Commodities trading companies with headquarters in Europe are increasingly coming into the crosshairs for their business relationships involving Russian interests, allegedly engaging in the facilitation of sanctions evasion in addition to other illegal trading activities related to Russia’s war in Ukraine. Swiss authorities have taken the brunt of international criticism for the country’s mirky legal landscape that has allowed companies and their owners to hide ownership records and profits from the public eye for decades. Recent investigations conducted by Swiss journalists uncovered a trail of breadcrumbs that implicated a Geneva-based company—Paramount Energy & Commodities SA—and its owner, Niels Troost, in a sanctions evasions scandal involving Russian crude, currently being investigated by government authorities in Switzerland.
While the G7 and a wider Western-imposed price cap on Russian oil has been at the center of attention when it comes to the economic pressure exercised by European countries—which Switzerland also participates in—commodities trading in grains would also merit closer investigation. While trade in wheat is exempt from international sanctions due to humanitarian reasons, this very exception might serve as a cloak for hiding illegal activities.
Russian trade in grains is not suspicious in and of itself. As the foremost exporter of the commodity in the world, various countries have relied on Russian deliveries for mitigating general domestic demand or climate change-induced shortages for decades. A notable but unsurprising development since the West joined forces to put pressure on Russia for its invasion of Ukraine is that trade cooperation between Western-sanctioned countries of the world has increased. This includes proliferating business ties between Russia on the one hand, and Syria and Iran on the other, with the latter two under sweeping Western sanctions for their own separate reasons.
Much more problematic than this marriage of convenience is trade in stolen grain from Ukraine, which is in the top 5 wheat exporting countries in the world, alongside Russia. A Chatham House report highlights that Russian grain exports to Syria have dramatically increased since Moscow annexed the Crimean Peninsula in 2014. Even more significant, however, is Russia’s theft of grain from Ukraine’s now-occupied eastern provinces, where Moscow set up trading companies and seized control of roads, railways and ports for the export of wheat. By the end of the first year of the war in Ukraine, Bloomberg assessed that Russia had stolen up to 6 million tons of wheat amounting to nearly $1 billion in value.
A staggering 80% of the world’s grains are traded through five companies based in Switzerland’s Geneva region according to the Swiss Trading and Shipping Association. Ukrainian grain without a Ukrainian certificate of origin is technically covered by the scope of the West’s list of sanctions, but enforcing this remains difficult. Once on international waters, grain from Russia and grain from Ukraine cannot feasibly be told apart. In addition to this, grain deliveries to third countries that do not enter Switzerland—as virtually all of such deliveries—are not covered by the country’s sanctions.
These trading activities are currently examined by international lawyers who try to argue that Switzerland’s turning a blind eye to trade in plundered goods might constitute a case of guilt by associated to what is considered as a war crime. While the practical issues of identifying stolen grain remain a serious hindrance to enforcing sanctions, more due diligence is required on the part of authorities, especially when it comes to suspect trading firms.
Trading firms that are involved in selling both grains and oil, especially those originating from Russia, might serve as appropriate candidates for such due diligence efforts. Harvest Group SA is one of the large commodities trading firms based out of Switzerland that has focused on trade in wheat, corn, and barley for most of its history, adding crude oil and oil products to its portfolio in 2024. An investor in the company has been the aforementioned Niels Troost, sanctioned in the UK along with Francois Edouard Mauron, director of Paramount DMCC, the UAE subsidiary of Niels Troost’s Paramount, for sanctions evasion, who are contributing to the construction of Harvest’s own grain houses in southern Ukraine. Harvest’s primary sources of grains have been Russia, Kazakhstan and Ukraine, with an extensive network of infrastructure for the transportation of goods, including partner ports in Russia and Ukraine. The company has not been implicated in a sanctions evasion case in its own…
Read More: Commodities Trading Companies Suspected of Facilitating Russia’s Sanctions