Swiss prosecutors charge Trafigura and former top executive with bribery

Profits from contracts alleged to have been secured corruptly amount to $143.7m.

Trafigura Group and one of its longstanding top executives have been charged over allegations of bribing public officials in Angola. The business is one of the world’s largest commodity traders specializing in oil and metals,

Trafigura acknowledged the Swiss charges in a statement, and also revealed the US Department of Justice is conducting an investigation into “improper payments” the business made in Brazil.

The charges are the latest in a series of actions from global prosecutors targeting corruption in the commodity trading industry, a marketplace in which the essential resources of oil, metals and grains that power, build and feed the world move between parties and between continents. 

Mike Wainwright, who was Trafigura’s chief operating officer and who, for a decade, formed part of the top trio running the company and has been named in the charges.

Unlike a bribery case that featured charges against an individual executive at Glencore Plc, those against Wainwright are notable given his extremely senior role. He was one of Trafigura’s top three executives and one of its biggest shareholders when he unexpectedly said in April that he would stand down as chief operating officer and soon retire.

Alleged bribe payments

In a statement issued on Wednesday, the Swiss federal prosecutor’s office said in an indictment at the Federal Criminal Court that Trafigura, through its unit Trafigura Beheer BV, failed to take necessary organizational measures to prevent the payment of bribes in Angola between 2009 and 2011.

The trading house paid €4.3m euros ($4.6m) to a bank account in Geneva and made cash payments of $604,000 to an Angolan official between April 2009 and October 2011 in relation to its activities in the country’s petroleum industry, the prosecutor said in the statement. It also paid hotel and meal expenses of Fr797 ($911) for a stay in Geneva.

In return, the Angolan official, the former chief executive officer of a subsidiary of the state oil company Sonangol, favored Trafigura in shipping contracts, the Swiss prosecutor alleges. Trafigura’s alleged profits from those contracts amount to $143.7m.

Prosecutors also charged the former Angolan official alleged to have received the payments who served as a middleman for Trafigura, plus the company itself for its lax controls that prosecutors said made this bribery possible.

Trafigura responds

Trafigura’s response is so detailed and interesting that it’s worth including here.

“Trafigura has been seeking to resolve investigations by regulatory authorities in the United States, Brazil and Switzerland into payments made by former employees via third parties, approximately 10 or more years ago.  

The company understands that the 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.

Trafigura anticipates resolving the US Department of Justice investigation into improper payments made in Brazil shortly and will disclose in its 2023 Annual Report a provision of USD127 million, which will be made available to Trafigura Beheer B.V. (TBBV), the parent company during the period in question. 

“In Switzerland, the Office of the Attorney General (OAG) has asked the Federal Criminal Court to consider charges against TBBV for failing to prevent alleged unlawful payments via a third party to a former employee of Sonangol, the Angolan state energy company between 2009-2011. 

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.  

“The OAG has also announced charges against former Trafigura Chief Operating Officer Mike Wainwright. Mr Wainwright 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.

Trafigura’s CEO responds

Trafigura Executive Chairman and Chief Executive Jeremy Weir said: “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. 

“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.” 

Turbulent industry sector

In February, Trafigura said it faced almost $600m in losses after discovering metal cargoes it bought didn’t contain the nickel they were supposed to hold. It was apparently the victim of fraud, and it brought a legal action against an Indian businessman and several companies connected to him.

Working in this industry is far from easy. There have been many allegations of incredibly costly instances of fraud, including shipments of cargo that were supposed to be precious metals but turn out to be painted rocks, and a case that involve fake receipts for nickel stocks in warehouses.

Author’s note

That prior bribery case in Brazil involving Ferraz (but not Trafigura at all), who was charged with corruption and money laundering? You guessed it: It was the long-running Petrobras Carwash probe. The corruption investigation began in 2014 with the arrest of a currency dealer and mushroomed into Brazil’s biggest ever graft scandal. It featured hundreds of businesspeople and government officials being convicted of various crimes, from money laundering to embezzlement to bribery.