Source: Bloomberg

Trafigura’s Bribery Case Puts Commodity Trading Culture on Trial in Switzerland

• Founder, former COO accused of involvement in bribery scheme
• Trafigura says its anti-corruption controls were adequate

By Hugo Miller, Jack Farchy, and Archie Hunter

December 2, 2024 at 5:00 AM UTC

A landmark trial for the global commodity trading industry begins in Switzerland on Monday, as Trafigura Group and its former chief operating officer stand accused of corruption.

The behavior of commodity traders has been in the crosshairs of global prosecutors for several years, but this week marks the first time that senior leadership of a major commodity trading house face allegations of bribery and corruption.

In the biggest Swiss prosecution of a company since 2022, when Credit Suisse was convicted for laundering a cocaine dealer’s cash, Trafigura and its former chief operating officer, Mike Wainwright, will face a panel of three judges at the Federal Criminal Court in Bellinzona.

With more than three weeks in December and January reserved for arguments, the trial will put top-level decision making at Trafigura between 2009 and 2011, when the company allegedly bribed an Angolan official, under intense scrutiny.

If convicted, Trafigura faces a maximum fine of just 5 million Swiss francs ($5.6 million), roughly what the company made every six hours last year from trading oil, metals and other commodities, plus repayment of the illicit profit of over $140 million. Wainwright faces the prospect of as long as five years in prison but any verdict would be subject to appeal and not enforceable until all those appeals have been exhausted. A process that will take years to resolve

Read more: Trafigura Paid Bribes Via ‘Mr. Non-Compliant,’ Swiss Say

A quietly spoken English accountant, Wainwright was nonetheless one of the most powerful men in the commodity trading industry as Trafigura’s COO from 2008 until he stepped down last year. In an indictment made public earlier this month, prosecutors also accused Trafigura’s late founder and chief executive officer, Claude Dauphin, and a former management board member, Mariano Ferraz, of involvement in the bribery scheme.

During the trial, the court will hear evidence about the case against each of the four defendants: Paulo Gouveia Junior, the Angolan official who allegedly received the bribes; a Swiss middleman; Wainwright; and Trafigura, which is being charged through its Dutch parent company.

Wainwright, who denies the charges against him, is expected to testify, while a representative of Trafigura is also likely to take the stand.

Not since the conviction of Credit Suisse, has a company of Trafigura’s size been put on trial in Switzerland, underscoring the importance of the case for local prosecutors determined to hold corporates to account who they believe have been criminally negligent.

In an ironic twist, Credit Suisse’s money laundering conviction was overturned on a technicality linked to the death of the key banker in the case just days before the Trafigura trial begins.

Swiss prosecutors are targeting Trafigura through a clause in the Swiss Criminal Code introduced in 2003 that allows them to indict a company if it didn’t take reasonable steps to prevent acts such as bribery or money laundering.

While the Credit Suisse conviction was the first time a local bank had been convicted of money-laundering offenses, a guilty verdict would mark the first time a company has been convicted on bribery-related charges in a Swiss court.

Trafigura’s defense will focus on the adequacy of its internal controls. In a statement earlier this month, it said its anti-bribery and anti-corruption controls and compliance program had been “externally reviewed and assessed to have met legal requirements and international good practice standards applicable at that time.”

Blatter, Platini

Though home to less than nine million people, Switzerland hosts a disproportionately large number of banks, multinationals and commodity traders, and has traditionally been seen as a soft-touch regulator, particularly of those that buy and sell oil and metals.

A conviction of a senior executive like Wainright would also be something of a first for a Swiss federal court. Sepp Blatter and Michel Platini, the former bosses of FIFA and UEFA were tried and then acquitted on fraud charges at a 2022 trial.

Pierin Vincenz, the ex-CEO of local retail bank Raiffeisen Switzerland was convicted at a lower court in 2022 of embezzlement for among other things, racking up a $216,000 tab at a string of cabarets, strip clubs and “contact bars.”

Daniel Kinzer, Wainwright’s lawyer, said he “entirely rejects the allegations made against him and will be presenting a robust defense.”

