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Putin's blacklisted oligarch ally to cash in on Morrison government's gas-led recovery

Ben Butler
·6-min read
<span>Photograph: Stanislav Krasilnikov/Tass</span>
Photograph: Stanislav Krasilnikov/Tass

A Faberge egg-collecting Russian oligarch who the US has hit with financial sanctions is set to benefit from the Morrison government’s gas-led recovery, it can be revealed.

And a mysterious company registered in secrecy-haven Delaware is also in line to reap dividends if one of the key gas basins the government has earmarked for quick development can be successfully fracked.

Viktor Vekselberg, who was sanctioned in 2018 over a number of matters including Russia’s invasion of Ukraine, and Delaware company Longview Petroleum, the ultimate owners of which are not clear, hold substantial stakes in Falcon Oil & Gas, which is involved in developing a fracking project in the Northern Territory’s Beetaloo basin.

The Beetaloo basin is one of five gas basins flagged for “unlocking” by the resources minister, Keith Pitt, who has set aside $28.3m to come up with “strategic basin plans” to accelerate their development. The move is part of the prime minister Scott Morrison’s plan to help revive the coronavirus-stricken economy through increased domestic gas production.

Related: Q+A: Australia’s fossil fuel industry will collapse within 20 years, Mike Cannon-Brookes says

Falcon is one of several overseas companies identified as standing to benefit from any gas boom by activist groups Publish What You Pay and the Tax Justice Network, which in a new report raised concerns about opaque ownership structures and the use of tax and secrecy jurisdictions in the sector as a whole.

The company, which is registered in Canada but run from Ireland, owns a little under a fifth of a Beetaloo basin exploration project, the rest of which is owned by the company charged with developing it – Australian energy group Origin Energy.

While Origin has yet to identify how much gas might be available in the exploration area, the sub-basin of which it is part has previously been identified by the NT government as the richest in the territory, containing about 70% of its gas.

Pitt and the energy minister, Angus Taylor, visited the Beetaloo basin over the weekend, with Taylor calling it “a world-class resource that has the potential to drive significant development in the Top End to create local jobs and help Australia remain a world leader in gas”.

Pitt last month committed the government to developing a strategic basin plan for the area, which a spokesman for the minister told Guardian Australia would “establish what resource opportunities are present; how we can accelerate, coordinate, and optimise development; and how this will secure gas supplies for Australian manufacturing and provide jobs for Australian workers and opportunity for Australian businesses”.

However, environment groups and Indigenous traditional landowners have long been concerned about the effect fracking the area might have on the water table.

Indigenous groups, assisted by activist group GetUp, raised concerns about the project at last year’s Origin shareholder meeting and did so again at this year’s AGM on Tuesday.

“Origin has not tried to seek consent for fracking from the traditional owners, and we will never give it,” said Naomi Wilfred, an Alawa traditional owner whose country covers the northern part of the project.

An Origin spokesman said the company worked closely with traditional owners to determine drill sites and was not exploring for gas in the area covered by Wilfred’s claim.

A motion put up by the Australasian Centre for Corporate Responsibility calling on Origin to explain its arrangements with Beetaloo’s traditional owners failed, with 88% of votes cast against.

Last year, a South African commission of inquiry investigating bribery and fraud in the country’s government heard allegations from one individual that Falcon offered a South African company a facilities management contract in return for help getting the country’s prime minister to loosen fracking laws.

Falcon’s chief executive, Philip O’Quigley denied the allegations, the Irish Times reported, and the South African inquiry has not made any findings against Falcon.

A Vekselberg-controlled company called Lamesa Holdings owns 16% of Falcon, making it the company’s biggest shareholder. Another Russian businessman, Maxim Mayorets, who was formerly on the board of Vekselberg’s best-known corporate vehicle, Renova, also sits on the Falcon board.

Vekselberg, who Forbes values at more than US$11bn, made his fortune from aluminium and is famous for his collection of jewel-encrusted Faberge eggs, which is said to be the largest in the world.

In April 2018, the US treasury named him among seven oligarchs it hit with financial sanctions, freezing their US assets and prohibiting Americans from doing business with them, over a number of matters including the Russian invasion of Ukraine.

Treasury said he was “designated for operating in the energy sector of the Russian Federation economy” and at the same time banned his Renova group.

Falcon’s second-biggest shareholder, owning 6.28%, is an Australian company that has long been associated with the Beetaloo project, Sweetpea Petroleum.

The current owners of Sweetpea, Longview Petroleum, is registered in the US state of Delaware, but it remains unclear who exactly owns Longview.

Delaware has long been one of the world’s top secrecy jurisdictions due to issues including its banking laws and its failure to publicly disclose the shareholders of companies.

However, a US court last year allowed TS Capital, an investment company owned equally by lawyers Robert Telles and David Siegel, to buy Sweetpea from its previous owner, Petrohunter Energy Corporation, which was bankrupt.

It’s unclear how the ownership of Sweetpea came to be in Longview’s hands following TS Capital’s acquisition.

Telles is also Longview’s registered agent in California. He did not respond to questions about Sweetpea’s ownership emailed to him by Guardian Australia at his law firm address.

O’Quigley did not answer Guardian Australia’s detailed questions about Falcon’s ownership structure or the roles of Vekselberg and Mayorets at the company.

In an email, he said Falcon met corporate disclosure rules set down by the Canadian government.

Related: The Coalition's plan to use gas to stimulate manufacturing will fail | Guy Dundas

In its report released this week, Publish What You Pay and the Tax Justice Network raised concerns about the structures of Falcon and other companies in the gas sector and said the Morrison government should rule out using taxpayers’ money to effectively subsidise operators that have unclear ownership or are registered in tax havens.

“The government must introduce a public list of the people who ultimately own and financially benefit from companies,” the director of Publish What You Pay, Clancy Moore, said.

“Unfortunately, the recent open government partnership, led by the Department of the Prime Minister and Cabinet, seems to have slammed the door shut on a beneficial ownership register in Australia.”

The Tax Justice Network spokesman Mark Zirnsak said a beneficial ownership register would help the government ensure it was dealing with reliable people.

“If the companies in question break Australian law, there is a need to know that the ultimate owners can be held to account and not simply vanish behind the veil of an anonymous shell company,” he said.

“The Australian government also has an obligation to ensure the people it is dealing with are not under any sort of international sanctions, which will be impossible if the ultimate ownership is hidden.”