Oil and commodities trading powerhouse Trafigura Group and three other defendants went on trial on Monday in Switzerland’s top criminal court over allegations of bribery. According to Reuters, Trafigura has been charged for failing to take all reasonable measures to prevent payment of more than $5 million in bribes to an Angolan oil official in exchange for oil and shipping contracts more than a decade ago.
Trafigura said that its former parent company, Trafigura Beheer BV (TBBV), will defend itself, “TBBV’s anti-bribery and anti-corruption controls and compliance programme in place at the relevant time have been externally reviewed and assessed to have met legal requirements and international good practice standards applicable at that time,” the company said in a statement, adding that it has since strengthened compliance.
Last month, Bloomberg reported that Trafigura is facing a loss of up to $1.1 billion in Mongolia, linked in part to suspected fraud by its own employees.
According to Bloomberg, the company’s staff manipulated payments while concealing a mountain of overdue debts, a malpractice that continued for years without raising any red flags. Speaking privately, nine bankers have described the potential loss as ‘astounding’, considering Mongolia’s consumption of ~35,000 barrels a day is worth roughly $1 billion a year, or less than 0.3% of the oil traded by Trafigura.
“The key question, as always, is how quickly and effectively one learns from mistakes and implements corrective measures. Not merely by reshuffling or dismissing staff and launching a lengthy recovery process, but by strengthening the company’s governance, internal processes, and controls,” said Jean-Francois Lambert, a consultant and former commodity banker.
Trafigura has grown into one of the biggest diversified commodities traders in the world: last year, the firm traded an average of 5.5 mn barrels of oil a day–the equivalent of the combined oil demand of the UK, France and Germany–and sold more than 100 million tonnes of metals and bulk commodities, including coal. Trafigura’s full FY 2023 revenue of $244 bn surpassed that of British oil major BP Plc. (NYSE:BP).
By Alex Kimani for Oilprice.com