BROOKLYN (CN) — The U.S. affiliate of one of the world’s largest energy trading firms struck a more than $160 million deal Thursday to resolve bribery investigations here and in Brazil.
In addition to paying the U.S. Justice Department $135 million — a third of which is to be credited against the parallel investigation in Brazil — Vitol will give up more than $12.7 million in illegal profits to the Commodity Futures Trading Commission and pay the that agency a separate $16 million penalty for trading activity not covered by the agreement.
A criminal information against Vitol was filed today in New York’s Eastern District, alleging that the company paid bribes to officials at state-owned oil companies in Brazil, Ecuador and Mexico from 2005 to 2020 for insider information that would give it an edge when bidding on contracts in Latin America.
Vitol’s parent company is headquartered Geneva, but its U.S. operations are based in Houston.
Charged with two counts of bribery conspiracy under the Foreign Corrupt Practices Act, Vitol should have faced a fine range between $180 million and $360 million but got a 25% discount on the bottom of that range, according to the deferred prosecution agreement.
Justice Department attorney Derek Ettinger said in court Thursday that the company got a break because it fully cooperated and remediated its transgressions.
The resolution effort coordinated between the U.S. and Brazil is unique, Ettinger said, and demonstrates that the company is “taking responsibility in both jurisdictions.”
He added that the agreement with the U.S. avoids penalizing the company twice, but Vitol will be on the hook for the entire amount if it fails to pay the Brazilian government the agreed-upon $45 million.
Senior U.S. District Judge Eric N. Vitaliano noted during proceedings that “essentially, while the prosecution is being deferred, the sentence is not.”
Prosecutors pointed out that the penalty is different from a guilty plea, which Vitaliano acknowledged.
“Call it what you want,” the judge said, “but the money is gone.”
Prosecutors say Vitol and its co-conspirators set up shell companies and created sham consulting agreements to transfer bribery funds to offshore companies. The bribes allowed the company to learn information about competitors, so that Vitol could adjust its bidding and win government oil contracts.
Between 2005 and 2014, Vitol and its agents paid more than $8 million in bribes to at least four Brazilian officials at the government-owned oil company Petróleo Brasileiro S.A., according to court documents agreed to by the company. Co-conspirators used alias email addresses and code names, including Batman, Tiger, Dolphin, Popeye and Phil Collins.
In a separate scheme between 2015 and 2020, Vitol admitted to bribing officials in Ecuador and Mexico with more than $2 million, similarly to gain business in those countries.
The three-year agreement signed Thursday will be followed by a review period of six months, after which the U.S. government will dismiss the criminal information against Vitol, provided there are no further breaches during the period.
Vitol must also continue cooperating with the CFTC in any ongoing investigations, and report to the department regarding its compliance programs.
The three-and-a-half year period will be up on June 3, 2024. Vitaliano expressed hope that by then, the Covid-19 pandemic that required the proceedings take place remotely, will be “just a bad memory and not a living concern.”
Vitol was represented by corporate counsel Ernest Kohnke.
Follow @NinaPullano
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Copenhagen’s historic stock exchange collapsing in flames April 16, 2024
