Gunvor to pay $661M to settle FCPA violations in Ecuador

As part of the plea agreement entered into U.S. District Court for the Eastern District of New York on Friday, Gunvor will pay a criminal penalty of nearly $375 million and forfeit about $287 million in ill-gotten gains, the DOJ said in a press release. Gunvor will pay approximately $98 million in penalties to the Office of the Attorney General of Switzerland and reached an agreement with Ecuadorean authorities as well.

The DOJ said the sentence “includes credits of up to one-quarter of the criminal fine each for amounts Gunvor pays to resolve investigations by Swiss and Ecuadorean authorities into the same misconduct, so long as the payments are made within one year of today’s date.”

Two former Gunvor consultants, a former Gunvor employee and agent, and a high-ranking official at Petroecuador previously pleaded guilty to charges that included violating the FCPA and money laundering.

The details: Between 2012 and 2020, Gunvor funneled more than $97 million in bribes to officials at Ecuador’s state-owned and state-controlled oil company, Petroecuador, Gunvor admitted. The bribe payments, arranged by Gunvor employees and third-party business agents, were routed through banks in the United States using shell companies located in the British Virgin Islands, Panama, and elsewhere, the DOJ said.

In exchange for the bribe payments, officials at Petroecuador helped Gunvor win the rights to a series of oil-backed loan contracts with Petroecuador that circumvented the bidding process and at contractual terms Gunvor would not have received otherwise, the DOJ said. Gunvor earned more than $384 million in illicit profits as a result of the scheme.

Gunvor was penalized in 2019 by Swiss authorities for bribing officials in Congo-Brazzaville and Côte d’Ivoire to secure oil contracts from 2009-12, the DOJ noted.

Compliance considerations: Gunvor earned a 25 percent reduction off the 30th percentile of the applicable guidelines fine range, the DOJ said, “taking into account Gunvor’s cooperation and remediation, as well as its prior history.”

The company said it parted with employees involved in the bribery scheme before the DOJ investigation began. It shared the results of its internal investigation with the DOJ at the agency’s request and produced an analysis of trading activity conducted by multiple outside forensic accounting firms it retained.

The DOJ said the “timely and appropriate” remedial measures undertaken by Gunvor included:

• Eliminating its use of third-party business origination agents;
• Enhancing its third-party due diligence process;
• Developing and implementing a control framework for internal business developers;
• Enhancing its independent compliance committee with responsibility for reviewing high-risk transactions;
• Reviewing and testing the effectiveness of its compliance program, including its hotline reporting process;
• Updating its compensation policy to better incentivize compliance;
• Enhancing its compliance program, including through new hires and culture reviews; and
• Developing and implementing a risk-based business communications policy that addresses the use of ephemeral and encrypted messaging applications.

Company response: “Gunvor made mistakes at the time, for which we are sorry and that we have worked diligently to fix,” Gunvor Group Chairman Torbjörn Törnqvist said in a statement. “Today, Gunvor upholds an industry-leading compliance program that we are committed to continuously enhance. Corruption has no place in our company and will never be tolerated.”

The company said its anti-bribery and corruption compliance program would be part of a new ethics and sustainability department within the business, “designed to bolster Gunvor’s ability to respond to an evolving and ever-changing regulatory environment and to ensure that Gunvor’s commercial activities are managed in the most efficient and compliant manner possible.”