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Next Up … Trafigura

Trafigura

First it was Sargeant Marine in 2020 (see here for the prior post).

Then it was Vitol in 2020 (see here for the prior post).

Then it was Glencore in 2022 (see here for the prior post).

Then it was Freepoint Commodities in 2023 (see here for the prior post).

Then it was Gunvor in 2024 (see here for the prior post).

Next up in the list of commodities trading (or related) companies to resolve an FCPA enforcement action is Trafigura (a company which has been under FCPA and related scrutiny for years). After accounting for various credits for related foreign law enforcement actions, the net FCPA settlement amount is approximately $100.2 million (a criminal fine amount of $53.66 million and a forfeiture amount of $46.51 million).

A criminal information was filed against the company on December 14, 2023 and the company and the DOJ reached a plea agreement by at least mid-January 2024 according to the court docket.

Nevertheless, the DOJ did not announce the Trafigura FCPA enforcement action until March 28th.

The DOJ’s release states in pertinent part:

“Trafigura Beheer B.V. (Trafigura), an international commodities trading company with its primary operations in Switzerland, pleaded guilty today and will pay over $126 million to resolve an investigation by the U.S. Justice Department into violations of the Foreign Corrupt Practices Act (FCPA), 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).

Trafigura pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA. Pursuant to the plea agreement, Trafigura will pay a criminal fine of $80,488,040 and forfeiture of $46,510,257. The department will credit up to $26,829,346 of the criminal fine against amounts Trafigura pays to resolve an investigation by law enforcement authorities in Brazil for related conduct.

[…]

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.”

The criminal information charging conspiracy to violate the FCPA’s anti-bribery provisions alleges in pertinent part:

“It was the purpose of the conspiracy for Trafigura and its co conspirators to unjustly enrich themselves by, among other things, making corrupt payments to Brazilian government officials, including Berkowitz [a Brazilian citizen described as a fuel oil trader for Petrobras who worked in Rio de Janeiro, Brazil, and Houston, Texas], Brazilian Official 1 [a Brazilian citizen and trading manager for Petrobras in Rio de Janeiro, Brazil], Brazilian Official 2 [a Brazilian citizen and trading manager for Petrobras in Rio de Janeiro, Brazil], Brazilian Official 3 [a Brazilian citizen and trading manager for Petrobras in Rio de Janeiro, Brazil], and Brazilian Official 4 [a Brazilian citizen and trading manager for Petrobras in Rio de Janeiro, Brazil], in order to secure improper advantages and to obtain and retain business with Petrobras for Trafigura and its co-conspirators.”

The information alleges improper conduct “from in or around 2003, and continuing through in or around 2014.”

The criminal charge was resolved through a plea agreement which sets forth the following facts and circumstances.

“(a) The nature and seriousness of the offense conduct … including a multi-year scheme to pay bribes to officials at Brazil’s state-owned and state-controlled petroleum company, Petrobras, in exchange for obtaining and retaining business, which resulted in profits of approximately $61 million to the Defendant;

(b) The Defendant did not receive voluntary disclosure credit pursuant to the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (the “Corporate Enforcement and Voluntary Self-Disclosure Policy”), or pursuant to the United States Sentencing Guidelines (“U.S.S.G.” or “Sentencing Guidelines”) § 8C2.5(g)(1), because it did not voluntarily and timely disclose to the Fraud Section the conduct …

(c) The Defendant received credit for its cooperation with the Offices’ investigation pursuant to U.S.S.G. § 8C2.5(g)(2) because it cooperated with the investigation and demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct; the Defendant also received credit for its cooperation and remediation pursuant to the Corporate Enforcement and Voluntary Self-Disclosure Policy, by, among other things: (i) providing timely updates on facts learned during its internal investigation related to conduct described in the Statement of Facts; (ii) making factual presentations to the government; (iii) facilitating the interviews of employees and agents, including an employee located outside the United States, and arranging for counsel for employees where appropriate; and (iv) producing relevant nonprivileged documents and data to the government, including documents located outside the United States in ways that navigated foreign data privacy laws, accompanied by translations of certain documents; however, the Defendant, in particular during the early phase of the government’s investigation, failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation;

(d) The Defendant provided to the government all relevant facts known to it, including information about individuals involved in the conduct described … and conduct disclosed to the government prior to the Agreement;

(e) The Defendant also received credit pursuant to the Corporate Enforcement and Voluntary Self-Disclosure Policy because it 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, the Defendant was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy;

(f) The Defendant has enhanced and has committed to continuing to enhance its compliance program and internal controls, including ensuring that its compliance program satisfies the minimum elements set forth in Attachment C to this Agreement (Corporate Compliance Program);

