Switzerland has launched an investigation into whether Geneva-based oil trader Paramount Energy & Commodities DMCC is evading sanctions against Russia with the help of its overseas subsidiary.
The Financial Times (FT) writes about this, noting that this is one of the first known investigations by a European body into compliance with Western sanctions on Russian oil.
Switzerland has joined the price cap for oil from Russia — $60 per barrel. However, Swiss law generally exempts foreign subsidiaries of a local company from taxation as long as they are "legally independent".
Paramount Energy & Commodities SA, headquartered in Geneva, founded by trader Nils Troost, took advantage of this. Last year, the company transferred its Russian oil trading activity to a company with an almost identical name in the United Arab Emirates.
This company is called Paramount Energy & Commodities DMCC, based in Dubai, and continues to export crude oil from Russia under the name ESPO-blend. As the Financial Times reported in March, the price regularly exceeded the limit of $60 per barrel.
Following this newspaper report, the Swiss State Secretariat for Economic Affairs (the department responsible for sanctions) questioned Paramount SA about its relationship with Paramount DMCC in the UAE and its trade in Russian oil, including prices.
The sanctions were supposed to allow Russian oil to continue flowing to markets outside Europe and the US, but limit the Kremlinʼs income. Because of this, oil traders began to massively move business from European countries to jurisdictions such as Dubai, where Western sanctions are not observed.
Paramount SA told the FT it had answered all questions from the Swiss State Secretariat for Economic Affairs and said it had stopped all transactions with Russian oil "well before any price cap was put in place". It also added that Paramount DMCC is a subsidiary of Paramount SA, but they are "separate legal entities" and "do not share directors".
At the same time, the State Secretariat noted that separate legal structures and directors are not a guarantee that Swiss courts will consider the subsidiary as independent and not subject to the laws of the country.