Trader Trafigura Pleads Guilty to a Decade of Oil Bribery in Brazil

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Trafigura entered a plea agreement with the US Department of Justice in a federal court in Miami on Thursday.

Trafigura Group pleaded guilty to a decade of bribery in Brazil, in the latest in a string of cases that have exposed a widespread culture of corruption inside the world’s biggest commodity traders.

Trafigura entered a plea agreement with the US Department of Justice in a federal court in Miami on Thursday. The company will pay a fine of $80.4 million and forfeit $46.5 million, in line with the $127 million it set aside in December to resolve the case. 

While its largest rivals have all admitted to paying bribes in recent years to resolve US investigations, this is the first time that Trafigura has made such an admission.

The DOJ on Thursday criticized Trafigura for its stance at the start of the investigation. “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,” it said. 

Trafigura’s “early posture in resolution negotiations” forced the US government to spend additional resources to develop further evidence before the company “constructively reengaged,” it said. The company was also slow to exercise disciplinary measures for employees who violated company policy. 

“For more than a decade, Trafigura bribed Brazilian officials to illegally obtain business and reap over $61 million in profits,” said Nicole Argentieri, head of the DOJ’s criminal division. 

The series of years-long investigations led by the US have laid bare a shockingly brazen culture of wrongdoing in an industry that had long sought to distance itself from a history of paying bribes to win business. 

Commodity trading is dominated by a handful of mostly privately owned companies that operate with little regulation and oversight, yet wield huge influence in the global economy through their sprawling businesses that buy, sell and transport raw materials around the world. The industry collectively earned about $100 billion in 2023, according to estimates from consultancy Oliver Wyman LLC.

For Trafigura — one of the largest of the group — the guilty plea for wrongdoing between 2003 and 2014 is a fresh stain on its reputation after the company has spent the past two decades working to move past an incident involving the discharge of hazardous waste in Ivory Coast in 2006, which catapulted it into the global spotlight at the time.

“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,” Chief Executive Officer Jeremy Weir said in a statement.

“We are pleased the DOJ recognized the steps we have taken to invest in our compliance function: enhancing our policies, procedures, processes and controls and from 2019, prohibiting the use of third parties for business origination.” 

Carwash Probe

The case is the latest that originated with the sweeping Carwash probe that began a decade ago in Brazil and uncovered massive corruption at state oil company Petrobras. Trafigura’s rivals Vitol Group and Glencore Plc have already admitted they paid bribes in Brazil to settle wider corruption investigations into them, but Trafigura has until now denied charges of wrongdoing. When Brazilian prosecutors in 2020 sued Trafigura and several of its executives in a civil lawsuit alleging corruption in its dealings with Petrobras, Trafigura said the charges were “not supported by evidence.”

A former Petrobras trader, Rodrigo Berkowitz, pleaded guilty in the US in 2019 to charges that he took bribes from several trading companies and agreed to cooperate with investigators.

Trafigura revealed the US probe in December, saying it would be resolved “shortly” and taking a $127 million provision. It is also facing a separate case in Switzerland, where the company and one of its longstanding top executives have been charged over allegations of bribing public officials in Angola.

Rival Gunvor Group Ltd. this year agreed to pay more than $660 million to resolve bribery charges, while Vitol signed a deferred prosecution agreement in 2020, and paid $164 million after admitting that it had bribed officials in Ecuador, Mexico and Brazil. Glencore in 2022 paid more than $1 billion after pleading guilty to bribery and market-manipulation charges in the US, UK and Brazil.

(Adds DOJ comments in paragraphs four to six.)

©2024 Bloomberg L.P.

By Lucia Kassai, Archie Hunter , Jack Farchy


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