Lee Hyo-jin covers the Bank of Korea, the banking industry and broader financial news. Her previous beats include foreign affairs, North Korea and general reporting on Korean society.
Finance attache up for state honor for clearing US sanctions risk on Russian naphtha imports
Choi Young-geon, left, finance attache at the Korean Embassy in U.S., and Kim Tae-yeon, assistant finance attache at the embassy / Courtesy of Ministry of Economy and Finance
By Lee Hyo-jin
A finance ministry official has been recommended for a government award after securing U.S. assurances that allowed a recent Russian petrochemical shipment to proceed without triggering secondary sanctions, officials said Tuesday.
According to the Ministry of Economy and Finance, Choi Young-geon, a finance attache at the Korean Embassy in Washington, has been nominated for an internal award.
Choi played a key role in securing U.S. assurances that enabled LG Chem to import 27,000 tons of Russian naphtha in March, as Korea turned to alternative supplies following disruptions to shipments through the Strait of Hormuz amid the Iran war.
The U.S. Treasury's Office of Foreign Assets Control generally prohibits transactions involving Russian oil, but issued a 30-day waiver on March 12 allowing limited purchases of Russian oil and petroleum products amid supply concerns.
LG Chem subsequently signed a contract to import the naphtha shipment.
However, uncertainties remained over payment methods due to the risk of potential secondary sanctions.
Intermediary banks handling dollar transactions refused to process the payments.
Alternative payment options using currencies such as the Chinese yuan, Russian ruble and United Arab Emirates dirham were considered, but Korean banks were reluctant due to concerns over possible U.S. secondary sanctions.
Choi, along with Kim Tae-yeon, assistant finance attache, worked to obtain clear assurances from U.S. authorities that the transaction would not trigger sanctions.
Despite the difficulty of reaching U.S. Treasury officials, the two persistently sought confirmation through repeated contact on both weekdays and weekends.
They ultimately secured a meeting with U.S. officials on March 25, where they explained the urgency of the naphtha import and obtained written confirmation that payments in non-dollar currencies would not trigger secondary sanctions.
The 27,000-ton shipment arrived in Korea on March 30.
"Such written assurances from the U.S. are significant in that they establish a precedent of securing sanctions exemptions through diplomatic channels," a finance ministry official said, adding that Choi is currently under review for an award in recognition of such efforts.
Finance Minister Koo Yoon-cheol reportedly told President Lee Jae Myung about the case at an emergency economic meeting.