Senate Foreign Affairs, Defence and Trade Legislation Committee, , 3:24:42 to 3:45:48
Ukrainian community leaders call for an end to 'blood oil' imports and discuss their direct engagement with corporate fuel importers to seek voluntary compliance.
Topics: Trade policy, National security
Speakers: Kateryna Argyrou, Andrew Mencinsky, Hon Sarah Henderson, Raff Ciccone, Unknown Speaker, Senator Raff Ciccone
The committee is now in session and I'd like to welcome representatives from the Australian Federation of Ukrainian Organizations and the Ukrainian Council of New South Wales. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. For the Hansard record, could you please state your full name and the capacity in which you appear
>> Andrew, I'll I'll commence. Andrew Mensinski. I'm the president of the Ukrainian Council of New South Wales.
>> Thank you so much. And to the other witness, please.
>> Hello everybody. My name is Katarina Arru and I am the chair of the Australian Federation of Ukrainian Organizations.
>> Thanks very much, Miss Arju. Uh do you have an opening statement? If so, um could I ask the Ukrainian Council of New South Wales to provide an opening
>> Thank you. Um, look, on behalf of the Ukrainian Council of New South Wales, um, I would like to thank you for the opportunity to make a submission and appear before you today. The UCNSW was established in 1949 and is the principal coordinating body representing Ukrainians across New South Wales. We work to support the Ukrainian community, strengthen engagement with the Australian government and broader public institutions, and promote Ukrainian culture, heritage, and identity. For many Ukraine wars in Australia, as well as for the broader Australian public, the effectiveness of sanctions against the Russian Federation is a critical measure of Australia's commitment to supporting Ukraine's defense and survival in the face of ongoing Russian aggression. While Australia has taken principled action since 2022, sadly, critical gaps persist which blunt the strategic and moral weight of Australia's sanctions and risk reputational harm at home and abroad. I would like to highlight two key gaps uh namely blood oil and and utilization of Russian sovereign assets. So firstly, blood oil. Uh I'm sure that by now the committee is aware of research indicating that Australia has been amongst the largest single bio fuels refined from Russian crude oil in third countries since 20123. These imports are estimated to have delivered $2.5 billion in revenue to the Kremlin which far outweighs the 1.7 billion in aid that has been provided in support to Ukraine. Quite frankly this is appalling. It's um it's shocking. It's unjustifiable and it's unacceptable to every person to whom I speak. This has to stop. Without a ban on such products, Australia remains a significant market for fuels refined from Russian crude oil via India, China, Singapore, and Brunai and weakens the effectiveness of the overall regime. Secondly, I believe there's been discussion today and I'd like to continue it on the utilization of Russian sovereign assets. Euro Clear has repeatedly reported AUD denominated cash balances of approximately $9 billion. Uh with my understanding being that these are debt securities that have expired and since been converted to cash with the cash being held subject to Russian Federation sanctions. Now, it is disappointing that unfortunately the Australian government has taken no visible action to confirm ownership and jurisdiction to these balances and has also taken no visible action to utilize those funds productively towards supporting Ukraine. Uh and I and I can address that later upon questions from the committee. Um the damage caused by Russia's invasion of Ukraine is estimated at US $589 billion almost $1 trillion Australian dollars and the UN General Assembly has affirmed that Russia must pay reparations for this damage. Now, existing legal doctrines uh support the transfer of these frozen frozen Russian assets to benefit Ukraine and the US, UK and Canada have shown support for these transfers. Um it is my submission or our submission that the Australian government should confirm ownership and jurisdiction of these funds and follow the lead of the EU and participate in the transfer of these frozen funds to a trust fund that can be used to benefit Ukraine now and in the future. Now, these estimates of damage, $1 trillion, are so high they're almost incomprehensible. So, I thought what I might do is rather than talk about such huge sums of dollars, I'll I'll actually personalize it. And I'll personalize the cost of Russian aggression, and I'll read a testimonial from OA, a displaced Ukrainian whom I know well, who children are friends with my children. My name is OA. I'm a Ukrainian mother now living in Australia with my family and two young children. We arrived in 2022, forced to flee in search of safety, carrying only our children and hope for survival. Two weeks ago, I've just returned to Ukraine for the first time in almost 4 years. This journey was emotional and painful. Life in Ukraine is incredibly hard. Russia is not only fighting soldiers on the front line, it is deliberately destroying civilian life across the entire country. Often we only had 2 hours of power per day and sometimes none for two full days during freezing winter temperatures. It was dark, cold, and frightening. This suffering is happening everywhere. In cities like Kiev, families with small children survived through constant missile attacks, blackouts, and freezing weather. Hospitals, schools, and infrastructure destroyed. Ukrainian children now live in darkness and fear as part of everyday life. Missiles fall daily across the entire country. There is no safe place. Russia is destroying a nation, families, and the future of millions of children. Every dollar that flows to Russia helps fund more missiles, more destroyed homes, more hospitals in ruins, and more innocent lives lost. Sanctions save lives. When loopholes allow Russia to earn money, families like mine pay the price in fear, hunger, and grief. Please close the loopholes and increase the pressure on Russia so this war can no longer be financed. Regards, OA New Closing my opening u remarks, I acknowledge that Australia has shown leadership in supporting Ukraine. But to match words with effect, the Australian government must close the blood oil sanctions loophole and clarify and utilize frozen frozen Russian assets to benefit Ukraine. These actions would align Australia with our allies, uphold our values, and deny the Russian Federation the revenues it uses to prosecute an illegal genocidal war against Ukraine and Ukrainians.
