Switzerland charges commodity trading giant Trafigura for alleged US$5M bribe leading to US$140M profit

SWITZERLAND: Trafigura, a Singapore-based global commodity trader, is currently entangled in a legal case in Switzerland. The country’s federal prosecutor has levelled charges against the company, alleging involvement in bribing foreign officials.

In a recent criminal indictment filed, Trafigura, along with its former chief operating officer, Mike Wainwright, faces accusations from Swiss investigators.

They claim that between 2009 and 2011, the company orchestrated bribes totalling more than EUR 5 million (approximately US$5.4 million) to an Angolan government official.

These payments were purportedly made in exchange for the official’s authorization of eight ship chartering contracts and one bunkering contract, which resulted in profits amounting to US$143.7 million for Trafigura, as asserted by the prosecutors.

The multinational commodity trading company has established significant operational hubs across the globe, including in Geneva, Houston, Montevideo, Mumbai, and other key locations.

Trafigura Beheer BV, headquartered in the Netherlands, serves as the direct holding company of Trafigura.

The legal proceedings will take place at Switzerland’s Federal Criminal Court. This marks the first instance in which Switzerland has pressed criminal charges against a company for bribing foreign officials.

According to a statement from Switzerland’s federal prosecutor, Trafigura stands accused of neglecting to implement all reasonable and essential organizational measures to prevent these bribes.

According to the indictment, a former Chief Executive Officer and executive board member of Sonangol Distribuidora SA, a subsidiary of the Angolan state-owned petroleum company Sociedade Nacional de Combustíveis de Angola, E.P., allegedly accepted various undue advantages from the Trafigura Group between April 2009 and October 2011.

These advantages comprised bank transfers totalling EUR 4,346,176.60 (approximately US$4.7 million) to a Geneva-based bank account, cash payments of US$604,000 in Angola, and CHF 797.25 (US$911.55) for hotel and meal expenses during a stay in Geneva.

The second defendant, a former consultant to DT Group (a joint-venture with Trafigura), is accused of facilitating part of the aforementioned undue advantages to the Angolan public official.

This involved bank transfers totalling EUR 3,991,315 to a Geneva bank account and cash payments of USD 604,000 in Angola between August 2009 and October 2011.

Mike Wainwright, the third defendant and former COO and management board member of Trafigura Beheer BV, allegedly facilitated part of the undue advantages to the Angolan public official.

This was in the form of bank transfers totaling EUR 4.3 million to a Geneva bank account and cash payments in USD in Angola between July 2009 and October 2011. Additionally, he is claimed to have facilitated these undue advantages through omission while serving as a guarantor within the Trafigura Group.

The Switzerland Office of the Attorney General (OAG) alleged that Trafigura’s internal regulations did not comply with international standards in preventing and combating corruption.

They were deemed inadequate in preventing the high corruption risk associated with the TRAFIGURA Group’s activities in the Angolan petroleum industry, especially considering its involvement with an Angolan state-owned company and the use of intermediaries in expanding business operations in that country.

The charges asserted that these failings reached the “highest level” within the company.

Trafigura addresses charges amid multi-country investigations

In response to recent charges brought forth by Switzerland, Trafigura has acknowledged the ongoing investigations conducted by regulatory bodies in the United States, Brazil, and Switzerland. These investigations have been a focal point for the company as it seeks resolution.

The genesis of these investigations, partly stemming from statements provided by Mariano Marcondes Ferraz—a former Trafigura employee—as part of a plea agreement following his conviction in Brazil, has prompted significant scrutiny.

“We sincerely regret these incidents which breached our code of conduct and are contrary to our values,” said chief executive Jeremy Weir in a statement.

Regarding the charges against Mike Wainwright, who held the position of chief operating officer from 2008 until recently, Trafigura has stated his rejection of the allegations and his intent to defend himself in court.

Separately, Trafigura revealed its decision to set aside US$127 million to potentially settle a U.S. Department of Justice (DOJ) fine, addressing an investigation concerning “improper payments” made by the company in Brazil roughly a decade ago.

In March 2018, Mariano Marcondes Ferraz, the co-founder of Brazilian company Decal do Brasil, received a 10-year prison sentence for corruption charges, involving bribery of a former executive at Petroleo Brasileiro.

During his arrest in Brazil in 2016, Ferraz served as a Trafigura board member and key executive for business development in Brazil and Africa.

Concurrently, Switzerland’s OAG had been investigating Ferraz since 2016 for a corruption case associated with Petrobras.

Trafigura had no contractual ties with Petrobras or Decal and lacked any business dealings with Decal at the time.

Trafigura engages in legal battle over nickel business fraud

Adding to its ongoing legal affairs, the industrial metals and oil trading giant Trafigura has initiated a lawsuit against Indian businessman Prateek Gupta.

The lawsuit, filed in February, contends that Trafigura fell victim to a massive fraud, amounting to a staggering US$600 million, purportedly orchestrated by Gupta and his associated companies.