were typically prepared by Rajesh Malhotra, DTI's Controller, and were approved by either Hargrave or Sorokin, depending on the transaction amount and the applicable approval authority. Hargrave stated that for payments above certain thresholds — which he recalled as $1 million or $2 million, though he was not certain of the exact figure — his approval was required.
Hargrave acknowledged that he signed wire transfer authorization forms for transactions exceeding the applicable threshold. However, he stated that his review of payment instructions was generally limited to confirming the amount, the counterparty name, and the bank account details on the face of the authorization form. He stated that he did not trace funds to their ultimate beneficiaries and did not inquire into whether intermediary accounts were being used in the payment chain.
When asked why he did not question the use of intermediary accounts in the payment structure, Hargrave stated: "In Dubai, multi-layered payment structures are common in commodity trading." He described the use of intermediary accounts as a feature of the Middle Eastern banking and commodity trading environment and stated that he did not view it as inherently suspicious. He noted that many commodity trading counterparties in the region maintained multiple accounts at different banks for various commercial and operational reasons.
The interviewers pressed Hargrave on whether he was aware that the intermediary account structure may have been designed to obscure the beneficial ownership of Volkhov-connected entities, thereby facilitating transactions that might otherwise have been flagged by sanctions screening systems. Hargrave responded firmly: "Absolutely not. I had no reason to think that." He stated that he was unaware of any connection between the intermediary accounts and Volkhov Industrial Group and that, to his knowledge, the payment flows reflected standard commercial arrangements.
Hargrave was asked whether Rajesh Malhotra ever raised concerns about the payment structuring or the use of intermediary accounts. Hargrave stated that Malhotra did not raise any concerns with him on this topic. He stated that Malhotra was a "detail-oriented" controller who would have flagged irregularities if he had identified them.
The interviewers noted for the record that Hargrave appeared to become less forthcoming during this portion of the interview. While he provided direct answers to most questions, his responses regarding the intermediary account structure were marked by longer pauses, more frequent hedging (e.g., "I don't recall," "I'm not sure"), and a tendency to redirect questions to Malhotra or the compliance function. This observation is noted in Section XII below.
VIII. Knowledge of Sanctions and Compliance Framework
A. OFAC and Sanctions Awareness
Hargrave was asked about his general awareness of U.S. sanctions laws and their applicability to DTI's operations. He stated that he was "generally aware" that U.S. sanctions applied to Dunmore entities and their subsidiaries, including DTI, because of the company's U.S. nexus. He identified several factors that he understood to create U.S. sanctions jurisdiction, including Dunmore Energy Holdings Ltd.'s operational headquarters in Houston, Texas; the existence of Dunmore upstream Americas LLC as a U.S. subsidiary; the employment of U.S. persons within the Dunmore group; and the use of U.S. dollar-denominated transactions that clear through U.S. correspondent banks.
Hargrave stated that he received "annual compliance training" on sanctions and export controls topics. When asked to identify the date or content of the most recent training session he attended, Hargrave could not recall specific details. He stated that the training was typically delivered via an online platform and covered "the basics of OFAC sanctions, anti-money laundering, and anti-corruption." He could not recall whether the training addressed sector-specific sanctions under Executive Order 13662 or the specific compliance obligations arising from DTI's trading activities with Russian-nexus counterparties.
Hargrave was asked specifically whether he was aware that Volkhov Industrial Group JSC was subject to OFAC Directive 2 sectoral sanctions as of November 15, 2019, pursuant to Executive Order 13662, which imposed restrictions on the provision of financing and other support to entities in specified sectors of the Russian economy. Hargrave stated that he was "not specifically aware of that designation" and that he "relied on the compliance team to flag sanctioned parties." He stated that his understanding of the sanctions landscape was at a "high level" and that he did not monitor OFAC designations or updates himself.
