Oil trading houses caught in Brazil corruption sting

  • : Oil products
  • 18/12/20

Brazil's state-controlled Petrobras has temporarily suspended trading business with Switzerland-based Glencore, Vitol and Trafigura following allegations the firms engaged in widespread corruption.

Petrobras said the decision was made after reviewing the findings of federal prosecutors, who earlier this month executed search and arrest warrants in connection with the ongoing Lava Jato corruption probe.

Petrobras' announcement came on the heels of another set of charges for 12 individuals allegedly linked to bribes initiated by Vitol. Federal prosecutors said the scheme that favored Vitol in oil and fuel trading lasted at least five years, and may be ongoing.

Of the 12 people charged, three were intermediaries "who had the confidence of the executives of Vitol to foment the criminal scheme," five were former Petrobras traders and the remaining four were unidentified bribe collectors, according to the prosecutors.

"A criminal scheme involving the leasing of fuel storage tanks and several other trading operations entered into by Petrobras with Vitol, Glencore, Chemium and other trading companies is under investigation. There are indications of current criminality considering that the investigation covers two other employees of Petrobras, who were in still employed at the launch of 57th phase of the Lava Jato," prosecutors said.

Petrobras said it has requested "clarification regarding the measures adopted by the companies to investigate irregularities, cancellation of contracts and liability of individuals and legal entities involved, cooperation with the authorities and improvement of its integrity program."

A Glencore spokesperson declined to comment. Vitol could not be reached for comment. Trafigura has previously denied the allegations, saying it has a zero tolerance policy regarding corruption.

"The suggestion that Trafigura's current management knew that payments to an intermediary would be used to make improper payments to employees of Petrobras is not correct," the company said last week after federal prosecutors charged two former executives with corruption.

Federal prosecutors say the three companies made around $15mn in illicit payments to Houston and Rio de Janeiro-based Petrobras employees in 2011-14 for advantageous prices on around 160 deals for fuel oil, vacuum gas oil, bunker fuel and asphalt.

Federal prosecutors say the scheme involving other trading firms, such as Chemium, Mercuria and World Fuel Services, totaled around $31mn in bribes. The companies made no immediate public comment.

Last month, Petrobras brought a close to an independent committee that had been established in December 2014 to investigate the first corruption claims resulting from the historic Lava Jato probe. The company says the investigation into the claims against Vitol, Glencore and Trafigura will be carried out by its internal investigation committee.

All three accused companies have substantial trading operations in Brazil. Most recently, Glencore signed a deal to 78pc stake in Brazil's fourth largest fuel distributor ALE and Vitol has agreed to acquire a 50pc stake in distributor Rodoil.

Petrobras said the claims against Vitol were not related to its recent $1.53bn sale of oil- producing assets in Nigeria to a joint venture including Vitol.

"There is no evidence or suspicion of irregularities regarding the disinvestment process, nor any relation with the activities that were the focus of the 57th phase of Lava Jato," the company said in a note.

Petrobras says it is looking to recover more than R40bn ($9.7bn) in losses and fines related to the systemic kickback scheme that directly and indirectly cost the firm around $20bn.

The company has already recovered around R2.5bn, and says it is pursuing 16 civil actions with federal prosecutors and the attorney general covering around R10.9bn in losses and R31.2bn in possible fines.

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