By Tom Hals, Gram Slattery and Julia Payne
(Reuters) - Vitol Group's U.S. subsidiary agreed to pay $164 million to resolve probes by the U.S. government that the energy trader paid bribes in Brazil and other countries to boost its oil trading business, the U.S. Department of Justice said on Thursday.
Under a three-year deferred prosecution agreement, the Swiss trading firm admitted guilt and agreed to improve internal reporting and compliance functions.
Vitol, run out of London, is the world's largest independent oil trader, trading some 8 million barrels of oil a day.
"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," Acting U.S. Attorney Seth DuCharme of the Eastern District of New York said in a statement.
The energy trader will pay the Department of Justice (DOJ) a criminal penalty of $135 million to resolve the probes. Brazilian authorities will receive $45 million from that amount.
Vitol will also pay back the Commodity Futures Trading Commission (CFTC) over $12.7 million in ill-gotten gains, plus $16 million in fines, according to the DOJ statement.
"Vitol is committed to upholding the law and does not tolerate corruption or illegal business practices. As recognised by the authorities, Vitol has cooperated extensively throughout this process," Vitol CEO Russell Hardy said in a statement.
Brazilian police have for years been investigating several major companies for the alleged use of bribes to win contracts with state-controlled oil company Petroleo Brasileiro SA (Petrobras), as part of the wide-ranging 'Car Wash' probe.
In October, police expanded the investigation at Petrobras based in part on secret recordings made by a former executive of Vitol, according to court documents.
Vitol and its co-conspirators paid over $8 million to at least four Petrobras officials between 2005 and 2014, the DOJ said. In an effort to hide the schemes, the company used "sham" consulting agreements, shell companies, and fake invoices with its co-conspirators, who in turn communicated with code names like 'Batman', 'Dolphin' and 'Tiger.'
Petrobras said in a statement that it had assisted prosecutors with dozens of investigations into alleged corruption involving employees.
ECUADOR AND MEXICO
Vitol also admitted to bribing or agreeing to pay over $2 million to officials in Ecuador and Mexico in other to secure and retain business there for oil products, according to the DOJ statement.
Prosecutors said the bribes went to employees at Mexico's state-run Pemex and Ecuadorian state oil company Petroecuador.
Petroecuador and Pemex did not respond to requests for comment.
Brazilian prosecutors announced in late 2018 that they were investigating Petrobras' oil deals with trading houses, including the world's biggest oil traders - Vitol, Trafigura and Glencore (OTC:GLNCY).
In early 2019, the DOJ opened its own probe into the three company's dealings in Brazil. The FBI investigated two key Vitol executives who were overseeing the region during those years, including the head of Vitol's U.S. arm, Michael "Mike" Loya, who retired earlier this year.
Loya did not immediately respond to a message sent to his LinkedIn (NYSE:LNKD) account.
Trafigura said no charges had been brought against any Trafigura company or its current management. Glencore declined to comment.
Brazilian prosecutors charged two former Trafigura employees, including a former board member, in late 2018 over allegations of paying bribes to Petrobras employees.