International commodities trading company Trafigura Beheer B.V. (Trafigura) on Thursday (28 March) pleaded guilty and will pay over USD 126 million to resolve an investigation 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 (Petrobras), according to the US Department of Justice. 

Trafigura pleaded guilty to conspiracy to violate the anti-bribery provisions of the the Foreign Corrupt Practices Act (FCPA). Pursuant to the plea agreement, Trafigura will pay a criminal fine of USD 80,488,040 and forfeiture of USD 46,510,257. The department will credit up to USD 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 USD 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.”  

“Our office will continue to target anyone who uses the Southern District of Florida to further foreign corrupt practices and bribery schemes,” said U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “We will continue to work with our Criminal Division colleagues to identify and prosecute those responsible, including both individuals and corporations.” 

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.

“Trafigura’s corrupt practices violated the FCPA, and today’s resolution demonstrates that there are steep penalties for any company that tries to bribe government officials,” said Assistant Director Michael Nordwall of the FBI’s Criminal Investigative Division.

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 (i) providing timely updates on facts learned during its internal investigation; (ii) making factual presentations to the department; (iii) facilitating the interviews of employees and agents, including an employee located outside the United States, and arranging for counsel for employees where appropriate; (iv) 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 (v) 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.

Trafigura also engaged in remedial measures, including: (i) 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; (ii) enhancing processes and controls around high-risk transactions; (iii) investment of additional resources in employee training and compliance testing; (iv) enhancing ongoing compliance monitoring and controls testing processes; and (v) 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. 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.

In a separate statement, Trafigura said it has resolved a previously disclosed investigation by DOJ into conduct of former employees or agents in Brazil, that took place approximately 10 or more years ago. 

“This conduct was and is inconsistent with the company’s principles, contractual terms and Code of Conduct,” the firm said.

The firm added that the DOJ recognized Trafigura’s proactive decision to end the “use of third-party agents” for business origination in 2019 and its development and implementation of “enhanced risk-based policies and procedures” related to anti-corruption and compliance monitoring in reaching its decision not to appoint an independent monitor.

Jeremy Weir, Executive Chairman and CEO of Trafigura, said: “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.

“We are pleased the DOJ recognised 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. Continuous improvement of our compliance programme and high standards of ethical behaviour will remain priorities for the Group.”

Photo credit: Pepi Stojanovski from Unsplash
Published: 1 April 2024