Ukraine's Interpipe denies violating Iran sanctions

By bne IntelliNews April 24, 2015

bne IntelliNews -

 

Ukraine's Interpipe, owned by oligarch Viktor Pinchuk, has denied allegations in an article in Newsweek magazine that it violated US sanctions by supplying pipes to Iran in 2011-2012.

Pinchuk was confirmed in 2014 as the largest individual contributor to the Clinton Foundation, run by Bill and Hilary Clinton, Newsweek added. At the same time, Hillary Clinton was US Secretary of State between 2009 and 2013, and was responsible for administering the sanctions.

In November 2014, now retired Republican congressman, Steve Stockman questioned the US Treasury in writing on Interpipe’s dealings with Iran. According to Newsweek, Stockman refers in the letter to a “body of evidence” describing “exports from Interpipe to Iranian entities” that “may have contravened US sanctions to Iran”.

The Newsweek article also stated that, "Newsweek has seen declarations and documents from Ukraine that show a series of shipments from Interpipe to Iran in 2011 and 2012, including railway parts and products commonly used in the oil and gas sectors.(…) Interpipe may qualify for penalties."

“Being denied access to US markets and the US banking system could prove catastrophic to Interpipe, given that accountancy giant Ernst & Young has raised questions over its viability,” the Newsweek article concluded.

"Since the information and documents used by Newsweek was not verified with Interpipe, Interpipe is not aware about its source and why Newsweek presumed that the information was reliable," Interpipe said in a statement.

"Interpipe has not violated the sanctions regime on Iran but on the contrary, complied with the sanctions to the letter. Any allegation to the contrary is completely wrong. The alleged “evidence” of alleged “violations,” is either falsified, or the authors have been misled in the interpretation," reads the Interpipe statement.

The controversy may add to Interpipe's already significant financial problems. Interpipe went into default on a Eurobond in November 2013, after failing to recover from the financial crisis of 2008-2009.

The company, which produces pipes for the energy sector and wheels for rolling stock, has been dependent on the Russian market, which it is set to lose because of the breakdown in relations between Ukraine and Russia.

Fitch Ratings expects Interpipe EBITDA to fall by 30% in 2015 because of the further closure of the Russian market to Ukrainian exports. According to Fitch, Interpipe has weak liquidity with only around $15mn in cash and working capital credit lines needing renewal every one to three months.

Interpipe's $200mn Eurobonds have been extended to August 2017, and are secured by shares and property, plant and equipment, according to Fitch.  

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