Jean-Louis Scenini, a lawyer for Gouveia who was CEO of Sonangol Distribuidora, didn’t respond to messages seeking comment and or whether his client would attend the trial. Daniel Tunik, a lawyer for the middleman who can only be named as P., confirmed his client will be there, declining to comment further.

Trafigura has said that it rejects the charges against it and will defend itself in court. Emails, calls and messages sent to Carlos Eduardo Machado requesting comment – a lawyer who previously represented Ferraz during Brazil’s Operation Carwash scandal – were not returned.

The family of Claude Dauphin has protested the case as a “denial of justice,” arguing that the late founder’s interests should be represented in court.

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Source: BBC

Trafigura found guilty of exporting toxic waste

• Published 23 July 2010

A Dutch court has found multinational Trafigura guilty of illegally exporting toxic waste from Amsterdam and concealing the nature of the cargo.

In 2006, Trafigura transported waste alleged to have been involved in the injury of thousands of people in Ivory Coast. Trafigura denied any wrongdoing.

It expressed disappointment in the ruling and is considering an appeal.

The firm was fined 1m euros (£836,894) for its ship, the Probo Koala, transiting Amsterdam with its cargo.

The ship then went on to unload its cargo in Ivory Coast.

Trafigura employee Naeem Ahmed, who was involved in the ship’s operation in Amsterdam, was fined 25,000 euros and the captain of the Probo Koala, 46-year-old Sergiy Chertov, was sentenced to a five-year suspended jail term.

This is the first time Trafigura has faced criminal charges since the toxic waste scandal unfolded in Ivory Coast’s commercial capital, Abidjan, in 2006.

Trafigura, an oil trading company, initially tried to clean up low-grade oil by tipping caustic soda into the hold of the Probo Koala. The company tried to unload the waste in Amsterdam for treatment, declaring it as “harmless slops”.

When the treatment company came back with a higher price for cleaning the waste, the cargo was shipped to Africa where it ended up in Abidjan to be handled at a much lower rate.

Presiding Judge Frans Bauduin said: “Trafigura – which by that time knew of the exact composition [of the waste] – should never have agreed to its processing at such a price.”

Trafigura said it was pleased to have been acquitted of the charge of forgery, but was “disappointed by the judges’ ruling on the other two, which it believes to be incorrect”.

A statement from Trafigura said: “Concerning the delivery of dangerous goods, it is important that the court has noted that there was limited risk to human health from these slops, and indeed no damage occurred in Amsterdam.”

Trafigura said it was considering an appeal.

A lawyer representing the company, Robert de Bree, said: “I think it’s important to notice that the convictions relate to highly technical, complex legal matters and we will carefully study the judgement to look at the possibility of an appeal.”

Another Trafigura lawyer, Michael Wladimiroff, was quoted by Associated Press news agency as saying the company believed the Marine Pollution Treaty applied and that the court had incorrectly applied the terms of another waste management treaty.

The firm also maintained that Mr Ahmed “did nothing wrong”.

Out-of-court settlement

Greenpeace, which brought this case, has welcomed the outcome, saying it was a warning to firms not to export waste to developing countries.

Greenpeace toxics campaigner, Marietta Harjono, said that further legal action should be taken against Trafigura: “We must also be very clear that justice is not complete yet, because this is only the beginning, because Trafigura has not been brought to trial yet for the deliberate dumping of toxic waste in Africa.”

One of those who fell ill after waste was dumped, Ivorian Guy Oulla, told the BBC: “I believe it is a very good decision because people should pay for what they do, you know. So, I agree with that decision. You know, we live in Africa and it could happen again because in Africa people do everything for money.”

In 2008, a court in Ivory Coast found two non-Trafigura employees guilty of illegally dumping the waste.

A Nigerian national named Salomon Ugborugbo was sentenced to 20 years in jail.

He was the head of an Abidjan firm, Tommy, which Trafigura said it contracted in good faith to handle the waste from the Probo Koala.

Essoin Kouao, who worked as a shipping agent at the Port of Abidjan and had recommended Tommy to Trafigura, received a five-year prison term.

In 2007 Trafigura paid $160m (£104m) to the government of Ivory Coast without admitting liability.

Trafigura also paid $50m (£32m) in an out-of-court settlement to individuals in Ivory Coast who said they had been injured when the waste was spread on dumps around Abidjan.