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Swiss-Based Commodities Trading Company Pays $661 Million for FCPA Violations

Posted  March 4, 2024

Last Friday (March 1), the Department of Justice (DOJ) announced that Swiss-based international commodities trading company Gunvor S.A. pleaded guilty and agreed to pay roughly $661 million to settle charges of violating the Foreign Corrupt Practices Act (FCPA).  The DOJ’s action stemmed from Gunvor’s scheme to bribe Ecuadorean officials to secure business with Ecuador’s state-owned oil company Petroecuador.

The FCPA bars payments to foreign officials for any kind of business advantage, such as securing government contracts or other kinds of favorable business treatment.  The statute covers any form of consideration including gifts, meals, travel, and entertainment.  It also imposes strict record-keeping and internal control requirements to prevent falsifying company books and records to disguise foreign bribes.  Enforcing the FCPA is a perennial priority for DOJ and the Securities and Exchange Commission (SEC), the agencies with primary responsibility for enforcing the statute.

According to the government and Gunvor’s admissions, the company and its co-conspirators paid roughly $100 million through various intermediaries to high-ranking officials at Petroecuador to secure oil-backed loan contracts with the state-owned company.  The scheme allowed Gunvor to receive confidential Petroecuador information, avoid a competitive bidding process for the contracts, and obtain more favorable contractual terms.  It also resulted in Gunvor earning roughly $384 million in profits from the contracts.

Notably, the $661 million payout is almost as large as the $748 million in total FCPA settlements last year.  And but for Gunvor’s cooperation with the government’s investigation, the payout would have been even larger.  DOJ made a point of highlighting the credit the company received for this cooperation, which included producing documents expeditiously, sharing information from its own internal investigation, and facilitating employee interviews.  DOJ also noted the significant remedial measures Gunvor has taken following the government’s action.

Nevertheless, the government believed the seriousness of Gunvor’s conduct still warranted a sizeable penalty.  And the government used the settlement to reinforce its commitment to strictly enforcing the FCPA and reaffirm its zero-tolerance approach to foreign bribery.  Acting Senior Counselor Brent Wible of DOJ’s Criminal Division put it this way:

Foreign bribery emboldens corrupt officials and undermines the rule of law.   Gunvor’s guilty plea demonstrates that the Criminal Division remains resolute in our efforts to root out bribery and official corruption.  We will continue to hold both corporations and individuals who bribe foreign officials to account, in coordination with our international partners.

U.S. Attorney Breon Peace for the Eastern District of New York echoed this sentiment:

Corruption erodes the public’s trust in their government, prevents government officials from acting in the best interests of the people they represent and harms businesses that play by the rules, driving up prices for consumers.  The Justice Department, including my office, will not tolerate bribes being paid by American companies or foreign companies misusing the U.S. financial system.

It is not clear whether any whistleblowers were involved in helping the government go after Gunvor.  Typically, whistleblowers play an important role in uncovering FCPA violations, which are often difficult to detect because of the sophisticated schemes at play to disguise the illicit payoffs.  In this vein, Gunvor routed its bribes through U.S. banks using shell companies in Panama and the British Virgin Islands controlled by Gunvor’s co-conspirators.

So if you think you might have information relating to potential FCPA violations, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.  Maybe you will be the whistleblower associated with the next big FCPA settlement and potentially secure a piece of the government’s recovery as a whistleblower award either under either the False Claims Act or the SEC Whistleblower Program.

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Tagged in: Bribery and Bid-Rigging, FCPA, Fraud in CFTC-Regulated Markets, Government Procurement Fraud,