TWO CYPRUS-LINKED companies and a Norwegian tycoon with Cypriot citizenship are at the centre of one of the biggest-ever crackdowns by US regulators on oil price manipulation, it emerged yesterday.
Regulators are suing two well-known traders and two trading firms owned by Norwegian billionaire John Fredriksen for allegedly making $50 million by squeezing markets in 2008.
The US Commodity Futures Trading Commission said traders James Dyer of Parnon Energy, and Nick Wildgoose of Arcadia Energy, amassed large physical positions at a key US trading hub to create the impression of tight supplies that would boost oil prices.
Later they dumped those barrels back onto the market, causing prices to crash and racking up profits from short positions they had accrued in futures markets, according to the suit, which is seeking $150 million.
Both Parnon and Arcadia are controlled by Fredriksen’s Farahead Holdings, based in Limassol.
A lawyer for Farahead yesterday did not wish to comment on the allegations when questioned by the Cyprus Mail.
Fredriksen’s energy empire also includes liquefied natural gas company Golar Energy, which put in a bid to produce Liquefied Natural Gas (LNG) for Cyprus on an offshore plant, which it was willing to fully finance.
But Golar’s initial license was rescinded by the energy regulator. The company was caught in limbo because of a law that gives what is essentially a monopoly over the purchase and supply of LNG to a corporation jointly owned by the state and the EAC. Golar has taken the government to court.
Forbes magazine has named Fredriksen as among the world’s 100 richest billionaires with an estimated fortune of $10.7 billion.
Fredriksen, was Norway’s richest man before gaining Cypriot citizenship in 2006 after 20 years association with the island. Reports at the time suggested the “modern-day Onassis” made the move to avoid high taxation in Norway, while the favourable laws on inheritance tax also reportedly played a part. Fredriksen, 67, is said to lead a very low-profile existence.
According to reports, Fredriksen made his fortune during the Iran-Iraq wars in the 1980s when his tankers picked up oil at great risk and huge profits. As described by his biographer, “he was the lifeline to the Ayatollah”.
Born on Oslo’s east side, the son of a welder, Fredriksen began as a trainee in a ship-brokering company, and is now the world’s largest tanker owner, with more than 70 oil tankers and major interests in oil rigs and fish farming.
His fleet is dominated by double-hulled, environmentally safer tankers. He is married with two daughters, and collects classic Norwegian art, and reportedly turned down an offer of $190m from Chelsea Football Club owner Roman Abramovich for his Chelsea home. As well as Cyprus and London he also has homes in Oslo and Marbella in Spain.
After granting Cypriot citizenship to the shipping billionaire, cabinet decided to formalise the procedure of granting citizenship “by exception” in 2007.
Within two years of setting the exception to the rules on normal procedures for granting citizenship, the state employed the practice 26 times for foreign millionaires, the majority being Russian, though other nationalities included Ukrainian and Cuban.
Citizenship by exception effectively means having enough money to jump the queue, although the authorities insist it’s a bit more complex than that, with athletes and those in the entertainment industry also eligible.
One requirement is that a person must have at least €17 million deposited in a Cypriot bank with a five-year restriction on withdrawals or that a company has an annual turnover of €85 million.
