A/S United Shipping & Trading Company, the parent firm of group company Bunker Holding A/S, on Wednesday (29 December) released a statement indicating its decision not to appeal the verdict against its entities which were indicted of having breached EU sanctions in Syria:
In the judgement that was delivered on December 14th in the city court of Odense, the court found that Dan-Bunkering’s Russian branch should have known that the company’s Russian clients would likely use the fuel in violation of EU sanctions against Syria. The court also found that Bunker Holding and its CEO had acted with unintentional negligence in regard to trades made in the spring of 2017. The court did not find that the companies had acted with direct intent to violate EU sanctions or that Bunker Holding and its CEO had acted intentionally to breach EU sanctions.
Bunker Holding, Keld R. Demant and Dan-Bunkering acknowledge the decision of the court and have decided not to appeal the verdict.
Putting an end to a complicated case
“Through the entire case the companies have expected to be acquitted so we are surprised by the verdict. However, we have decided not to appeal the ruling because we want to put an end to the case. From the outset we have taken the accusations very seriously and we accept the outcome of the legal proceedings”, says Klaus Nyborg, vice chairman of the board of directors at Bunker Holding.
This is a very complicated case, which is also reflected in the fact that the judges were not able to reach consensus on Dan-Bunkering’s level of intent.
The judgement shows that it is no longer sufficient to screen trades against direct counterparties. Rather it points out the need to check your customers counterparts, even including several links downstream, in order to control the usage of the product being sold.
Comprehensive compliance system and procedures
Bunker Holding has traded in oil products to global customers for more than 40 years and is today the world’s largest bunker company. Since the company was founded, Bunker Holding and subsidiaries have operated in accordance with international sanctions and continuously expanded its capabilities as the requirements for sanctions compliance have increased. In the latter years the development and expansion of the company’s compliance system and procedures have been intensified significantly and Bunker Holding’s compliance system is today regarded among the best in the shipping industry.
The system checks more than 100,000 trades per year against international sanctions lists and media information while using Big Data and artificial intelligence to follow sailing patterns and the use of AIS trackers. Based on this, the system flags specific trades and can stop trades if it identifies unusual trading and payment patterns.
Since 2017 Bunker Holding has strengthened and centralised its global compliance team to ensure that the group’s compliance procedures function optimally. Bunker Holding has also further expanded its internal compliance training program for all employees in the group. Everyone undergoes annual mandatory training and newly hired traders must complete intensive onboarding training when joining the company. The compliance department also conducts training tailored for the specific needs of local offices based on their trading patterns and customers.
In the verdict, which is the first sanctions case brought against the company in its more than 40-years history, none of the counterparties that Dan-Bunkering were involved with has ever been on the EU’s sanctions list. As a result, the verdict highlights how difficult it has become to navigate international sanctions and underlines the importance of continuously improving internal training, systems and monitoring.
Strong support from customers and business partners also after the verdict
Bunker Holding and Dan-Bunkering have experienced continued strong and unchanged support from customers, suppliers, banks, and credit insurance companies as well as confidence in the compliance system and procedures that Bunker Holding has built over the years. The group’s compliance set-up is regularly evaluated and validated by external, international experts in the field.
Full trust in CEO
Contrary to Bunker Holding’s expectations, CEO Keld R. Demant received a suspended sentence for acting with unintentional negligence. The court did not find that he had acted with direct intent or intentionally had acted in breach of EU sanctions. Keld R. Demant accepts the verdict and has decided not to appeal.
“Keld R. Demant has the full and unchanged support of the board of directors and the ownership and will continue as the CEO of Bunker Holding”, says Klaus Nyborg. Torben Østergaard-Nielsen, chairman of the board of directors at Bunker Holding and co-owner of the company, also expresses his full support of Keld R. Demant.
We must learn from this case
For Torben Østergaard-Nielsen it is crucial that everyone within Bunker Holding learns from the case.
“It is a core value for me and the entire Bunker Holding group that we act with decency in everything we do. I regard this entire case and the fact that the court reached the conclusion that EU sanctions have been breached with the utmost gravity. This case simply does not reflect the values or the culture that we stand for and that we are known for. It has obviously been a serious matter for Dan-Bunkering and Bunker Holding, but certainly also for me personally. Bunker Holding is the world’s largest bunker company, and as such we have an obligation to take the lead in compliance and set the highest standards for ourselves to ensure that the company at all times abides by all trade sanctions”, says Torben Østergaard-Nielsen.
Note: Earlier Manifold Times coverage regarding Bunker Holding/Dan-Bunkering’s breaches of EU sanctions can be found below:
Related: Statement regarding the city court of Odense’s ruling against Dan-Bunkering, Bunker Holding and CEO
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Photo credit: Bunker Holding
Published: 29 December, 2021
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‘We will now take the necessary time to consider and evaluate the verdict and the premises of the verdict thoroughly before making any decision of whether to appeal to a higher court,’ informs company.
Dan-Bunkering was fined USD 4.56 million; Bunker Holding received a USD 610,000 penalty while its CEO Keld R Demant faces a conditional prison sentence of four months in prison, according to court judgement.