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Former top Petroecuador official testifies Trafigura, Vitol and Gunvor bribing him

Nilsen Arias said that he had received bribes from “certain companies” via the Pere brothers and were used to funnel bribes to Ecuadorian officials, according to Bloomberg.

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Former top Petroecuador official testifies Trafigura, Vitol and Gunvor bribing him

Nilsen Arias, former Head of International Trade at Petroecuador, reportedly testified that he was bribed by three top commodity trading companies during his tenure in a New York trial into the Ecuadorian corruption scheme, according to Bloomberg on Friday (12 January).  

He named Trafigura, Vitol Group and Gunvor Group in his testimony. 

Arias, who has been testifying for the past week, reportedly said that he had received bribes from “certain companies” via the Pere brothers, consultants who operated from Miami and Ecuador and were used to funnel bribes to Ecuadorian officials.

When asked to name the companies, he identified Trafigura, Gunvor, Vitol and US asphalt firm Sargeant Marine. Sergeant Marine pleaded guilty to bribery charges in Brazil, Venezuela and Ecuador in 2020. 

The case is US v. Aguilar, 20-cr-390, US District Court, Eastern District of New York (Brooklyn).

Vitol Group, the world’s largest oil trader, in 2020 reportedly admitted to having bribed government officials for more than a decade in three countries including Ecuador, while rival Gunvor Group has disclosed it faced a US investigation over bribery in Ecuador and booked a $650 million provision.

Meanwhile, the media also reported that Switzerland’s federal prosecutor charged Trafigura last month with bribing foreign officials in Angola. Trafigura and former Chief Operating Officer Mike Wainwright were accused of arranging EUR 5 million of bribes to an Angolan government official between 2009 and 2011. 

 

Photo credit: Claire Anderson on Unsplash 
Published: 15 January, 2024

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Legal

Trial against Hin Leong Trading Founder and children draws to an end

Lim Oon Kuin, also known as O.K. Lim, and his two children have agreed to pay USD 3.5 billion to the liquidators of the troubled oil trading firm but have stated they will apply for bankruptcy.

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Singapore High Court

The 50-day trial involving Founder of Hin Leong Trading, Lim Oon Kuin, also known as O.K. Lim, and his two children approached its conclusion with the trio agreeing to pay USD 3.5 billion to the liquidators of the Singapore-based defunct oil trading company Hin Leong Trading, according to The Straits Times on Tuesday (1 October). 

The High Court also approved a consent judgement that the Lim family reached with HSBC Holdings which had sued them and Lim’s personal assistant Serene Seng Hui Choo for USD 85.3 million in damages.

Both cases were jointly heard in the High Court. 

In the judgement reached by both parties, the family including Lim’s children, Evan Lim Chee Meng and Lim Huey Ching, have to pay the sum of USD 3.5 billion plus interest at 5.33% per annum – from April 2020 to the date of payment – and costs.

However, in written statements, the family stated they do not have enough assets to pay the claimants and will be applying for bankruptcy. 

They’ve also said they are not admitting liability for the allegations against them despite consenting to the judgement. 

The three were sued in August 2020 by judicial managers PricewaterhouseCoopers Advisory Services for breaching fiduciary duties as directors and fraud. In a court filing, the judicial managers were looking to recover USD 3.5 billion on top of another USD 90 million in dividends which the trio had allegedly paid themselves despite the company being insolvent.

HSBC is reportedly still pursuing its case against Seng, who is unrepresented. A two-day trial on 15 and 16 October is scheduled for HSBC's closing submissions against her to be heard.

Lim is scheduled to be sentenced on 15 October. He faces a jail term of up to 10 years and will also be liable to a fine for each charge of cheating and forgery.

An extensive coverage by Singapore bunkering publication Manifold Times regarding the fall of Hin Leong can be found below:

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Related: Singapore: Hin Leong Trading Founder found guilty of cheating and instigating forgery charges
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Related: Singapore: Hin Leong takes Deloitte to court over alleged auditing failures
Related: Hin Leong Trading Founder OK Lim facing 23 new forgery-related charges at State Courts
Related: Application to wind up Hin Leong Trading subsidiary, Hin Leong Marine approved
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Related: Hin Leong judicial managers to hold meeting of creditors to discuss fees incurred
Related: Lim family files application to wind up Hin Leong Trading subsidiary, Hin Leong Marine
Related: First creditors meeting of Ocean Tankers to be held in early January 2021
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Related: Singapore High Court concedes interim judicial management to Hin Leong Trading
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Photo credit: Manifold Times
Published: 2 October, 2024 

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Legal

Trafigura pleads guilty, to pay over USD 126 mil to settle Brazilian oil bribery case

Trafigura will pay the criminal fine to resolve an investigation stemming from the firm’s corrupt scheme to pay bribes to Brazilian government officials to secure business with Petrobras, says US DOJ.

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RESIZED Pepi Stojanovski from Unsplash

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

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Legal

BP Singapore bunker trial: PPT Director loses appeal, to begin 80-month jail sentence

Court of Appeal’s decision on appeal is final and cannot be further appealed against, according to the government of Singapore.

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The Court of Appeal of the Republic of Singapore on Friday (15 March) upheld the previous ruling of an 80-month jail sentence for the Executive Director of marine fuel trading firm Pacific Prime Trading (PPT) despite a second round of appeal.

Koh Seng Lee (Mr Koh), who paid former BP Singapore manager Chang Peng Hong Clarence (Mr Chang) $5.88 million in bribes on 19 occasions between 2006 and 2010, is expected to begin his jail sentence on Wednesday (27 March).

Original sentence – State Courts

The State Courts of Singapore on May 2021 found Mr Koh and Mr Chang guilty of corruption and initially issued a 54-month jail sentence for both parties.

Further, Mr Chang was issued a penalty of SGD 6 million (exact: SGD 6,220,095) and faced an additional 28-month imprisonment term if he decides not to pay the penalty.

Both Mr Koh and Mr Chang decided to appeal the State Court’s decision by taking the case to the High Court.

First appeal attempt – High Court

The High Court on March 2023 increased the jail sentence for both appellants to an 80-month imprisonment term after a failed appeal attempt by Mr Koh and Mr Chang on the May 2021 decision.

“In relation to sentence, I dismissed the appellants’ appeals against their respective sentences,” stated Vincent Hoong, Judge of the High Court, in his judgement dated August 2023.

“I allowed the appeal by the Prosecution in respect of both sentences and set aside the sentences of 54 months’ imprisonment imposed by the District Judge for Koh and Chang.

“I imposed a sentence of 80 months’ imprisonment for each appellant. I further ordered that three penalty orders under s 13(1) of the PCA be imposed on Chang for the amounts of $1,796,090 $1,905,520, and $2,175,985, with a total in-default imprisonment term of 2129 days’ imprisonment.”

Second appeal attempt – Court of Appeal

Both Mr Koh and Mr Chang went to the Court of Appeal to contest the High Court’s August 2023 decision by stating the Prosecution breached its disclosure obligations under Muhammad bin Kadar and another v PP [2011] 3 SLR 1205 (Kadar), amongst other claims.

Submissions by Deputy Public Prosecutors in December 2023, as seen by bunkering publication Manifold Times, concluded: “The Kadar questions do not satisfy the requirements for leave to be granted. They do not arise from the case that was before the High Court, and they are not questions of law of public interest. Rather, they are attempts to circumnavigate the single tier of appeals of our criminal justice system. Leave should be refused, and costs should be awarded.”

The Court of Appeal’s decision on appeal is final and cannot be further appealed against, according to the government of Singapore.

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Photo credit: Manifold Times
Published: 27 March 2024

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