Hargrave was further asked whether he was aware of Executive Order 14024, issued on April 15, 2021, which expanded the scope of U.S. sanctions on Russia and provided additional authority for the designation of persons operating in specified sectors of the Russian economy. Hargrave stated that he was not aware of Executive Order 14024 or its specific implications for DTI's trading activities until after the OFAC SDN designation of Volkhov Industrial Group on April 6, 2022. He stated that he became aware of the SDN designation through industry news reports, not through any internal Dunmore communication or compliance alert.
B. Relationship with Gerald Fisk (Former CCO)
Hargrave described his relationship with Gerald Fisk, who served as Chief Compliance Officer of Dunmore Energy Holdings Ltd. during the relevant period, as "cordial but distant." He stated that Fisk was based in Houston and that there was "limited day-to-day interaction" between the DTI trading desk in Dubai and the compliance function in Houston. He attributed this in part to the time zone difference between Dubai and Houston and in part to the organizational structure, which positioned the compliance function as a Houston-based corporate function rather than an embedded function within the trading subsidiary.
Hargrave stated that Fisk visited the DTI Dubai office "perhaps once or twice a year." He described these visits as primarily focused on general compliance program updates and on-site reviews, rather than detailed transaction-level compliance assessments. He could not recall the date of Fisk's most recent visit to Dubai prior to April 2022.
When asked whether Fisk ever raised concerns with Hargrave about the Petronova relationship or any other Russian-nexus transactions, Hargrave stated: "Not that I recall. If he had concerns, he didn't share them with me directly." He stated that he was not aware of any compliance red flags or escalations regarding Petronova Trading FZE or Zenith Petroleum DMCC prior to April 2022. He further stated that he did not receive any communications from Fisk or anyone else in the compliance function suggesting that the Petronova or Zenith Petroleum onboarding files contained any deficiencies or warranted additional scrutiny.
C. OFAC Screening at DTI
Hargrave was asked about the adequacy of DTI's counterparty screening and compliance infrastructure. In a notable moment of candor, Hargrave acknowledged that DTI's counterparty screening was "not as robust as it should have been." He stated that the Dubai office relied primarily on an automated screening tool that was managed and administered from Dunmore's Houston headquarters, with screening results reviewed by Fisk's compliance team in Houston. Hargrave stated that DTI in Dubai did not have its own standalone compliance screening capability and was dependent on the Houston function to process and review screening results.
Hargrave confirmed that there was no dedicated compliance officer stationed at the DTI Dubai office during the relevant period of March 2020 through April 2022. He stated that compliance oversight for DTI was provided remotely from Houston, which he acknowledged created "gaps" in real-time compliance monitoring and oversight. He noted that the absence of a local compliance officer meant that traders such as Sorokin were effectively making counterparty recommendations without the benefit of on-site compliance review or challenge.
When asked whether he had ever recommended or advocated for the hiring of a dedicated compliance officer for the DTI Dubai office, Hargrave stated that he had raised the issue "informally" with CEO Callum Renshaw in approximately late 2021. He stated that he communicated to Renshaw that the DTI office would benefit from a local compliance presence, given the growing volume and complexity of DTI's trading activities. Hargrave stated that Renshaw was receptive to the idea in principle but that "budget constraints" had delayed the hire. He stated that the matter was still under discussion at the time of the Volkhov SDN designation in April 2022. Hargrave did not have written documentation of his recommendation to Renshaw and stated that the conversation occurred verbally, either in person or by phone.
IX. Relationship with Natasha Sorokin
Hargrave was asked about his relationship with and supervision of Natasha Sorokin, DTI's Senior Trader. He described Sorokin as "the best trader on the desk — aggressive, well-connected in the Russian and CIS markets." He stated that Sorokin was a Russian-American dual national who joined DTI in 2018 and quickly established herself as the top revenue producer on the trading desk. He spoke highly of her trading acumen and market knowledge, noting that she brought significant relationships and expertise in the Russian and Central Asian crude oil markets that DTI had previously lacked.
