When commodity traders get caught

Companies and/or individuals involved: Vitol Inc. (USA), Vitol SA (Switzerland); Javier Aguilar (former trader at Vitol Inc.); Lionel H. (intermediary)

Charges:

• Vitol: Violation of the Foreign Corrupt Practices Act (USA); manipulation and deception
• Javier Aguilar: Violation of the Foreign Corrupt Practices Act (USA), conspiracy to commit money laundering
• Lionel H.: Conspiracy to commit money laundering

Swiss lawyers used: None

Countries affected: Mexico, United States

Places of Proceedings: United States (Department of Justice, DOJ, and Commodity Futures Trading Commission, CFTC; District Court for the Eastern District of New York)

Outcome:

• Vitol:
  • USA (Department of Justice): Deferred Prosecution Agreement: Criminal penalty: USD 90 million (relates to several matters and countries; other penalties partly taken into account)
  • USA (Commodity Futures Trading Commission): Settlement: Civil monetary penalty: USD 16 million and forfeiture of profits of USD 12,791 million (relates to several matters and countries; other penalties partly taken into account)
• Javier Aguilar:
  • USA (U.S. District Court for the Eastern District of New York): Found guilty, facing up to 30 years in prison. He has announced that he intends to appeal.
• Lionel H.:
  • USA (U.S. District Court for the Eastern District of New York): Pending

Asset recovery: None

The case

Employees who land contracts through bribery may assume that their actions serve the interests of the company. But when they get found out, everyone fights for themselves. This is also the case with Vitol Inc., a U.S. affiliate of the Vitol group of companies, and its former employee Javier Aguilar, an oil and gas trader in Houston.

From 2015 to 2020, Aguilar ran, according to the information Vitol has provided to the U.S. authorities, a sophisticated bribery scheme to procure contracts in Mexico and Ecuador for Vitol Inc.

In Mexico, it involved contracts with Pemex Procurement International (PPI), a U.S. subsidiary of the state-owned oil company Petróleos Mexicanos (Pemex). Aguilar entered into consulting and brokerage contracts with Lionel H., an external consultant based in Curaçao. The latter’s shell companies, in turn, maintained consulting contracts with other bogus companies, through which bribes flowed to two PPI employees.  Further payments were made in cash, some handed over by intermediaries in a car park in Houston. The PPI employees received a total of more than USD 600,000.

The group used private email addresses and WhatsApp, code names and code words. Bribes were referred to as “shoes”, “medicine”, “invitations” or “coffee”. A thousand U.S. dollars became a “gringo”. The recipients were looking forward to the “dulces para la fiesta” (candies for the party). “The cash register should start ringing from now on.” 

In return, the PPI employees provided inside information that Vitol Inc. utilized to beat competitors and conclude contracts worth several hundred million U.S. dollars.

On 22nd September 2020, however, the U.S. Department of Justice (DoJ) charged Aguilar with bribery in Ecuador and, on 3rd August 2023, with bribery in Mexico.

As early as 3rd December 2020, Vitol Inc. and the Swiss parent company Vitol SA signed a Deferred Prosecution Agreement (DPA) in New York. Vitol Inc. admitted bribery in Brazil, Ecuador and Mexico. It undertook to pay a total of USD 90 million to the United States and ramp up its compliance program. On top of that, Vitol had to pay almost USD 29 million in civil monetary penalties to the Commodity Futures Trading Commission (CFTC) and paid USD 45 million in restitution to Petrobras.

This allowed the company to avoid a criminal conviction and conclude the proceedings quickly.

The New York trial against Aguilar did not take place until early 2024.

The former Vitol Inc. employee presented himself as a scapegoat. According to him, the operation was masterminded by his Swiss supervisor at the time.

The DoJ indeed referred to his line manager as a co-conspirator. However, the other accomplices cooperating with the DoJ all testified against Aguilar.

Lionel H., the intermediary who had been subject of criminal proceedings in the United States since 2022, incriminated Aguilar, but had to admit that Aguilar’s line manager was an old friend of his and had lent him money. Accordingly, Lionel H. would have had a reason not to incriminate Aguilar’s line manager.

The jury considered all of this irrelevant. It found Aguilar guilty for his role in a sophisticated bribery and money laundering scheme. He has announced that he wants to appeal against the decision.

Things remain interesting.

Documents related to this affair

• Bloomberg: “How the top oil traders’ brazen corruption was caught on tape” (18th March 2024)
• United States District Court, Southern District of Texas - Houston Division: Indictment against Javier Alejandro Aguilar Morales (3rd August 2023)

Timeline

Legislative loopholes

• Concealment of responsibility by using intermediaries to pay bribes
• Systematic bribery is seen as an organizational problem
• Lack of monitoring of group-wide compliance with minimum legal standards
• No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders