Energy trading firm agrees to pay $135M in Brooklyn Federal Court

December 3, 2020 Editorial Staff

The U.S. District Court for the Eastern District of New York, more informally known as Brooklyn Federal Court, in Downtown Brooklyn. Photo: Rob Abruzzese/Brooklyn Eagle

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Vitol Inc. (Vitol), the U.S. affiliate of the Vitol group of companies, which together form one of the largest energy trading firms in the world, has agreed to a combined total criminal penalty of $135 million to resolve bribery charges with law enforcement authorities in the United States and Brazil.

The resolution arises out of Vitol schemes to pay bribes to officials in Brazil, Ecuador and Mexico. Vitol has also agreed to pay more than $12.7 million to the Commodity Futures Trading Commission in a related matter and to pay the CFTC a penalty of $16 million related to trading activity not covered by the deferred prosecution agreement with the department.

The case is assigned to Senior U.S. District Judge Eric N. Vitaliano, sitting in Brooklyn.

Federal Eastern District Judge Eric Vitaliano. Photo: Rob Abruzzese/Brooklyn Eagle

“Vitol paid bribes to government officials in Brazil, Ecuador and Mexico to win lucrative business contracts and obtain competitive advantages to which they were not fairly entitled,” stated Acting U.S. Attorney Seth DuCharme. “The United States Attorney’s Office for the Eastern District of New York will continue to hold accountable companies and individuals that attempt to defy U.S. law to the detriment of honest competitors.”

“This resolution demonstrates the FBI’s commitment to investigate foreign corruption and hold accountable those who circumvent laws for financial gain at the expense of American consumers,” said FBI Assistant Director-in-Charge Kristi Johnson. “We’ll continue to work with our partners to root out corruption, whether it occurs domestically or abroad.”

Vitol entered into a deferred prosecution agreement with the government in connection with criminal information filed in the Eastern District of New York. The indictment charges the company with two counts of conspiracy to violate the anti-bribery provisions of the FCPA.

As part of the agreement, Vitol will pay a total criminal penalty to the United States of $135 million. The Department of Justice will credit $45 million — approximately one third of the total criminal penalty — against the amount that Vitol will pay to resolve an investigation by the Brazilian Ministério Público Federal for conduct related to the company’s bribery scheme in Brazil.

As part of the deferred prosecution agreement, Vitol Inc. and Vitol S.A., another company within the Vitol group of companies, have agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the charged conduct; enhance their compliance programs; and report to the department on the implementation of their compliance programs.

According to Vitol’s admissions and court documents, between 2005 and 2014, Vitol and its co-conspirators paid bribes of more than $8 million to at least four officials at Brazil’s state-owned and controlled oil company Petróleo Brasileiro S.A. – Petrobras (Petrobras). Vitol paid these bribes in exchange for receiving confidential Petrobras pricing and competitor information.

Vitol concealed the scheme through the use of intermediaries and a fictitious company that facilitated the payments to offshore accounts and, ultimately, to the Petrobras officials, federal prosecutors said.

Vitol also admitted that from 2011 to 2014, it bribed at least five additional Petrobras officials in exchange for receiving confidential pricing information that Vitol used to win fuel oil contracts with Petrobras. During that scheme, a consultant acting on behalf of Vitol engaged in back-channel negotiations with a Houston-based Petrobras official.

The parties would then hold staged negotiations, ultimately settling on the pre-arranged price that allowed for bribes to be paid from Vitol to the Petrobras officials, spokespersons for the Eastern District said.

Several of the co-conspirators communicated using alias email accounts and code names, including “Batman,” “Tiger,” “Phil Collins,” “Dolphin,” “Popeye” and “Beb.” Finally, Vitol admitted to participating in a second conspiracy to bribe officials in Ecuador and Mexico in order to obtain and retain business in connection with the purchase and sale of oil products.

Between 2015 and July 2020, Vitol agreed to offer and pay more than $2 million in bribes to those officials. To further the scheme, Vitol and its co-conspirators entered into sham consulting agreements, set up shell companies, created fake invoices for phony consulting services and used alias email accounts to transfer funds to offshore companies — all while knowing that the funds, at least in part, would be used to pay bribes to Ecuadorian and Mexican officials, according to the Eastern District.