Hargrave confirmed that Sorokin was the "primary architect" of the Petronova Trading FZE relationship. He stated that Sorokin identified Petronova as a potential counterparty, introduced Volkov to Hargrave, and handled the majority of day-to-day communications with Volkov and other Petronova personnel throughout the trading relationship. Hargrave stated that Sorokin was the principal point of contact for trade negotiations, pricing discussions, and logistical coordination with Petronova.
When asked whether he supervised Sorokin's activities closely, Hargrave stated: "I gave her latitude. She produced results. I reviewed the trade tickets and financials, but I didn't monitor her day-to-day communications." He described his supervisory approach as focusing on "outputs rather than inputs" — reviewing trade performance, profitability, and compliance with internal trading limits, rather than closely monitoring the content of Sorokin's communications with counterparties.
Hargrave acknowledged that he was aware Sorokin used encrypted messaging applications, including Meridian Services Inc. and Kestrel Data Systems, for some communications with counterparties and market contacts. He stated that this was "common practice among traders in the region" and that he did not view it as inherently problematic. He stated that he did not instruct Sorokin to refrain from using encrypted messaging applications and did not take steps to ensure that communications conducted through such applications were preserved or archived in accordance with Dunmore's record retention policies. He acknowledged that he was not sure whether Dunmore's record retention policy specifically addressed the use of encrypted messaging applications for business communications.
When asked whether he was aware that Sorokin may have had knowledge of Petronova's connection to Volkhov Industrial Group JSC, Hargrave stated: "If she knew, she didn't tell me." He did not elaborate further on this point and did not speculate about what Sorokin may or may not have known. He maintained that he relied on Sorokin's judgment and that she did not disclose any information that would have caused him to question the Petronova relationship.
X. Events Following April 6, 2022 (OFAC SDN Designation of Volkhov Industrial Group)
Hargrave was asked to describe his actions and awareness in the period following the April 6, 2022 OFAC designation of Volkhov Industrial Group JSC as a Specially Designated National. He provided the following chronology.
Hargrave stated that he first learned of the Volkhov Industrial Group SDN designation from a general industry news alert — he believed it was a notification from an industry newsletter or a news wire service — on or about April 6 or April 7, 2022. He stated that he did not learn of the designation from Dunmore's compliance function or from any internal company communication. He acknowledged that this fact was concerning in retrospect and suggested that it reflected a gap in the company's internal escalation procedures.
Hargrave stated that when he first read the news of the Volkhov SDN designation, he did not immediately connect the designation to DTI's trading relationship with Petronova. He stated that, in his mind, Petronova was an independent Dubai-based trading company managed by Sergei Volkov, and he did not associate Petronova with Volkhov Industrial Group or its chairman, Arkady Volkhov.
Hargrave stated that Gerald Fisk, the Chief Compliance Officer, contacted him on approximately April 12, 2022. He stated that Fisk told him that a screening refresh conducted on April 11, 2022, had identified potential Volkhov exposure in DTI's counterparty portfolio and that Fisk wanted to discuss DTI's transactions with Petronova Trading FZE. Hargrave stated that during this conversation, he told Fisk that Petronova was "a Dubai-based counterparty" and that he was "not aware of any Volkhov connection." He stated that Fisk did not provide him with specific details about the nature of the potential exposure identified in the screening refresh and that the conversation was relatively brief.
Hargrave stated that he was subsequently contacted by Marcus Wellbourne, General Counsel of Dunmore Energy Holdings Ltd., on or about April 14, 2022. Wellbourne informed Hargrave that the company was retaining outside counsel — Calderwood & Harkness LLP — to conduct an internal investigation into potential sanctions and export controls issues, including DTI's transactions with Petronova and related counterparties. Wellbourne instructed Hargrave to cooperate fully with the investigation and to preserve all documents and communications potentially relevant to the matters under review.
Hargrave confirmed that he received a formal litigation hold notice from Dunmore's legal department on April 20, 2022. He stated that he reviewed the litigation hold notice and confirmed his understanding of its requirements. He stated that he took steps to preserve all responsive documents in his possession, custody, or control, including emails, trade records, electronic files, and physical documents maintained at his office in Dubai.
