Commodities Trading Companies Suspected of Facilitating Russia’s Sanctions Evasion Should Be Under the EU’s Microscope

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.

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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 right, but Troost’s close ties to Russian oligarchs and his placement on the UK’s sanctions list in February, in addition to Harvest’s board documents indicating the involvement of Maurice Taylor, a Swiss-American consultant advising a long list of Russian oil-trading companies, is certainly reason enough to examine the firm in greater depth. All firms found to be contributing to perpetuating Putin’s war of aggression, directly or indirectly should fall under the umbrella of the extensive sanctions which the west has imposed on Russia and its proxies.

Wheat has, similar to Ukraine, long been among Russia’s top export products. It has also been one of the few Russian exports which have received internationally approved allotments to continue trading despite sanctions, as a means of ensuring global food supply, with an emphasis on the global south. This has made the industry a prime target for those evading Western imposed sanctions, who exploit it for circumventing sanctions mechanisms, by for example, swapping grain for oil.

Harvest’s activities in particular appear to be closely aligned with Russian interests. Under the direction of Kazakh businessman Almaz Alsenov and his sister Anel Alsenova and having offices in both Geneva and Dubai—similarly to Troost’s trading company—Harvest was one of the companies that facilitated the export of wheat from Ukraine as part of the Black Sea Grain Initiative. Venturing into the trade of oil, it is apparent that using the same routes, ports and ships, Harvest is exploiting the infrastructure they have in place for trading grain for the trade of sanctioned Russian oil. Looking beyond oil, even their trade in grain warrants further examination as Russia has been revealed to be stealing Ukrainian grain and selling it on the world market as its own, adding to the means through which it exploits its adversary.

Baltic states have been at the forefront of policy efforts to try and limit Russia’s means of profiting from its agricultural sales. While food products are exempt from international sanctions so as not to disrupt supply chains in developing countries that are heavily reliant on imports, some European leaders argue that policymakers should not shy away from imposing sanctions on deliveries to better off countries. The Latvian Parliament was the first to approve a ban on the import of all Russian agricultural products in the EU—an example that Poland followed.

As Switzerland pledged to ramp up legal measures for increased transparency with regard to money laundering and sanctions, more attention must be paid to trading companies and the networks of businesspeople they operate under to make sure that legal schemes in Europe do not work against the sanctions that these countries put in place to combat Russia’s profiting off of the war in Ukraine. As legal principles and normative values often come into conflict with or lack the practical means of implementation, it is up to Western leaders to find a workable solution to the issue.

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