When commodity traders get caught

Companies and/or individuals involved: Gunvor SA (Switzerland) / Pascal C., Bertrand G., Jean-Marc Henry, David B., Eliyahu E. 

Charges: Bribery of foreign public officials (Article 322^septies of the Swiss Criminal Code (SCC)), linked to a lack of organization (Article 102 SCC)

Swiss lawyers used: Benjamin Borsodi (Schellenberg Wittmer, Geneva) & Adrian Bachmann (Bachmann Rechtsanwälte, Zurich) / Pascal C.: Matteo Pedrazzini & Delphine Jobin (PMA Pedrazzini Martin-Achard Avocats, Geneva), Bertrand G.: Alec Reymond (@lex avocats, Geneva), Jean-Marc Henry: Philippe Prost and Léonard Stoyanov (MLL Legal, Geneva), David B.: Laurent Moreillon (Mazou Avocats, Vaud), Eliyahu E.: Marc Joory (Python, Geneva) 

Countries affected: Republic of Congo (Brazzaville), Côte d’Ivoire, Switzerland

Proceedings: Switzerland (Ministère public de la Confédération, MPC)

Outcome: 

• CHF 94 million (including a fine of CHF 4 million)
• Pascal C.: 18-month suspended prison sentence
• Bertrand G.: Pending (trial expected for 2024)
• Jean-Marc Henry: Six-month suspended prison sentence, along with 300 daily penalty units. Equivalent claim in excess of CHF 5 million.
• David B.: No custodial sentence. Equivalent claim of CHF 4.4 million.
• Eliyahu E.: 14-month suspended prison sentence, minus the 170 days spent in pre-trial detention. Equivalent claim of CHF 100,000

Asset recovery: N/A

The case

Gunvor has been stuck with the same image since it was created. That of a company under the Kremlin’s control, co-founded by the oligarch Gennady Timchenko, who is also close to Vladimir Putin. So, when the Geneva-based trading house decided to set out to conquer the Congolese (Brazzaville) market and its corrupt regime, it didn’t spare any expense. 

Gunvor began by making its impressive cash reserves available to the government of Denis Sassou-Nguesso (in office for 26 years). From 2010 to 2012, the trader granted the Congolese National Oil Company (SNPC) six pre-financing arrangements – loans of USD 125 million each – to be repaid by future oil deliveries: some 10 shipments of crude oil per month. 

To help land this contract – which also envisaged the construction of an oil pipeline linking Brazzaville to Pointe-Noire, negotiated in high places in Moscow – two intermediaries close to the Sassou-Nguesso clan were brought in. Jean-Marc Henry and Maxime Gandzion received a total of nearly USD 30 million in commission fees into their accounts at the Clariden Leu bank in Geneva. 

In December 2011, Credit Suisse, which had just bought Clariden Leu, discovered what had been going on and sent a report to Money Laundering Reporting Office Switzerland (MROS). The Office of the Attorney General of Switzerland launched proceedings against unknown persons on suspicion of money laundering. For several years, the investigation progressed at a snail’s pace, until Gunvor’s business developer, designated by his superiors from the outset of this scandal as a “rogue employee”, made a confession in spring 2017. Pascal C. reached an agreement with the Swiss judicial authorities, detailing the ins and outs of the corrupt pact. Thanks to this “simplified” procedure – a kind of Swiss plea bargain – he was given a lenient sentence and allowed his former employer to be convicted of bribery of foreign public officials linked to a lack of organization

On 28th August 2018, the former Gunvor trader was given an 18-month suspended prison sentence for corruption. He admitted to having participated in five corrupt agreements that enabled the Geneva-based trading house to win over oil markets, between 2009 and 2012, in Congo (Brazzaville) and Côte d’Ivoire. His indictment stated that the corrupt agreements were set up “in collaboration with other Gunvor employees” and that the payments (USD 43 million) were approved by the finance department. “The employee was immersed in a work atmosphere where corruption would apparently have been an accepted business process,” read the same court document. 

Nevertheless, the justice system has been very lenient for some. For instance, none of the business developer’s superiors have been prosecuted and the big boss, Torbjörn Tornqvist, escaped without even the slightest reproach. A former colleague, Bertrand G., who tried to revive the Congolese market in 2014 by proposing a new bribery scheme to the Congolese, is awaiting trial for bribing foreign public officials, while a minor intermediary, whose company in Hong Kong received part of the commission fees to redistribute them to Sassou-Nguesso’s networks, was convicted of forgery of documents.

Documents related to this affair

• Public Eye: Guvnor in Congo Oil, cash payments and embezzlement. The adventures of a Swiss trader in Brazzaville. A story in six acts. (September 2017)
• MPC: Commodities trader Gunvor held criminally liable for acts of corruption (17th October 2019)

Timeline

Legislative loopholes

• Oil-backed pre-financing: a practice that entails many risks of corruption and embezzlement of funds
• Banks’ failure to carry out due diligence on politically exposed persons (PEPs)
• Systematic corruption seen as a lack of organization
• Lack of cooperation from the local justice authority. Difficult for the case to advance in the Swiss justice system
• Great difficulty for prosecutors to prove corruption in this kind of case unless there is self-disclosure or a corruption agreement is discovered on paper
• Inability to convict the company’s senior executives
• Fines that are too low (CHF 5 million maximum) and therefore fail as a deterrent for groups making billions in profits
• Compensation claim paid to the Swiss justice system and not to the victims of corruption
• No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders