We continue our exploration of the resolution of the FCPA enforcement action involving the Swiss trading firm trading firm G Trafigura Beheer B.V. (Trafigura), an international commodity trading company with its primary operations in Switzerland. The company pled guilty and will pay over $126 million to resolve an investigation stemming from the company’s corrupt scheme to pay bribes to Brazilian government officials to secure business with Brazil’s state-owned and state-controlled oil company, Petróleo Brasileiro S.A. – Petrobras (Petrobras). The matter was resolved via a Plea Agreement. An Information detailing the company’s conduct was also issued.

Given the multi-year nature of the bribery scheme, how high it went up into the organization,  the lack of self-disclosure, and the admittedly lack of stellar cooperation; one might charitably wonder how Trafigura was able to obtain any discount from their overall penalty.  There was no total figure to show the amounts of bribes paid by Trafigura in the Plea Agreement.  However it did note that Trafigura earned over $61 million in profits from the business obtained through the corrupt scheme. Yet Trafigura received a 10% discount off the 50^th percentile of the applicable US Sentencing Guideline fine range. How did Trafigura achieve this discount.

Cooperation

The starting point for this analysis is the Plea Agreement. However we should begin by noting that However, Trafigura failed to preserve and produce certain documents and evidence in a timely manner and, at times, took positions that were inconsistent with full cooperation, “particularly during the early phase of the department’s investigation.” Additionally, Trafigura was slow to exercise disciplinary and remedial measures for certain employees whose conduct violated company policy. Finally, Trafigura “ultimately accepted responsibility for its criminal conduct, its prior posture in resolution negotiations also caused significant delays and required the Offices to expend substantial efforts and resources to develop additional admissible evidence before the Defendant constructively reengaged with the Offices in agreeing to a negotiated resolution.”

This cooperation included, (i) providing timely updates on facts learned during its internal investigation; (ii) making factual presentations to the DOJ; (iii) facilitating the interviews of employees and agents, including an employee located outside the United States, and arranging for counsel for employees where appropriate; (iv) producing relevant non-privileged documents and data to the department, including documents located outside the United States in ways that navigated foreign data privacy laws, accompanied by translations of certain documents; and (v) providing all relevant facts known to it, including information about individuals involved in the conduct. Here I think the compliance professional should note that Trafigura provided documents to the DOJ which were located outside the United States in ways that navigated foreign data privacy laws.

The Remediation 

The Plea Agreement also reported on the remediation engaged in by Trafigura. Trafigura also engaged in remedial measures, including: (i) developing and implementing enhanced, risk-based policies and procedures relating to, among other things, anti-corruption, use of intermediaries and consultants, third party payments, and joint venture and equity investment risk assessment; (ii) enhancing processes and controls around high-risk transactions; (iii) investment of additional resources in employee training and compliance testing; (iv) enhancing ongoing compliance monitoring and controls testing processes; and (v) proactively discontinuing the use of third-party agents for business origination. The final point is perhaps the most significant as we have now seen the DOJ call out Albemarle and SAP for discontinuing their use of third-party agents.

Prior Misconduct

Trafigura also had prior misconduct which was called out by the DOJ. While noting it was “not recent” Trafigura had sustained a 2006 guilty plea by for entry of goods by means of false statements: a 2010 conviction of violating Netherlands export and environmental laws in connection with the discharge of petroleum waste in Côte d’Ivoire.

Fine Calculation

The explanation from the DOJ explained an open question on the mind of many compliance professionals around recent FCPA enforcement. That question was about how culture and prior misconduct were factored into the fine determination. This case follows the recent SAP enforcement action where there was a similar analysis. The DOJ is not discounting fines off the low end of the range of a fine but rather at the middle between the high and low range. In the case of Trafigura, the high end of the fine range (after the full calculation under the Sentencing Guidelines) was $170,345,061 and the low range was $85,172,530. The DOJ gave the come 10% off the middle of the two (50^th percentile) to come up with the “total criminal fine in the amount of $80,488,040, which reflects a discount of ten percent off the fifth percentile above the low end of the otherwise-applicable Sentencing Guidelines fine range, taking into account the Defendant’s cooperation and remediation, as well as certain Trafigura Group entities’ prior misconduct, pursuant to the Corporate Enforcement and Voluntary Self-Disclosure Policy; and forfeiture in the amount of $46,510,257.”

Join us tomorrow for where we conclude with some lessons learned from the Trafigura enforcement action.

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