XI. Hargrave's Characterization of His Conduct
Throughout the interview, Hargrave maintained that he did not knowingly transact with sanctioned entities or their affiliates. He was consistent in this position and returned to it multiple times, particularly when confronted with specific documentary evidence or lines of questioning that suggested a greater degree of knowledge or involvement than he acknowledged.
Hargrave attributed the current situation to three principal factors:
1. Sorokin's failure to disclose the Petronova-Volkhov connection. Hargrave stated that Sorokin was the person with the closest relationship to Petronova and Sergei Volkov, and that if anyone within DTI was aware of a connection between Petronova and Volkhov Industrial Group, it would have been Sorokin. He maintained that Sorokin did not disclose any such connection to him at any time.
2. Inadequate compliance infrastructure at DTI in Dubai. Hargrave acknowledged that the absence of a dedicated compliance officer at the DTI Dubai office created a gap in the company's ability to monitor and oversee compliance in real time. He stated that the reliance on remote compliance oversight from Houston was insufficient given the volume and complexity of DTI's trading activities.
3. Gerald Fisk's failure to implement effective OFAC screening protocols and third-party due diligence for DTI counterparties. Hargrave stated that Fisk, as Chief Compliance Officer, bore responsibility for ensuring that the company's sanctions screening and counterparty due diligence processes were adequate. He suggested that Fisk's failure to identify the Petronova-Volkhov connection during the counterparty onboarding process, and his failure to flag the Volkhov Directive 2 sectoral sanctions designation in November 2019 as relevant to DTI's existing counterparty relationships, were significant compliance failures.
Hargrave summarized his position as follows: "I ran the trading desk. I trusted my team and I trusted compliance. If the screening came back clean, I approved the deals." He stated that he viewed his role as focused on the commercial and operational aspects of the trading business and that he relied on the compliance function to serve as a check on counterparty risk.
When asked whether he felt any personal responsibility for the current situation, Hargrave stated: "In hindsight, I should have asked more questions. But at the time, nothing raised a red flag for me." He did not elaborate further on what specific questions he wished he had asked or what information he wished he had sought.
XII. Credibility Assessment and Observations
The following credibility assessment and observations are provided by Victoria Chambers, Responsible Partner, for the internal use of the investigation team and are based on her evaluation of Hargrave's demeanor, responsiveness, and the consistency of his statements with the documentary record developed to date. These observations are attorney work product and are not intended for disclosure outside the investigation team.
General Cooperation. Hargrave was generally cooperative throughout the four-hour-and-fifteen-minute interview. He arrived on time, did not request breaks beyond those offered by the interview team, and answered the majority of questions without objection. He did not invoke any privilege or refuse to answer any question.
Minimization of Oversight Responsibilities. Notwithstanding his general cooperation, Hargrave appeared to minimize his own oversight responsibilities as President of DTI. He repeatedly deflected responsibility for counterparty due diligence, sanctions screening, end-user verification, and payment structuring to subordinates (Sorokin, Leclerc, Malhotra) and to the Houston-based compliance function (Fisk). While it is not uncommon for senior executives to rely on specialized functions for compliance tasks, Hargrave's consistent pattern of deflection — particularly given his position as the most senior executive at DTI with personal sign-off authority over all material transactions — warrants careful scrutiny.
Petronova-Volkhov Connection. Hargrave's claims that he had no knowledge of Petronova's connection to Volkhov Industrial Group are difficult to reconcile with certain documentary evidence identified during the document review. Specifically, trade documents referencing Russian-origin crude oil sourced by "VIG-affiliated producers" have been identified in Hargrave's custodial email collection. These references, if confirmed to relate to Volkhov Industrial Group ("VIG"), would suggest that Hargrave had at least documentary notice of a Petronova-Volkhov connection. This issue must be cross-referenced with the ongoing document review findings, and Hargrave should be confronted with these specific documents in a follow-up interview.
