Vitol, a Swiss-based energy trading firm agreed to pay $163 million to settle criminal and civil charges. The charges related to Vitol’s paying bribes and manipulating the domestic energy market. Vitol is the world’s largest privately held oil and gas trading company. It will pay over $135 million in criminal fines. Of this amount, Vitol will pay $90 million directly to DOJ and another $45 million to the government of Brazil. The Commodities Futures Trading Commission has ordered Vitol to pay $95 million in disgorgement and civil penalties, some of which will be offset by the criminal penalties, but at least $28 million will go directly to the CFTC.
This settlement shows the seriousness that the government treats foreign bribery and market manipulation.
The Genesis Of The Vitol Scheme
According to Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York,
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.
In Brazil, Vitol paid at least $8 million to bribe officials at the national oil company Petróleo Brasileiro S.A. – Petrobras (Petrobras). Vitol paid these bribes to obtain confidential pricing and competitor information, which it used to cheat the energy trading markets.
Moreover, from 2011 to 2014, Vitol bribed other Petrobras officials to help win fuel oil contracts from Petrobras. Vitol then held fake negotiations for those contracts, arriving at pre-arranged prices purchased with the bribes. As part of this scheme, co-conspirators communicated using alias email accounts and code names. These included “Batman,” “Tiger,” “Phil Collins,” “Dolphin,” “Popeye,” and “Beb.”
Vitol also admitted to a conspiracy to bribe officials in Ecuador and Mexico. Vitol paid over $2 million in bribes to officials in these countries.
The CFTC $95 million Vitol Energy Trading Manipulation Order
The $95 million CFTC order is also based in part on the bribes paid by Vitol. The bribes violate the Foreign Corrupt Practices Act (FPCA). This law bars companies from paying bribes to secure foreign business. As the CFTC announced back in 2019, when it issued an enforcement advisory on the topic, it take foreign corruption affecting domestic commodities markets seriously:
Combatting misconduct that affects our financial markets has truly become a team effort, and that is particularly true with respect to foreign corrupt practices. We at the CFTC will do our job as part of the team to identify this type of misconduct in our markets and hold wrongdoers accountable, working closely with our enforcement partners domestically and abroad. This new Enforcement Advisory provides further clarity surrounding the benefits of self-reporting misconduct, full cooperation, and remediation in this context, and it reflects the enhanced coordination between the CFTC and our law enforcement partners like the Department of Justice
This order reflects the CFTC’s first fine for violations of the FPCA. The SEC has long enforced cases of foreign bribery in the industries it regulates.
CFTC also penalized Vitol for manipulating and attempting to manipulate fuel oil benchmarks to benefit its energy positions. The CFTC found that “if successful, such conduct would have been to the detriment of market participants who held opposing positions—including Vitol’s counterparties—or those who rely on the benchmarks as an untainted price reference for U.S. physical or derivative trades.”
Potential Whistleblower Award
On December 8, the CFTC posted a Notice of Covered Action for the Vitol case. The Notice starts a 90-day clock for any whistleblowers who submitted information that led to the CFTC order. Such CFTC whistleblowers are entitled to 10-30% of the government’s recovery. Since making its first award in 2014, the CFTC has awarded approximately $100 million to whistleblowers in connection with enforcement actions that netted more than $800 million in CFTC fines and other recoveries.
How to Report Commodities & Futures Fraud
If you are considering submitting a tip, complaint, or referral to the CFTC, we urge to contact us for a free, confidential, consultation to discuss the CFTC whistleblower process. We can explain the option to file your tip, complaint, or referral anonymously through your legal counsel. We can also walk you through additional steps to protect the confidentiality of whistleblowers and their information.