(g) Based on the Defendant’s remediation and the state of its compliance program, including its discontinuation of the use of third-party agents for business origination and other compliance enhancements noted above in subparagraph (e), and the Defendant’s agreement to report to the Offices as set forth in Attachment D to this Agreement (Enhanced Corporate Compliance Reporting), the Offices determined that an independent compliance monitor was not necessary;

(h) The prior misconduct of Trafigura Group entities, which is not recent but includes (i) Trafigura AG’s 2006 guilty plea for violation of Title 18, United States Code, Section 542; as well as (ii) the Defendant’s conviction in 2010 of violating Netherlands export and environmental laws in connection with the discharge of petroleum waste in Côte d’Ivoire;

(i) The Defendant’s anticipated resolution with authorities in Brazil, related to conduct …, which anticipated resolution the Offices will credit in connection with the criminal penalty specified in this Agreement; and

(j) The Defendant’s agreement to continue to cooperate with the Offices in any ongoing investigation …

(k) Accordingly, after considering (a) through (j) above, as well as the fact that while the Defendant ultimately accepted responsibility for its criminal conduct, its prior posture in resolution negotiations also caused significant delays and required the Offices to expend substantial efforts and resources to develop additional admissible evidence before the Defendant constructively reengaged with the Offices in agreeing to a negotiated resolution, the Offices determined that the appropriate resolution in this case is for the Defendant to plead guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA pursuant to this Agreement; a criminal fine in the amount of $80,488,040, which reflects a discount of ten percent off the fifth percentile above the low end of the otherwise-applicable Sentencing Guidelines fine range, taking into account the Defendant’s cooperation and remediation, as well as certain Trafigura Group entities’ prior misconduct, pursuant to the Corporate Enforcement and Voluntary Self-Disclosure Policy; and forfeiture in the amount of $46,510,257.”

As stated in the plea agreement, “the parties agree that the gross pecuniary gain resulting from the offense is $60,837,522. Therefore, pursuant to Title 18, United States Code, Section 3571(d), the maximum fine that may be imposed is twice the gross gain, or approximately $121,675,044.” The plea agreement sets forth an advisory guidelines fine range of $85.2 million – $170.3 million.

The plea agreement then states:

“[T]he parties agree, based on the application of the Sentencing Guidelines, that the appropriate total criminal fine is $80,488,040 (“Total Criminal Fine”). This reflects a ten percent discount off the fifth percentile of the Sentencing Guidelines fine range, taking into account the Defendant’s cooperation and remediation, as well as its prior history, pursuant to the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy.

[The parties] further agree that the Defendant will pay the United States Treasury $53,658,694, equal to approximately two thirds of the Total Criminal Fine, no later than ten (10) business days after entry of the judgment by the Court. The Offices agree to credit the remaining amount of the Total Criminal Fine as follows: up to $26,829,346 of the Total Criminal Fine will be credited against the amount the Defendant pays to authorities in Brazil—so long as the Defendant pays such amount to Brazil pursuant to the Defendant’s anticipated separate resolution with Brazilian authorities related to the bribery conduct …

The Defendant acknowledges that it obtained and/or acquired property that is subject to forfeiture as a result of its violation of Title 18, United States Code, Section 371 and Title 15, United States Code, Section 78dd-3, as alleged in the Information. The Defendant consents to the entry of a forfeiture money judgment in the amount of forty-six million, five hundred ten thousand, two hundred fifty-seven dollars in U.S. Currency ($46,510,257.00) (the “Forfeiture Money Judgment”).”

In the DOJ release, Principal Deputy Assistant Attorney General Nicole Argentieri stated:

“For more than a decade, Trafigura bribed Brazilian officials to illegally obtain business and reap over $61 million in profits. [This] 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.”

U.S. Attorney Markenzy Lapointe for the Southern District of Florida stated:

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

Assistant Director Michael Nordwall of the FBI’s Criminal Investigative Division stated:

“Trafigura’s corrupt practices violated the FCPA, and [this] resolution demonstrates that there are steep penalties for any company that tries to bribe government officials.”

In this release, Trafigura stated:

“Trafigura has resolved a previously disclosed investigation by the U.S. Department of Justice (“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.

As part of the resolution, and under the terms of the plea agreement, Trafigura Beheer BV, the parent company of Trafigura Group during the relevant period, will pay a total amount of approximately USD127m.

As noted in the agreement, the DOJ credited Trafigura “because it cooperated with the investigation and demonstrated recognition and affirmative acceptance of responsibility.” The DOJ also 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.

This draws to a close the DOJ’s investigation of Trafigura.

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.”

As highlighted in this prior post, in December 2023 the Office of the Attorney General of Switzerland announced that a criminal indictment was filed against the company (and others) in connection with an alleged bribery scheme in Angola.

Trafigura was represented by Anita Margot Moss (Markus/Moss) and Debevoise attorneys David O’Neil and Yeugenia Shvets.

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