>> Uh thank you so much, Mr. Machinsky. Uh I'd now like to go to the Australian Federation of Ukrainian Organizations,
>> Thank you, Senator. Um, I would like to acknowledge the comments made by Mr. Mchinsky and also uh say that we support that position. In terms of an opening statement from the Australian Federation of Ukrainian Organizations, um, as chair, I would like to say that I'm here representing an organization that has been working for the benefit of the Ukrainian community in Australia for over 70 years. We have 22 member organizations and are the peak body for the Ukrainian community in Australia. We represent approximately 60,000 people with Ukrainian background and descent. Um, up until recently, the full-scale invasion, Russia's full-scale invasion of Ukraine, we had a community that largely consisted of uh different generations of immigrants, first, second, third, fourth. Most recently, we've had an influx of Ukrainians that have been displaced by Russia's war. and uh that brings our total community to about 60,000 people. I would like to speak on behalf of the Ukrainian community today. Uh the Ukrainian uh Council of New South Wales is one of our 22 member organizations. They will share their thoughts from a New South Wales perspective and I will share our thoughts of from the diaspora um on a federal level. I'd also like to say that um I personally saw the atrocities of Russia's war against Ukraine when I traveled to a city called Suma only 18 thou 18 kilometers from the Russian border. I saw destroyed buildings. I heard daily alarms warning of incoming Russian missiles and drones. I saw little children that had to go down and study in bunkers because they didn't know when Russia would attack next. I myself felt the horror of receiving a phone call from my mother who survived a missile attack that hit the building right next to hers. Her apartment was absolutely shattered. All the windows blew out. She was thrown across her apartment and sustained a head injury that she's still recovering from right now. Luckily, she survived. But many in Ukraine do not survive when Russia launches their daily attacks on Ukrainian civilians in Ukrainian cities. I myself have also felt the deepest pain of war when I received a phone call saying that my closest cousin was killed on the front line. He was serving as a volunteer from the very first days of Russia's full-scale invasion. Had nothing to do with the military. He just dropped everything that he was doing to go defend his home. his family, his children. He leaves behind a loving wife, two young kids, and a wife that's only 30 years old and is already a widow. This is just my personal experience, 15,000 kilometers from Ukraine, but my entire family is in Ukraine right now. We here have community members that experience the horrors of Russia's war against Ukraine on a daily basis. And there are millions of Ukrainians who experience the impact of Russia's attacks, the impact of Russia's war crimes on a daily basis. And that's why I would like to acknowledge the committee's work. I would like to acknowledge the Australian government support because every single bit of aid that has gone to Ukraine has literally saved lives. I would like to thank the committee for taking on this inquiry and looking into the effectiveness of sanctions on the Russian Federation because there has been huge public interest in this. If you look at the submission made from the AFO, there's at least 70,000 individual pieces of articles, TV interviews, media coverage in the last year alone, specifically on the topic of blood oil. This is something, as Andrew previously mentioned, something that uh any person that learns about this, whether at a pub, at a supermarket, just in casual conversation, they're absolutely shocked that Australia is the single largest importer of refined Russian crude in the world. This is something that Australians don't stand for. This is something that the general Australian public does not support. And we feel very strongly as the Ukrainian community that there is something that the Australian government can do to put a framework in place to stop the import of this refined Russian crude from third countries which goes directly to financing a war machine on the other side of the world. And if we look at the scale of the problem and this is something that I would like to ask on behalf of our entire community. If there is one single thing that Australia can do, we advocate for military aid. We advocate for a humanitarian aid, but if we look at the scale of the problem and if we look at the numbers, we have $1.7 billion that has been sent in aid to Ukraine. And on the other hand, over $2.4 billion has been sent to Russia from the import of refined Russian crude. So on the one hand, we're helping Ukraine by supporting Ukrainians in their fight for freedom and democracy that Australia stands for, but on the other hand, we're supporting a genocidal regime that goes against every single thing that Australia stands for. So I would like to thank the committee and I would like to thank the Australian government for taking this seriously and would be happy to answer any questions in an attempt to find a solution to this massive gap in Australia sanctions regime and to close the blood oil
much, Miss Aguru, and I firstly just want to express to you on behalf of the committee our sincere condolences for the loss of your cousin. And I I know to the Ukrainian community right across this country, the the horror of what is happening in your country is is truly shocking. So, um, we stand with you every step of the way during this most horrendous time for both the community here in Australia and of course for the people of Ukraine. I I am going to pass first of all to the deputy chair for questions, Senator Chakonei.
