Trafigura used dozens of ‘high-risk’ intermediaries, court told in bribery case

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Trafigura used dozens of “high-risk” intermediaries to facilitate business deals in developing countries, the Swiss court trying the company for bribery heard on Friday.

The company reached a “tipping point” in 2019 when concerns about corruption outweighed the commercial benefits of such “intermediaries,” Michael Firth, Trafigura’s deputy director of compliance who has been with the department since 2010, told Swiss judges.

Many were created by former Trafigura employees and were used to help the company unlock valuable business opportunities in politically problematic or complicated countries, the court heard.

Trafigura’s compliance department had always considered the use of such agreements to be “high risk”, Firth said. “There were concerns around bribery and corruption,” he said, when pressed by the judges.

The commodities trading group is on trial this week in Switzerland’s federal criminal court in a case centered on its lucrative advance in Angola between 2009 and 2011, in which a group of intermediary contractors played a crucial role.

Switzerland had never before put a commodities trader on the bench. Trafigura, which runs much of its business from the country, is a global industry giant, with group revenues of $244 billion last year.

This case is also the first worldwide in which charges have been brought against a senior executive in the sector: Mike Wainwright, who was Trafigura’s chief operating officer until April, is jointly charged by Swiss prosecutors.

They claim that the company paid more than 5 million euros in bribes through third parties to an Angolan government official in exchange for oil storage and shipping contracts worth more than $143.7 million in profits.

Trafigura’s lawyers have argued that there is no evidence connecting the company or Wainwright to the decision to pay the alleged bribes. They have raised questions about the reliability of the prosecution’s evidence and the fact that key figures in the alleged bribery chain have not been charged or called as witnesses.

The trial has scrutinized contracts and payments between DT Trading, Trafigura’s jointly owned African subsidiary run by Mariano Ferraz, nicknamed “Mr Angola”; Consultco, a broker run by former Trafigura trader Thierry Plojoux; and Wyland, an offshore shell company, whose legal beneficiary, prosecutors say, was Angolan government official Paulo Gouveia Junior.

Trafigura’s lawyers seek to demonstrate that the company had strong compliance mechanisms in place at the time and did everything necessary to prevent illegal payments from occurring.

They do not dispute that Consultco, which was their key intermediary in Angola, may have paid money to Wyland, but they say Trafigura had no knowledge of any such payments being made.

Former Trafigura CFO Pierre Lorinet told the court on Thursday that DT Trading’s payments to Consultco had not raised any “red flag.”

Firth told the judges that Trafigura had around 50 such brokerage deals around the world in 2010. In his experience, he said, they were rigorously vetted with “enhanced” compliance checks.

“We were aware that the risk of bribery and corruption in Angola was high,” he said.

Over time, the legal and reputational risks of using such intermediaries increased, he said.

“I think there came a tipping point where intermediaries were seen as high risk and, in the meantime, Trafigura was already quite well established in the countries (in which they operated), so there was not the same need for them “.

Trafigura’s focus on compliance increased steadily during his time working for the company, Firth said. After 2011, the company moved from conducting repeated due diligence checks on key counterparties deemed high risk every three years to every year, he added.

Present evidence in court Earlier in the week, Wainwright said that in his experience he did not believe any of Trafigura’s intermediaries had acted corruptly.

The decision to cut ties with them, he said, was mainly due to pressure from the banks that lent money to Trafigura.

The trial continues next week.