Danish Court fines Dan-Bunkering over Syria sanctions violations
On Tuesday (14 December 2021), the Court of Odense, Denmark, fined Dan-Bunkering DKK 30 million for violating EU sanctions by selling 172,000 tonnes of jet fuel for use in Syria between 2015 and 2017.
The sales were made to 2 Russian entities in 33 transactions. Its parent company, Bunker Holding, was also fined DKK 4 million, the CEO of Bunker Holding was given a suspended sentence of 4 months’ imprisonment, and DKK 15.65 million worth of profits were seized.
The Court in Odense has ruled in a criminal case against two companies and a director for having, in violation of EU sanctions, delivered a total of approx. 172,000 tonnes of jet fuel for use in Syria. The two companies have been fined while the director has been sentenced to a suspended prison sentence.
The criminal case was more about whether the company T1, which is domiciled in Middelfart, in violation of EU Regulation No. 36/2012 of 18 January 2012 as amended by Regulation No. 1323/2014 of 12 December 2014 on restrictive measures on the basis of the situation in Syria, by a total of 33 trades in the period from October 2015 to May 2017, had intentionally or in the alternative negligently supplied jet fuel for use in Syria, where a civil war was raging during the period. The company T2, which is the parent company of T1, as well as T3, which is chairman of the board of T1 and CEO of T2, were both charged with intentional or subsidiary negligent participation in the last 8 trades in jet fuel that took place in the period from February to May 2017. Previously, the Danish Business Authority had on 23 December 2016 addressed a written inquiry to T1 and announced, among other things. a., that the agency had received a notification about T1's possible involvement in violating sanctions against Syria in the transport of jet fuel, which the agency would investigate further. In this connection, the Danish Business Authority called on T1 to provide information on whether the company had in any way contributed to transporting jet fuel to Syria. In a reply letter of 26 January 2017, T1 informed the Danish Business Authority that the company had not participated in sales, transport of jet fuel, etc. or other prohibited activities in relation to Syria. whether the company had in any way contributed to the transport of jet fuel to Syria. In a reply letter of 26 January 2017, T1 informed the Danish Business Authority that the company had not participated in sales, transport of jet fuel, etc. or other prohibited activities in relation to Syria. whether the company had in any way contributed to the transport of jet fuel to Syria. In a reply letter of 26 January 2017, T1 informed the Danish Business Authority that the company had not participated in sales, transport of jet fuel, etc. or other prohibited activities in relation to Syria.
In all 33 trades, with delivery in the eastern Mediterranean, T1 had sold jet fuel to two Russian companies, each of which was a general agent for the Russian navy. In all cases, the trades were concluded from T1's branch office in Kaliningrad, Russia. At some of the traders, the fuel had been transhipped in space by so-called "ship-to-ship" operations. On the basis of i.a. trade documents, mails, unloading documents and AIS data, the Court found it proved that the Russian companies, after receiving the jet fuel from T1, had delivered the jet fuel in the Syrian port of Port Banias, after which the jet fuel had been used by the Russian air force for military operations in Syria. The Court found that the deliveries objectively constituted infringements of EU sanctions.
The majority of the judges found that T1 for all 33 trades must have realized that it was overwhelmingly probable that the jet fuel would be used by the Russian military in Syria. The majority thus found that T1 for all 33 trades committed a deliberate violation of EU sanctions, emphasizing, among other things, that the trades were entered into by Russian employees at T1's branch office in Kaliningrad, where one must have been aware of the Russian intervention in Syria. It was also emphasized that the two Russian companies had not purchased jet fuel from T1 prior to October 2015, on the amount of jet fuel delivered, and on T1's knowledge that the two companies were general agents of the Russian fleet, which is why the jet fuel should used by the Russian military. The minority of the Court of Appeal found that it was only from September 2016, where one Russian company was sanctioned by the US authorities that T1 committed an intentional violation of EU sanctions. The minority found that T1 had previously negligently violated the sanctions, as the company for these trades should have realized that the Russian companies supplied jet fuel for use in Syria in violation of EU sanctions.
The Court of Appeal unanimously found that both T2 and T3 for the last 8 trades that took place in February to May 2017, had contributed to a negligent violation of EU sanctions, as T2 and T3 after the Danish Business Authority's inquiry to T1 in December 2016 and after the an internal investigation into the group should have realized that the Russian company was supplying jet fuel for use in Syria in violation of EU sanctions, and that T2 and T3 could and should have stopped trading.
The prosecution had demanded that the three defendants be sentenced in accordance with the indictment and argued that T1 should be fined DKK 319 million. DKK corresponding to approx. half of the amount for which jet fuel had been sold (turnover) that T2 should be fined DKK 81 million. according to the same principle for the 8 trades for which this company was charged, and that T3 for the same 8 trades should be punished with imprisonment for 2 years. The defenders had demanded acquittal and had argued that a possible fine to the companies was to be calculated on the basis of the companies' profits from the trades, which amounted to less than 3 per cent. of turnover.
By the Court's ruling, T1 has been fined DKK 30 million. DKK, and T2 has been fined DKK 4 million. Both fines are measured on the basis of the companies' profits from the trades, so that the fine for T1's intentional violation of the rules is measured at approx. double the profit, while the fine for T2's negligent infringement is measured so that it roughly corresponds to the profit of the last 8 trades. T3 has been sentenced to 4 months in prison, which has been made conditional. The Court has hereby emphasized, among other things, that T3 is only punished for a negligent violation of the sanctions, as well as during the case processing time. In addition, T1 has confiscated the dividends from the traders, which have been calculated by the Court to be approx. 15.65 million kr.