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Trafigura has pleaded guilty to bribery charges in Brazil brought by US prosecutors and agreed to pay $127 million in fines and confiscation of profits, in the latest in a series of corruption cases against the largest commodities trading firms first in the world.
Under the plea agreement, Trafigura will pay $80.5 million in fines and $46.5 million in forfeited profits after paying approximately $19.7 million in “corruption fees” to Brazilian officials in an attempt to “ secure improper advantages” on oil contracts between 2003 and 2014. .
According to court documents, the company pleaded guilty to one charge of conspiracy to violate the U.S. Foreign Corrupt Practices Act.
Trafigura paid the bribes to maintain its business with state-controlled oil company Petrobras, prosecutors said, earning the Trafigura entities about $61 million in profits over the decade from ill-gotten deals with the Brazilian group.
Under the scheme, Trafigura and his co-conspirators agreed to make illicit payments of up to 20 cents a barrel in petroleum products bought or sold to Petrobras and to hide the kickbacks through shell companies, prosecutors said.
Nicole Argentieri, head of the U.S. Justice Department’s criminal division, said Trafigura has been “bribing Brazilian officials to obtain business illegally” for more than a decade. “Today’s guilty plea highlights that when companies pay bribes and undermine the rule of law, they will face significant sanctions,” she added in a statement.
“These historic incidents do not reflect the values of Trafigura nor the conduct we expect of every employee,” Jeremy Weir, executive chairman and CEO of Trafigura, said in a statement, adding that he was “pleased that the DoJ has recognized the steps that we have taken steps to invest in our compliance function.”
Petrobras did not immediately respond to a request for comment.
Trafigura in December revealed for the first time that it had set aside $127 million in its 2023 accounts to resolve a DoJ investigation into “improper payments” passed to Brazil.
The payments involved Brazil’s largest political corruption case known as Lava Jato, or Car Wash, a vast bribery contract scheme with Petrobras at the center. Company executives were paid bribes for handing out contracts in a conspiracy involving a construction cartel. His revelation led to the imprisonment of dozens of politicians and businessmen.
According to court documents, some of the payments were made in cash at Trafigura’s office in Rio de Janeiro. To generate that bribe money – coded as “commissions” by those involved – a Trafigura executive used “illicit market money exchangers” in Brazil known as “doleiros,” as well as making wire transfers.
To facilitate delivery of the bribes, the conspirators sent an invoice from a Hong Kong company for purported consulting services related to the purchase of floor and wall tiles from Brazil for $390,240. Trafigura paid that sum to one of the conspirators, who then wired the money into a Hong Kong account for the ultimate benefit of Petrobras officials.
The DoJ gave Trafigura credit for its cooperation and corrective measures, but not for the voluntary disclosure.
Trafigura’s appeal marks the first time it has admitted wrongdoing in the Car Wash scandal, after rivals Glencore and Vitol admitted paying bribes in the country to resolve wider corruption investigations against them.
In 2018, Brazilian prosecutors charged two former Trafigura executives, Mariano Marcondes Ferraz and Marcio Pinto de Magalhães, with allegedly paying approximately $1.5 million in bribes.
The civil case against Trafigura in Brazil for the Car Wash scandal has been suspended, but part of the 127 million dollars allocated can also be used for agreements with the Brazilian authorities.
The case draws a line in the sand with the current public activities of Trafigura’s Justice Department, although the group and its former chief operating officer Mike Wainwright still face charges in Switzerland over alleged bribery payments to Angola.
Other commodities trading firms have also been hit with sanctions by the DoJ for bribery and corruption in recent years. In 2022, Glencore pleaded guilty to multiple bribery cases in Africa and Latin America to access oil and received fines of more than $1 billion.
Rival oil trader Gunvor also pleaded guilty earlier this month to paying bribes in Ecuador to secure oil contracts, resulting in fines of more than $660 million and confiscated profits. Oil trader Vitol agreed to pay more than $160 million to U.S. and Brazilian authorities in 2020 for corruption in Brazil, Ecuador and Mexico.
Additional reporting by Michael Pooler