The wire transfer was just one of millions that ricochet through the global financial system every day. Starting at the Zurich branch of a Russian state bank, $800 million zipped through Citigroup Inc. in New York before landing in a small bank in Lebanon.
The payment came from Russian oil giant Rosneft PJSC –- a loan to the cash-strapped government of the breakaway region of Kurdistan in northern Iraq that would be repaid with barrels of crude.
It was the opening tranche of a $6 billion torrent of cash that made a similar journey over the next two years. But the account didn’t belong to the Kurdish government. The money flowed to a company registered in the tax haven of Belize, with a mailing address in Cyprus, and controlled by a Pakistani-born businessman: Murtaza Lakhani.
The SWIFT wire instruction showing the $800 million payment from Rosneft Trading into the account that Murtaza Lakhani’s company IMMS Ltd had at Bankmed in Lebanon, via Citibank in New York.
A veteran of the oil industry’s most challenging jurisdictions, Lakhani was using his company’s account at Lebanon’s BankMed SAL as the clearing house for Kurdistan’s new-found oil wealth.
Disclosed as part of a lawsuit, the billions of dollars that flowed in and out of the account offer a rare window into the inner workings of the global oil trade.
It’s a tale of petrodollars and power in the Middle East, linking the world’s largest commodity traders with local politicians, the Kremlin and even the family of Lebanon’s former prime minister. The lawsuit, a dispute between Lakhani’s company and BankMed, provides hundreds of pages of wire transfers, emails, and ledgers, providing a payment-by-payment insight into his role at the heart of one of the hottest oil trades in recent years: selling Kurdish crude.
Lakhani’s relationship with the Kurdish government was extraordinary for a private individual. Through his company, IMMS Ltd., Lakhani handled payments from Rosneft and oil traders like Vitol Group and Trafigura Group; he made payments for foreign companies to which the Kurdistan Regional Government owed money; and he transferred hundreds of millions of dollars to the Kurdish finance ministry itself.
The set-up may spur campaigners to amplify calls for greater transparency in the oil industry. It remains unclear how much money Lakhani was making from handling Kurdistan’s cash flows. The use of the BankMed accounts has also exacerbated the region’s economic woes because a banking crisis in Lebanon left some of the funds marooned in Lakhani’s company’s account.
“Oil trading remains secretive in far too many countries, which creates space for potential controversies such as this one,” said Alexandra Gillies, an adviser at the Natural Resource Governance Institute. “The trading companies and the governments involved have a responsibility to be more transparent and follow due process.”
The Kurdish Ministry of Natural Resources said in a statement that it agreed to use IMMS’s account in 2017 because it had “no other viable options.” Lakhani’s company was “only a service provider and is only paid fees by the KRG according to its contract.”
A spokesman for Lakhani said that all banking transactions carried out by IMMS on behalf of the Kurdish government were instructed, approved and countersigned by the Kurdish Ministry of Natural Resources. “These operations were always done in full compliance with local laws and regulations and with full transparency between all parties,” the spokesman said.
For the trading companies that dealt with him, Lakhani is an awkward counterpoint to the recent trend of publicly disavowing the use of middlemen, or “agents.” In private, the traders argue that Lakhani wasn’t their man: he was the agent of the Kurds, and they paid through him because the Kurdish authorities instructed them to do so. The size of the deals suggests they had few qualms. In just one three-month period last year, Vitol, Trafigura and smaller trading house Petraco Oil Group paid a combined total of more than $1 billion into the account of Lakhani’s company, according to data disclosed in the lawsuit.
Trafigura and Petraco declined to comment, while Vitol said it had stringent controls to ensure compliance with all laws and regulations.
For Lakhani, playing middleman for the Kurdish government reprised a role he’d perfected over his career.
The 58-year-old businessman has been working in hot spots of the oil trading world for decades. Known for his wide network of contacts, he is equally at home in the discreet world of Swiss finance as the oil fields of Iraq.
Asked a few years ago to describe his role in the oil industry, he told the Financial Times: “I get my hands dirty.” (Lakhani’s spokesman said that he had meant he was “prepared to work hard in a ‘hands on’ manner, often in a small team.”) Despite his role at the heart of some of the world’s hottest oil deals, however, he eschews the limelight, only occasionally speaking in public and rarely allowing himself to be photographed.
Born in Karachi in 1962 but raised in England and Canada, Lakhani began his career in commodities helping with his family business trading rice, cotton and wheat. On an old personal web page, he said that in the 1980s he “moved his focus to oil trading, concentrating on some of the most challenging markets in the world.”
Soon, that meant Iraq under Saddam Hussein, working as an agent for Glencore Plc, the world’s largest commodity trader. Describing himself as Glencore’s “man in Baghdad,” Lakhani received a monthly fee of $5,000 to help the company buy Iraqi crude.
At the time, Iraq could only sell its crude via a system known as the oil-for-food program, administered by the United Nations. But with demand for oil booming, Saddam found a loophole in the early 2000s, asking traders to pay a surcharge to his government outside the UN system.
A later investigation into the oil-for-food program found that Lakhani paid just over $1 million in surcharges for crude that was ultimately bought by Glencore, despite UN staff issuing warnings to traders that paying the surcharges was illegal. Lakhani himself provided UN investigators receipts for cash he’d received from Glencore –- as much as $415,000 on one occasion –- which he then transported across Switzerland before delivering it to the Iraqi diplomatic mission in Geneva.
“Mr. Lakhani was asked to attend interviews with the U.S. government to assist it with its investigation, and voluntarily provided his assistance,” Lakhani’s spokesman said. “Since 2006, Mr. Lakhani has had no further involvement with this matter.” Glencore declined to comment.
Neither Lakhani nor Glencore was ever charged with any wrongdoing in the oil-for-food affair.
More recently, he expanded his oil trading business, recruiting grandees to the boards of his various companies including Simon Murray, the former Glencore chairman, and Charles Guthrie, who’d been the most senior general in the British army.
One of his latest ventures has involved another difficult oil producer: Venezuela. For several months in 2019 and 2020, Lakhani’s company helped to ship Venezuelan crude through an obscure route — his tankers picked up the oil half way through its voyage, via a ship-to-ship transfer off the west coast of Africa. After Washington slapped sanctions on Rosneft Trading SA, one of the major shippers of Venezuelan oil, one of Lakhani’s companies, Mercantile & Maritime, said it planned to end the business linked to the country.
Lakhani’s spokesman said the Venezuelan deals were fully compliant with international law.