Swiss Investigating Oil Trader Gunvor for Foreign Bribery

(Bloomberg) -- Switzerland’s Attorney General said it is investigating Gunvor Group Ltd. on “suspicion of bribery of foreign public officials” in the Republic of Congo, underscoring the energy traders’ legal troubles in the long-running case.

The top Swiss prosecutor in its 2018 annual report Monday said it had widened an investigation into suspected bribery to include two companies controlled by the oil trader. Gunvor had previously disclosed only that the Swiss probe had expanded to include “organizational shortcomings” that may have been “exploited” by a former employee to “perpetrate alleged acts of bribery of foreign officials.”

The disclosure of the criminal bribery investigation against the Gunvor entities makes clear the legal pressures facing the top-five oil trader and, once again, highlights the industry’s use of third-parties or agents in foreign countries.

A Gunvor spokesman declined to comment specifically on the annual report. He referred to a statement issued in 2018, after an ex-Gunvor employee was given an 18-month suspended sentence, three years probation and ordered to pay 33,000 Swiss francs ($32,300) for bribing public officials in the Republic of Congo.

The federal prosecutor “decided to investigate the company for organizational shortcomings that did not prevent the ex-employee from his admitted misdeeds,” Gunvor said in the 2018 statement, noting that it has long ceased doing business in the Republic of Congo, and that no members of management knew of the former employee’s conduct.

In the annual report, the Attorney General said “consultants engaged and paid by companies in the Gunvor Group transferred a significant portion of their fees to foreign government officials in order to persuade them to make decisions in favour of the Group.” Similar offences were committed in the Ivory Coast, the Swiss prosecutor added.

A spokeswoman for the Office of the Attorney General confirmed the prosecutor is investigating the two Gunvor entities under Article 102 of the Swiss criminal code which spells out how if it’s not possible to attribute a suspected crime to any individual because of the “inadequate organization” of the company then the crime is attributed to that company.

The spokeswoman also said investigations against “several financial intermediaries” on suspicion of money laundering and criminal mismanagement were ongoing. The investigation began in 2012.

The commodities trading industry is under intense scrutiny by authorities for business practices in resource-rich countries around the world and the use of middlemen. There are now a multitude of bribery and corruption investigations in jurisdictions ranging from Brazil to the U.S., drawing comparisons with the early 1980s when Glencore Plc’s founder Marc Rich was prosecuted for tax evasion.

Top executives at some of the biggest trading houses, including Gunvor and Trafigura Group Ltd. vowed earlier this year to cut back on the use of agents in foreign countries amid a raft of corruption investigations and allegations involving middlemen.

‘‘We clearly are shying away from agents,” Gunvor Chief Executive Officer Torbjorn Tornqvist said in an interview in March.

“If you are asking me, ‘Will we use more or less agents?’ the answer is considerably less.”

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