Leading LNG supplier embroiled in corruption across three continents - Upstream Online

Leading LNG supplier embroiled in alleged corruption across three continents | Upstream Online

Trafigura, one of the world’s largest independent liquefied natural gas suppliers, has been hit with criminal charges relating to the alleged bribing of a former Sonangol official associated with Trafigura’s activities in the petroleum industry in Angola.

Federal prosecutors in Switzerland have charged a unit of Trafigura, alleging the company between April 2009 and October 2011 paid more than $6 million in sweeteners to Sonangol, and Trafigura is alleged to date to have made profits of $143.7 million on income from contracts secured by these bribes.

The Office of the Attorney General (OAG) of Switzerland had called on the Federal Criminal Court to consider charges against Trafigura’s parent company Trafigura Beheer (TBBV) for failing to prevent these alleged unlawful payments via a third party to a former employee of the Angolan state energy company Sonangol.

“In return for the above-mentioned undue advantages, the Angolan public official is alleged to have favoured the Trafigura Group's interests by enabling the development of ship chartering and bunkering activities between Trafigura and Sonangol Distribuidora in particular the conclusion, between June 2009 and July 2010, of eight ship chartering contracts and one ship bunkering contract,” the OGA of Switzerland said.

“In addition, a former intermediary and a former senior executive of the Trafigura Group are charged with being involved in this corruption scheme. Finally, TBBV is charged with failing to take all reasonable and necessary organisational measures to prevent the payment of these bribes,” the OGA added.

This is the first time that the Federal Criminal Court has been called upon to judge the criminal liability of a company for the bribery of foreign public officials.

“Despite TBBV’s willingness to resolve the Swiss investigation, the OAG has decided to send the case to court. TBBV will defend itself at court, including in view of the compliance and anti-bribery and corruption controls in place at the relevant time,” Trafigura said.

The commodities trader confirmed the OAG had also announced charges against former Trafigura chief operating officer Mike Wainwright, who rejects the charges against him and will defend himself in court. The former Sonangol employee and a former consultant to DT Group (a joint venture in which TBBV owned a part share) are also being charged, confirmed Trafigura.

The company in a statement elaborated it has been seeking to resolve investigations by regulatory authorities in the US, Brazil and Switzerland into payments made by former employees via third parties “approximately 10 or more years ago”.

Trafigura added it understands that these investigations stem in part from statements made by Mariano Marcondes Ferraz, a former Trafigura employee, as part of a plea agreement following his conviction in Brazil.

The company said it anticipates soon resolving the US Department of Justice investigation into improper payments made in Brazil and would disclose in its 2023 Annual Report a provision of $127 million, which will be made available to its parent TBBV.

Meanwhile, also in Brazil, TBBV remains involved in an ongoing civil case.

“We sincerely regret these incidents which breached our code of conduct and are contrary to our values. We have made extensive efforts over many years to instil a culture of responsible conduct at Trafigura. Since the period in question, we have significantly enhanced our compliance programme and controls. This includes mandatory training for all staff, ongoing investment in a global compliance team and our decision in 2019 to prohibit the use of third parties for business origination,” said Trafigura chief executive Jeremy Weir.

“Our compliance policies and procedures have been externally reviewed and found to meet relevant legal requirements and international good practice standards. These historical incidents in no way represent the company we are today.”

'Not effectively implemented'

According to the indictment in Switzerland, Trafigura Group’s internal regulations applicable between April 2009 and October 2011 are alleged to have not been in conformity with international standards on preventing and combatting corruption and to have not been apt to prevent the high risk of corruption associated with its activities in Angola’s petroleum industry — the said risk being all the greater given that Trafigura was involved with an Angolan state-owned company and resorting to intermediaries to develop its business in that country.

“In addition, the aforementioned internal regulations and international standards, particularly in relation to due diligence and monitoring of the intermediaries' activities, are alleged to have not been effectively implemented within the Trafigura Group,” added the OGA.

“As a result of this disorganisation, which is alleged to have manifested itself up to the highest level of the company, the above-mentioned offences of active bribery of foreign public officials would have been rendered possible.”

Sonangol could not be reached for immediate comment at the time of publication.