Energy trader Vitol to pay $164M in FCPA case

Vitol on Thursday agreed to pay a combined $135 million to resolve a Department of Justice investigation into violations of the Foreign Corrupt Practices Act (FCPA) in addition to a parallel probe by the Brazilian Ministério Público Federal, to which $45 million of the criminal penalty will be credited. The firm has also entered into a three-year deferred prosecution agreement (DPA) with the DOJ but will not need to appoint an independent compliance monitor.

In a related matter, Vitol will pay approximately $28.7 million in penalties and disgorgement to the CFTC—the first time the regulator has coordinated with the DOJ in an FCPA enforcement.

“Over a period of 15 years, Vitol paid millions of dollars in bribes to numerous public officials—in three separate countries—to obtain improper competitive advantages that resulted in significant illicit profits for the company,” said Acting Assistant Attorney General Brian Rabbitt of the Justice Department’s Criminal Division in a press release. “Today’s coordinated resolution with Brazil, along with our first coordinated FCPA resolution with the CFTC, underscores the department’s resolve to hold companies accountable for their crimes while, at the same time, avoiding unnecessarily duplicative penalties.”

The DOJ investigation focused, in part, on more than $8 million in bribes paid by Vitol employees and agents between 2005 and 2014 to Brazilian officials in order to obtain and retain business from state-owned petroleum company Petrobras. Vitol and its affiliated companies earned at least $33 million in profits from the improperly obtained contracts, the DOJ noted.

Also investigated was a more than $2 million bribery scheme that ran through Ecuador and Mexico between 2015 and 2020 to similarly obtain and retain business in connection with the purchase and sale of oil products. In the case of both schemes, illegal payments were made through bank accounts located in the United States, namely the Eastern District of New York.

In executing the schemes, Vitol entered into sham consulting agreements, set up fictitious shell companies to launder the corrupt payments, and created fake invoices for purported consulting services.

The DPA was entered in the Eastern District of New York and charges Vitol with two counts of conspiracy to violate the anti-bribery provisions of the FCPA. Senior U.S. District Judge Eric N. Vitaliano will oversee the case.

As part of the DPA, Vitol and its affiliate Vitol S.A. have agreed to a series of compliance enhancements, including the following:

• A review of existing internal accounting controls, policies, and procedures regarding compliance with the FCPA and other applicable anti-corruption laws;
• The maintenance and adoption of an effective system of internal accounting controls designed to ensure the making and keeping of fair and accurate books, records, and accounts; and
• The maintenance and adoption of a rigorous anti-corruption compliance program that incorporates relevant internal accounting controls, as well as policies and procedures designed to effectively detect and deter violations of the FCPA and other applicable anti-corruption laws.

Vitol and its affiliate received full credit for its cooperation with the DOJ’s investigation, in addition to enhancements to compliance already made.

“Vitol is committed to upholding the law and does not tolerate corruption or illegal business practices,” CEO Russell Hardy said in a statement. “As recognized by the authorities, Vitol has cooperated extensively throughout this process. We understand the seriousness of this matter and are pleased it has been resolved. We will continue to enhance our procedures and controls in line with best practice.”

Historic CFTC involvement

The CFTC’s order marks the first time the agency has brought an action involving foreign corruption. The regulator penalized Vitol for the effects of its bribes on the markets, which gave the company “unlawful competitive advantages in trading physical oil products and related derivatives to the detriment of its counterparties.”

“This historic enforcement action demonstrates that the CFTC will actively pursue fraud tied to foreign corruption and manipulation that impacts the U.S. derivatives and related physical markets,” Chairman Heath Tarbert said in a press release.

The CFTC’s order also included allegations that Vitol attempted to manipulate S&P Global Platts physical oil benchmarks in August 2014 and July 2015 for its own profit. Vitol neither admitted nor denied the findings in reaching settlement.