Italian regulators probe finances behind Glencore-Rosneft deal

Financial regulators in Rome are examining whether Intesa Sanpaolo’s financing of  Glencore‘s recent investment in Russian oil group Rosneft complies with sanctions imposed on Western companies conducting business with Russian concerns after the annexation of Crimea in 2014, it emerged yesterday.
Two weeks ago, Glencore and its major shareholder the Qatar Investment Authority sovereign wealth fund, agreed to buy a 19.5% stake in the Rosneft oil giant from the Russian authorities. The trouble seems to be that  Intesa Sanpaolo, Italy’s largest bank by market capitalisation, was lined up to provide most of the finance, despite the fact that it too may be subject to  the sanction regime.  
The deal also seems to fly in the face of last week’s decision by EU leaders to extend sanctions by a further six months, and of calls from a grouping of east European EU member states led by Polish Foreign Minister Radoslaw Sikorski to  double the length of the renewal. EU officials examining the investment have contacted national agencies in Italy and the UK  where Glencore has its main stock market listing, to question the investment. 
It is turning into  something of a bad month for Intesa Sanpolo. Last week it was fined $235m fine by US regulators for violating anti-money laundering and bank secrecy laws. Maria Vullo, New York’s main financial regulator, said her department had uncovered “sweeping violations” that required “fundamental changes” to the way Intesa conducted its business.The state’s Department of Financial Services said compliance staff at the bank “utterly mismanaged” transaction monitoring and “repeatedly failed” to stop suspicious transactions. 

Source: FT