>> Thanks um a lot chair and good afternoon. Um could I just um just ask picking up some comments that were made in the opening statements um in terms of um putting aside government's roles um what are what are I guess your views and this is to the both of you your views on the responsibility of the industry uh particularly the oil importers and distributors in Australia given that no doubt they talk about being good social corporate citizens um in ensuring that the products they do sell on in the Australian market do not contain Russian crude oil in the supply chain.
>> Thank you Senator for your question. I might take that one first. Um so in terms of the corporate sector um while I represent the Ukrainian diaspora here on a voluntary basis and I'm heavily involved in the community I also um have a professional job and I'm in the finance sector and uh have a corporate role specifically with respect to investments and deal with uh industry on a daily basis. I am very well aware of uh environmental social governance, corporate responsibility and large statements that are made uh by corporates in trying to do the right thing, act ethically, trade ethically um and uh make sure that they live up to both corporate and public expectations. But what we have here is that we as a as a community organization, as the Australian Federation of Ukrainian Organizations have reached out to all of the fuel importers that we know of that import from countries like India, from the Jamnagar refinery, from China, from Brunai and that uh through the research that has been done by Korea can with a high uh degree of certainty say that they are certainly importing uh product that come uh from Russian that are refined from Russian crude and the answer was uh the same from all of the participants that we received an answer from some didn't even respond to us is that they are acting in line with Australian law and Australian sanctions and at this point in time yes uh Australia has done a great deal in terms of imposing sanctions on the Russian Federation sanctioning the shadow fleet imposing personal financial sanctions But because this loophole exists technically the companies are not doing anything illegal uh because of the current uh sanctions framework they are importing a derivative from a third country which um unfortunately there isn't that those barriers in that framework to stop them and voluntarily they have not expressed any desire or interest uh to do to do it on their own to check their own supply chains to ensure that they are Russian crude food oil free. So that's why we are knocking on the government's door. That's why we are advocating with the Australian federal government to put that framework in place because to date over the past four years, especially since the launch of the of Russia's full-scale invasion, that trade has been only flourishing and uh nothing has been done on the part of industry to limit that. And we can see the the numbers speak for themselves if we look at 2 over2.4 4 billion that has been sent to Russia via this trade of uh importing refined Russian crude from
If I may add to that um Senator um I think it's fair to say that corporates uh corporate enterprises generally do focus on commercial perspectives and that commercial perspective of course while valuable I think it reflects industry incentives for maximum supply options. So in other words, the private sector isn't going to do this uh because it limits their optionality. It limits their flexibility in terms of supply and potentially their profitability. Now corporate incentives don't necessarily however align with national security with foreign policy objectives and also international legal objectives. So hence relying upon the petroleum importers to act without some form of stronger regulation I think is is futile and I don't think that they will act to the to the degree that is
and just further I guess to both what you have said and thank you for that. Um have you have either of you two or your organizations had any engagement with industry regarding the concerns you've just articulated to the committee?
Yes, we've written formal letters and we've received responses only from a few uh and uh it basically stopped at that they uh corporates were not uh interested or willing to engage with community on this. We did have um one offer uh from a certain company to tour their facilities to see what they do and how they do it and there was a bit of dialogue. Um but uh they kept on basically saying and um reaffirming that they're acting in line with Australian sanctions currently. And is that
something you're able to share with the committee in terms of I'll for you maybe to have a think about maybe take it on notice if you want to share any of the correspondence.
>> Sure. We're happy to share the correspondence. We can send it to the committee after this.
>> Sorry Andrew, you're about to jump in.
>> No, no, I wasn't. No, sorry.
>> You have had with industry?
>> No. No. Um I given that the AFO was engaging with industry, it was um better to have a single point of contact that acted on a federal level. So I didn't want to muddy the waters as it were.
>> Yeah.
>> And also I I might add in one other thing if that's okay, Senator. thing that uh that I want to point out is that uh I'm not sure if they will be um attending the hearings today, but representatives from before Ukraine, which is an organization in Europe that has done extensive work in terms of identifying companies that currently operate within the Russian Federation and advocating for their exit. With all of their experience over the past four years, they have not seen any voluntary um initiative. it was always uh backed by a pressure campaign. There were activists involved. Uh there were different appeals for them to do so. Uh so they didn't or different frameworks put in place whether sanctions or or other things. So um those companies did not do it on their own initiative. So I think that should be taken into account for Australian industry that if they feel like they're working within Australian rules, laws and regulations that there isn't really that incentive for them uh to to go above and beyond.
>> Yeah. And I appreciate that. I guess I guess ultimately what I was going with this is to have a better understanding about what actions you've made of industry and what been their response. It doesn't seem like they've had much of a meaningful wholesome response back. All right. Thank you very much. I'll hand back the call to the chair.