When commodity traders get caught

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Trafigura's monopoly in Angola

Companies and/or individuals involved: Trafigura Beheer BV (Netherlands and Switzerland), Michael Wainwright, Thierry P. and the former boss of Sonangol Distribuidora (Angola)

Charges: Bribery of foreign public officials (Article 322septies paragraph 1 of the Swiss Criminal Code (SCC)), linked to a lack of organization (Article 102 paragraph 2 SCC) for Trafigura

Swiss lawyers used: Trafigura: Jean-François Ducrest (Ducrest Heggli Avocats, Geneva) and Myriam Fehr-Alaoui (Niederer Kraft Frey SA, Geneva), Thierry P.: Daniel Tunik (Lenz & Staehelin, Geneva)

Countries affected: Angola, Switzerland 

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

Outcome: Pending judgment for December 2024, Bellinzona

Asset recovery: N/A

The case

Trading commodities can be like dealing with communicating vessels. So, between 2016 and 2018, when the media was packed with articles about the arrest and conviction of Brazilian businessman Mariano Marcondes Ferraz, it is easy to imagine the tension being felt within Trafigura’s offices. Known as the Geneva trading house’s “Mr Brazil” and after being caught for having made, on behalf of his company Decal do Brasil, no fewer than nine corrupt payments to officials at the state oil company Petrobras, the trader was also prospecting in the Dos Santos’ Angola on behalf of Trafigura, where he held management positions until 2016.

When Mariano Marcondes Ferraz was sentenced to 10 years in prison in exchange for his cooperation, Trafigura was preparing for the fallout at rue Jargonnant, the trader’s headquarters in Geneva. But the judicial authorities only caught up with the company in late 2023, when the Office of the Attorney General of Switzerland (OAG) announced that it had filed an indictment against Trafigura and three individuals, including a former member of the Board of Directors, in connection with the Angolan oil sector. The issue in point related to nine contracts for chartering or bunkering ships, signed between April 2009 and July 2011, when the country was still being run by the Dos Santos family. 

At the time, Trafigura had a de facto monopoly on imports of petroleum products into Angola, a market valued at USD 3.3 billion a year. The trader had also built up a considerable network of petrol stations thanks to investment contracts worth USD 931 million signed by the Angolan presidency, via Pumangol, a subsidiary of Puma Energy, itself a subsidiary of Trafigura. In 2011, the latter then sold 20% of Puma Energy to the national oil company Sonangol.

Some time previously and according to the OAG’s accusations, with a view to winning favourable contracts in Angola, Trafigura had the equivalent of nearly EUR 5 million paid to the director of the Sonangol subsidiary, who was responsible for the distribution and marketing of petroleum products. Thanks to these bribes, Trafigura, the world’s third largest oil trader, allegedly made a profit of USD 143.7 million.

Trafigura immediately responded to the announcement of the trial by issuing a press release, stating that it would have preferred to reach an agreement with the OAG, without going through the courts. It also emphasized that the “compliance and anti-bribery and corruption controls in place at the relevant time” were not up to current standards: “These historical incidents in no way represent the company we are today.” The group has set aside $127 million to deal with this series of investigations. 

Apart from the unprecedented nature of the large-scale unravelling of a trading house in court, the trial will also provide an opportunity to scrutinize Michael Wainwright’s responsibility in relation to the corrupt scheme. Chief Operating Officer and a member of the group’s Board of Directors, this motor racing enthusiast has just been retired by Trafigura. He says he is ready to defend himself in court. 

A few thousand miles away from Bellinzona, Mariano Marcondes Ferraz will certainly be keeping a close eye, from his cell, on the outcome of the trial that could convict his former employer. This will be the first time that a trading house is tried by the Federal Criminal Court.

Documents related to this affair

Timeline

Date

Event

Source

2009Trafigura is omnipresent in the Angola of José Eduardo dos Santos, the hero of independence and president from 1979 to 2017. The country produces crude oil, but lacks the facilities to refine it for its 30 million inhabitants. The trading house has a monopoly on the import of fuels into the country and is responsible for distributing them through its subsidiary Puma Energy via its subsidiary Pumangol in Angola.Public Eye
April 2009-October 2011Suspicions of corrupt payments being made to an Angolan public official. These allegedly took the form of bank transfers totalling nearly EUR 4 million in Geneva and cash remittances in Angola totalling USD 604,000.Public Eye
26th September 2017José Eduardo dos Santos hands over the presidency to his former defence minister João Lourenço. The latter launches an anti-corruption programme and tackles the prevailing nepotism, notably by dismissing Isabel Dos Santos (daughter of José Eduardo dos Santos) as head of Sonangol.The Washington Post
5th March 2018 and 30th October 2019The Brazilian justice system sentences Mariano Marcondes Ferraz, a Trafigura executive until November 2016, to 10 years and 4 months in prison for eight corrupt payments made to the Brazilian state-owned group Petrobras. The payments referred to his own company, Decal do Brasil. Thanks to his collaboration, which allowed him to receive a reduction in his sentence, several criminal investigations have been launched against Trafigura and some of its executives.
The Office of the Attorney General of Switzerland convicts him 18 months later for the payment of an additional ninth bribe in the same Brazilian case. 		Gotham City
15th July 2019Following a series of legal proceedings targeting intermediaries, Trafigura announces that it will stop using its “business developers” to win new contracts in countries rich in raw materials “by October 2019”. Financial Times
July 2020The Office of the Attorney General of Switzerland opens a criminal investigation against an unknown person on suspicion of bribery of foreign public officials (Art. 322septies SCC) and money laundering (Art. 305bis SCC), in connection with possible corrupt payments made to Angolan public officials.Office of the Attorney General
6th December 2023The Office of the Attorney General of Switzerland files an indictment with the Federal Criminal Court. It is targeted at three individuals, as well as Trafigura, for corrupt payments of EUR 4.3 million and USD 604,000 in connection with the Angolan oil sector. These proceedings are part of a series of investigations being carried out in the United States, Brazil and Switzerland. The trial will start on December 2, 2024.Office of the Attorney General

Legislative loopholes

  • Concealment of liability by using intermediaries to pay bribes
  • 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 corrupt agreement is discovered on paper
  • The importance of the accused’s cooperation and of mutual legal assistance to shed light on the corrupt fabric, which extends across several jurisdictions
  • No specific supervisory authority in the commodities sector and no appropriate due diligence obligations for traders