Name Similarity. Hargrave's claim that the phonetic and orthographic similarity between "Volkov" (Petronova's Managing Director) and "Volkhov" (the sanctioned entity's chairman) "didn't register" warrants further scrutiny. While it is true that both surnames are common in Russian, a reasonable executive in Hargrave's position — dealing in Russian-nexus commodity trades and aware of U.S. sanctions on Russian entities — might reasonably be expected to have noticed the similarity and made further inquiries. The credibility of this claim will be tested against the broader body of evidence as the investigation proceeds.
Evasiveness on Payment Flows. Hargrave appeared forthcoming about the general operations of the DTI trading desk and provided detailed answers regarding the organizational structure, trading processes, and commercial rationale for the Petronova transactions. However, he became noticeably less forthcoming and more evasive when questioned about the specific payment routing through Crescent Commercial Bank intermediary accounts. His responses in this area were marked by longer pauses, hedging language, and a pronounced tendency to redirect questions to Rajesh Malhotra (Controller) rather than providing direct answers. This shift in demeanor suggests either a lack of genuine knowledge about the payment flows or discomfort with the line of questioning. Further investigation of the payment flows — including review of Malhotra's records and testimony — will be essential to assessing the accuracy of Hargrave's statements.
Reliance on Sorokin. Hargrave's heavy reliance on Sorokin as both the originator and day-to-day manager of the Petronova relationship, combined with his admitted lack of supervision over Sorokin's communications, raises significant questions about the adequacy of his oversight. His acknowledgment that Sorokin used encrypted messaging applications for counterparty communications, without any effort to monitor or archive those communications, is of particular concern and suggests a supervisory environment in which a subordinate trader could maintain undisclosed relationships or information without detection.
Recommendation. It is recommended that Hargrave be re-interviewed after completion of the document review (being conducted by Nexagen Analytics, Project No. NX-DEH-2204) and the forensic accounting analysis being performed by Ridgeline Advisory Group (Engagement No. RAG-2022-0319). A second interview will allow the investigation team to test Hargrave's statements against the full documentary record, including the "VIG-affiliated producers" references, payment flow analyses, and any communications recovered from Sorokin's custodial collection.
Note Regarding Personal Counsel. Based on the trajectory of the investigation and the information gathered to date, it appears increasingly likely that the interests of Derek Hargrave and those of Dunmore Energy Holdings Ltd. may diverge as the investigation proceeds. Hargrave may benefit significantly from retaining personal counsel to advise him in connection with any further interviews and with respect to his potential individual exposure. Consistent with the Upjohn protocol, this observation was not communicated to Hargrave during the interview. The investigation team should consult with Marcus Wellbourne regarding whether and how to address this issue going forward.
XIII. Documents Reviewed During the Interview
The following documents were shown to or discussed with Hargrave during the course of the May 25, 2022 interview:
1. Summary Schedule of Crude Oil Swap Transactions. A tabular summary prepared by the investigation team identifying 14 crude oil swap transactions between DTI and Petronova Trading FZE, and 2 crude oil swap transactions between DTI and Zenith Petroleum DMCC, executed during the period from June 2020 through February 2022, with an aggregate notional value of approximately $218.7 million. The schedule included transaction dates, counterparty names, commodity grades, notional values, and settlement terms.
2. Sample Trade Tickets. Representative trade tickets for selected transactions from the above schedule, bearing Hargrave's electronic approval notations or initials. Hargrave confirmed recognition of his approval markings on each trade ticket presented.
3. Petronova Trading FZE Counterparty Onboarding File. The counterparty onboarding file for Petronova Trading FZE, including the completed counterparty onboarding form, corporate registration documents, and OFAC screening results dated approximately early 2020. Hargrave confirmed he had not previously reviewed this file personally.
4. Preliminary Excerpts from Crescent Commercial Bank PJSC Wire Transfer Records. Preliminary extracts of wire transfer records obtained from Crescent Commercial Bank PJSC and provided to the investigation team by Ridgeline Advisory Group. The excerpts highlighted the intermediary account structure identified in Ridgeline's preliminary analysis, including the $34.2 million in payments across 127 individual transactions.
5. Sample End-User Certificates for Caspian Logistik GmbH Equipment Shipments. End-user certificates associated with selected oilfield equipment shipments facilitated through Caspian Logistik GmbH. Certain certificates contained references to end-users that the investigation team has identified as potentially connected to Volkhov Industrial Group JSC.
6. DTI Organizational Chart (Q1 2022). The organizational chart for Dunmore Trading International Ltd. as of the first quarter of 2022, reflecting the reporting structure described by Hargrave during the interview.
All documents presented to Hargrave during the interview are maintained in the investigation team's secure document repository under Matter No. 1016-00009, Interview Subfolder (Hargrave — May 25, 2022).
XIV. Follow-Up Items and Open Questions
Based on the substance of Hargrave's interview, the following follow-up items and open questions have been identified for further investigation:
1. Cross-reference with Natasha Sorokin interview. Hargrave's statements regarding Sorokin's role as the "primary architect" of the Petronova relationship, her handling of day-to-day communications with Sergei Volkov, and her alleged failure to disclose any Petronova-Volkhov connection must be tested against Sorokin's own account. Sorokin's interview is currently scheduled for June 2, 2022.
2. Hargrave's personal communications with Sergei Volkov. Obtain and review Hargrave's personal email, text messages, and encrypted messaging application records (including Meridian Services Inc. and Kestrel Data Systems) for any direct communications with Sergei Volkov that bypassed Sorokin. Hargrave's claim that he did not have regular direct communications with Volkov should be verified against the electronic record.
3. "VIG-affiliated producers" references in Hargrave's custodial collection. Review and analyze the specific documents found in Hargrave's custodial email collection that reference "VIG-affiliated producers" as the source of crude oil in connection with Petronova transactions. These documents are potentially the most significant evidence bearing on Hargrave's claimed lack of knowledge of the Petronova-Volkhov connection. The results of this analysis should be used to prepare targeted questions for Hargrave's re-interview.
4. Gerald Fisk interview — compliance escalations. Confirm with Gerald Fisk whether Fisk raised any compliance concerns with Hargrave regarding Petronova Trading FZE, Zenith Petroleum DMCC, or Russian-nexus transactions at any time prior to April 2022. Fisk's interview is currently scheduled for June 8, 2022. Catherine Blackthorn of Blackthorn & Associates LLP will attend as Fisk's personal counsel.
5. Rajesh Malhotra — payment authorization protocols. Obtain Rajesh Malhotra's records regarding payment authorization protocols at DTI, including the specific procedures for preparing and approving wire transfer instructions. Determine whether Malhotra provided Hargrave with reports or documentation that disclosed the use of intermediary accounts in the payment chain for Petronova and Zenith Petroleum transactions.
6. Callum Renshaw — compliance officer recommendation. Analyze Hargrave's claim that he raised the need for a dedicated compliance officer at DTI's Dubai office with CEO Callum Renshaw in approximately late 2021. Cross-check this claim against Renshaw's interview memorandum. Renshaw's interview was conducted on May 23, 2022, and the memorandum should be reviewed for any corroboration or contradiction of Hargrave's account.
7. Schedule re-interview of Hargrave. A second-round interview of Hargrave should be scheduled for August or September 2022. By that time, the forensic accounting results from Ridgeline Advisory Group (Engagement No. RAG-2022-0319) should be available, and the document review being conducted by Nexagen Analytics (Project No. NX-DEH-2204) should be substantially complete. The re-interview should be designed to test Hargrave's statements against the full body of documentary and financial evidence.
8. Individual exposure assessment. Assess Hargrave's potential individual exposure under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, and the Export Control Reform Act of 2018 ("ECRA"), 50 U.S.C. §§ 4801–4852, in light of his U.S. permanent resident status, his personal approval authority over the DTI transactions at issue, and the evidence developed to date. This assessment should be conducted in coordination with the broader DOJ engagement strategy for the investigat

ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

MEMORANDUM OF INTERVIEW

Record

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