Yet Another Swiss Trader Fined in Petrobras Graft

Swiss commodity broker Trafigura pleaded guilty to crimes related to bribing Brazilian officials of the state owned oil company Petrobras, the Justice Department announced March 28.

The $126 million settlement noted the firm's extensive prior misconduct, as well that "Trafigura was slow to exercise disciplinary and remedial measures," and  "Trafigura failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation."

Trafigura Beheer B.V.  pleaded guilty to resolve an investigation by the U.S. Justice Department into violations of the Foreign Corrupt Practices Act (FCPA), stemming from the company’s corrupt scheme to pay bribes to Brazilian government officials to secure business with Brazil’s state-owned and state-controlled oil company, Petróleo Brasileiro S.A. – Petrobras. 

Trafigura pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA. Pursuant to the plea agreement, Trafigura will pay a criminal fine of $80,488,040 and forfeiture of $46,510,257. The department will credit up to $26,829,346 of the criminal fine against amounts Trafigura pays to resolve an investigation by law enforcement authorities in Brazil for related conduct.

“For more than a decade, Trafigura bribed Brazilian officials to illegally obtain business and reap over $61 million in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Today’s guilty plea underscores that when companies pay bribes and undermine the rule of law, they will face significant penalties. The department remains determined to combat foreign bribery and hold accountable those who violate the law.”  

According to court documents, between approximately 2003 and 2014, Trafigura and its co-conspirators paid bribes to Petrobras officials in order to obtain and retain business with Petrobras. Beginning in 2009, Trafigura and its co-conspirators, who met in Miami to discuss the bribery scheme, agreed to make bribe payments of up to 20 cents per barrel of oil products bought from or sold to Petrobras by Trafigura and to conceal the bribe payments through the use of shell companies, and by funneling payments through intermediaries who used offshore bank accounts to deliver cash to officials in Brazil. Trafigura profited approximately $61 million from the corrupt scheme.

The department reached this resolution with Trafigura based on a number of factors, including, among others, the nature and seriousness of the offense.

Trafigura received credit for its cooperation with the department’s investigation and affirmative acceptance of responsibility, which included

1. providing timely updates on facts learned during its internal investigation;
2. making factual presentations to the department;
3. facilitating the interviews of employees and agents, including an employee located outside the United States, and arranging for counsel for employees where appropriate;
4. producing relevant non-privileged documents and data to the department, including documents located outside the United States in ways that navigated foreign data privacy laws, accompanied by translations of certain documents; and
5. providing all relevant facts known to it, including information about individuals involved in the conduct.

"However, and particularly during the early phase of the department’s investigation, Trafigura failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation," the Justice Department said.

Trafigura also engaged in remedial measures, including:

1. developing and implementing enhanced, risk-based policies and procedures relating to, among other things, anti-corruption, use of intermediaries and consultants, third party payments, and joint venture and equity investment risk assessment;
2. enhancing processes and controls around high-risk transactions;
3. investment of additional resources in employee training and compliance testing; (iv) enhancing ongoing compliance monitoring and controls testing processes; and
4. proactively discontinuing the use of third-party agents for business origination.

However, Trafigura was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy.

In addition, Trafigura’s prior misconduct, though not recent, includes a 2006 guilty plea by Trafigura AG for entry of goods by means of false statements; as well as Trafigura’s 2010 conviction of violating Netherlands export and environmental laws in connection with the discharge of petroleum waste in Côte d’Ivoire.

While Trafigura ultimately accepted responsibility for its criminal conduct in this investigation, its early posture in resolution negotiations also caused significant delays and required the department to expend substantial efforts and resources to develop additional admissible evidence before

Trafigura constructively reengaged in agreeing to a negotiated resolution.  Accordingly, the department determined that the appropriate resolution in this case was for Trafigura to plead guilty to one count of conspiracy to violate the FCPA.

$13 million discount

The criminal fine calculated under the U.S. Sentencing Guidelines reflects a 10% reduction off the fifth percentile of the applicable guidelines fine range, which accounts for Trafigura’s cooperation and remediation, as well as its prior history.

Angola, Exim Involvement

Trafigura is reportedly facing a seperate investigation by Swiss authorities into senior executive's involvement in bribery in Angola, and has been under investigation by the CFTC for commodity price manipulation.

Angola booster and globetrotting president of the US Export Import Bank Reta Jo Lewis announced last summer a guarantee for a $400 million credit facility for Trafigura's Liquified Natural Gas trading book.

Jeremy Weir, Executive Chairman and CEO of Trafigura said in a statement: “These historical incidents do not reflect Trafigura’s values nor the conduct we expect from every employee. They are particularly disappointing given our sustained efforts over many years to embed a culture of responsible conduct at Trafigura."

Trafigura earned $7.4 billion in profits last year.

20 Convicions, $1.7 Billion in Fines

The Global commodity trading community has long been a honey pot for corrupt officials and rogue operators.  Many firms, including Glencore and Trafigura  trace their lineage back to the notorious fugitive "King of Oil"  Marc Rich.

Rich fled the United States in 1983 when indicted on charges of tax evasion, fraud, racketeering and illegal trading of oil with Iran.  He was later pardoned by Preident Bill Clinton after Rich's former wife Denise gave the Clinton Library $450,000.   Rich died in Switzerland in 2013.

The Justice Department investigation into international commodities trading companies that paid bribes to win business with state-owned and state-controlled oil companies in Latin America and Africa has resulted in six corporate resolutions, 20 convictions of individuals, and total fines, forfeitures, and other penalties of more than $1.7 billion.

Since 2017, the Criminal Division’s Fraud Section’s Foreign Corrupt Practices Act (FCPA) Unit, in partnership with U.S. Attorneys’ Offices across the country, the Money Laundering and Asset Recovery Section, and the FBI, has been investigating corruption committed by international commodities trading companies, which paid millions of dollars in bribes to corrupt government officials to secure billions of dollars in business with state-owned enterprises.

Through this work, the Criminal Division has entered into six corporate resolutions, which have included mandatory cooperation, disclosure, and compliance obligations and resulted in total fines, forfeitures, and other penalties of more than $1.7 billion:

• In September 2020, Sargeant Marine Inc., an asphalt company based in Boca Raton, Florida, with an asphalt trading arm, pleaded guilty in the Eastern District of New York to schemes to bribe government officials in Brazil, Venezuela, and Ecuador;
• In December 2020, Vitol Inc., entered into a deferred prosecution agreement (DPA) in the Eastern District of New York, admitting to schemes to pay bribes to government officials in Brazil, Ecuador, and Mexico;
• In May 2022, Glencore International AG pleaded guilty in the Southern District of New York to a scheme to pay bribes to government officials in seven countries across Africa and Latin America;
• In December 2023, Freepoint Commodities LLC entered into a DPA in the District of Connecticut and admitted to a scheme to bribe government officials in Brazil;
• In March, Gunvor S.A. pleaded guilty in the Eastern District of New York to a scheme to bribe government officials in Ecuador; and
• Also in March, Trafigura Beheer B.V. pleaded guilty in the Southern District of Florida to a scheme to bribe government officials in Brazil.