Lebanon files charges against oil firms over alleged Russian fuel scam

Case relates to shipment of fuel oil for Lebanese power plants that was allegedly part of wider scheme to evade sanctions-related price caps

A shipment delivered by the Hawk III tanker in August was investigated by Lebanese authorities. Photo: vesselfinder.com

Lebanon's judiciary has filed charges against several companies and people and issued arrest warrants in connection with an alleged Russian fuel import scheme that may have cost the cash-strapped country tens of millions of dollars, a judicial source told The National.

The Financial Public Prosecution has brought charges against six companies and four people alleged to have forged official documents and engaged in corruption resulting in illicit enrichment, as part of an investigation into a shipment delivered by the Hawk III in August.

The companies include Sahara Energy Resources DMCC, which supplied the shipment; Galileo Trading DMCC, the shipper; and SR Navigation SA, the shipowner, a Panama-registered company based in Greece; and the inspection firms, according to a judicial document seen by The National.

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The prosecution also requested three arrest warrants in person and one in absentia. The investigation is continuing and has been referred to Beirut's first investigative judge.

The companies did not respond to The National’s requests for comment. In a previous statement, however, Sahara Energy said its “contractual obligations for the recent fuel delivery to Lebanon were completed in full” and that it had “no operational control over the vessel”.

The Hawk III, which delivered about 36,000 tonnes of fuel oil for Lebanon’s power plants in August, is suspected of carrying Russian oil disguised as Turkish to inflate prices. Since 2023, the US and EU have capped the price at which Russian oil can be sold to limit Moscow’s ability to fund its war machine.

Based on a leaked contract, The National previously revealed that the Hawk III shipment, which Lebanese authorities believe to be of Russian origin, was sold to the energy-starved country for about $18 million, roughly $7 million above the price cap.

The shipment is allegedly part of a broader sanctions-evasion scheme under which international oil companies sold Russian fuel to Lebanon in breach of Western sanctions, allegedly using fraudulent shipping manifests to conceal its true origin.

The price difference would have cost the cash-strapped country tens of millions of dollars since 2023, according to The National’s calculations, as international traders reportedly billed Lebanon up to 70 per cent above value for Russian fuel imports while pocketing hefty premiums.

It is not known which entities involved in the transactions benefited from the pay-offs.

In September, the Hawk III attempted to slip out of Lebanese waters but was intercepted during a special operation by the Lebanese army. It has remained anchored off the Lebanese coast since.

Procurement violations

The head of the Public Procurement Authority, Jean Ellieh, recommended that the Ministry of Energy exclude Sahara Energy from tenders and procurement processes until a final judgment is issued in the case. His recommendation followed a letter submitted by whistleblower and engineer Fawzi Mechleb.

In a letter to the ministry dated October 20 and seen by The National, Mr Ellieh cited what he described as “the magnitude of the violations”, including “the attempt by the tanker it owns to flee Lebanon, the intervention of the army to stop it”.

Lebanese authorities have taken other measures since the fuel scandal broke this summer.

Sources previously told The National that Energy Minister Joe Saddi ordered the freezing of performance bonds from the companies allegedly involved, including Iplom International. Performance bonds are guarantees that companies present to buyers to ensure completion of a contract.

While other investigations have gathered pace, a separate investigation into BB Energy DMCC, another oil trader suspected of involvement in the scheme, has stalled, an informed source said.

The investigation was launched after Mr Saddi sent a letter to the public prosecutor requesting further inquiry into one of BB Energy’s shipments, amid suspicions that the certificate of origin had been falsified to disguise Russian fuel as Egyptian.

BB Energy has repeatedly denied any wrongdoing, saying in a previous email that it did not conceal the fuel’s origin and that the company is not legally responsible for the vessel’s voyage until its discharge in Lebanon.

The oil was purchased to power plants operated by the state utility, Electricite du Liban, which has been mired in crisis for decades, unable to supply electricity for more than a few hours a day, in a sector described by analysts as hampered by mismanagement and alleged corruption.