Major Tory donor’s company in talks to finance sanctioned Russian oil giant

The chief executive of Vitol, which avoided huge sums in UK tax, has handed £1m to the Conservative Party

Whitehall Editor

A company run by the one of the Tory Party’s biggest donors is in negotiations to finance a Russian oil company targeted by US sanctions against President Putin.

Vitol, the world’s largest oil trader, is looking to lend Rosneft $2bn in exchange for supplies of refined products over the next five years.

The deal would boost Rosneft’s cash reserves and, if agreed, could help mitigate the effect of US sanctions that wiped five per cent off the its share price when they were announced last week.

Yesterday The Independent revealed that Vitol pays a fraction of the standard UK tax rate for its hugely profitable London operations. Revelations about the firm’s tax arrangements and business dealings in Russia will risk embarrassing David Cameron, who has led calls for tighter sanctions against Moscow despite his own party’s ties with wealthy oligarchs.

Talks on the Rosneft deal began before the downing of Malaysian Airlines flight MH17 and last night the company refused to say whether they were ongoing.

“Our client relationships are confidential,” they said, adding that the “any conflict in which innocent civilians are caught up is tragic”. They said Vitol was, and would remain, “fully compliant with all applicable international laws and regulations”.

Vitol’s chief executive Ian Taylor has given the Tories around £640,000 since 2006 including over £100,000 since July last year alone. Mr Taylor is a director and a significant shareholder in Vitol so would be likely to benefit directly from the deal with Rosneft.

Last year Vitol went into partnership with another trading firm, Glencore, to give another $10bn loan to Rosneft in return for future oil supplies.

The US sanctions proscribe Rosneft from receiving new long-term loans from US banks and investors as well as targeting the company’s chief executive, Igor Sechin, who is close to President Putin.

But they do not prohibit the kind of deal envisaged by Vitol – as long as it is not financed by US banks.

The deal, if it goes ahead, will be deeply embarrassing for David Cameron.

The close links between the two companies mean that the Conservative party is indirectly benefiting from profits made in collaboration with a company with intimate links to the Kremlin.

Mr Cameron has already called on the EU to blacklist the “cronies and oligarchs” around President Putin as part of “new, hard-hitting economic sanctions” in response to the downing of MH17.

This week The Independent reported on internal documents from the company’s London headquarters showing that in the past nine years it has paid an average of just 10.5 per cent tax on its global profits, which totalled nearly $15bn (£8.8bn) over the period.

Vitol achieves this by “confirming” its deals in low-tax Switzerland even if they have been negotiated in London.

While legal, it is a technique for which the internet giant Google was strongly criticised for by the House of Commons Public Accounts Committee.

As one of the Tories’ biggest donors, Mr Taylor has privileged access to David Cameron and other senior Conservative ministers.

The Prime Minister hosted Mr Taylor at a private dinner in Downing Street on 2 November 2011, described as a “social dinner for strong and long-term supporters of the party, with whom the PM has a strong relationship”. In November last year he was invited for dinner at Chequers.

In February the former Tory Energy Minister Charles Hendry MP became a £60,000-a-year Vitol consultant.

Mr Taylor has also been one of the party’s largest and most reliable donors. In the run up to the 2010 election he gave the party £125,000 and since June last year he has given the party £116,000. Overall his donations since 2006 amount to around £1m.

Led by Igor Sechin, a former deputy prime minister of Russia and a close ally of president Vladimir Putin, Rosneft has undertaken a string of acquisitions which have transformed it into the world’s largest listed oil company.

As well as the $55bn purchase of TNK-BP, the company has in the last year bought Itera and Sibneftegas, two significant Russian gas producers, the gas business of Alrosa, the diamond miner, and refineries in Germany and Italy.

The company was targeted by the US for limited sanctions as a direct response to the situation in the Ukraine. It is a possible target for European sanctions as well although most observers believe it will be hard to get agreement among all 28 member states for such dramatic action.

Start your day with The Independent, sign up for daily news emails
Sport
Australia vs New Zealand live
cricket Follow over-by-over coverage as rivals New Zealand and Australia face off
News
Zayn has become the first member to leave One Direction. 'I have to do what feels right in my heart,' he said
peopleWe wince at anguish of fans, but his 1D departure shows the perils of fame in the social media age
Life and Style
Researchers found that just 10 one-minute swill-and-spit sessions are enough to soften tooth enamel and make teeth vulnerable to erosion
health
News
i100
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
The Regent Street Cinema’s projection room in the 1920s
film
News
Leah Devine is only the ninth female to have made the Young Magician of the Year final since the contest began more than 50 years
peopleMeet the 16-year-old who has set her heart on being the first female to win Young Magician of the Year
News
Jonathan Anderson was born in Northern Ireland but now based between London, where he presents a line named JW Anderson
peopleBritish designer Jonathan Anderson is putting his stamp on venerable house Loewe
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing