Trafigura and ex-COO convicted of bribery by Swiss court

Trafigura trial: company fined, defendants jailed Keystone-SDA

Trafigura and its former chief operating officer were convicted by a Swiss court on bribery charges, the first time a senior executive at a major commodity trading house has been found guilty of corruption.

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Mike Wainwright, Trafigura’s ex-COO, was sentenced to 32 months in jail, of which 20 months are suspended, the Federal Criminal Court ruled on Friday in Bellinzona, Switzerland. 

Trafigura, which had been charged through its Dutch holding company Trafigura Beheer BV, was found guilty of not having sufficient systems in place to prevent bribery, and was ordered to pay a fine of CHF3 million ($3.3 million). The company was also ordered to pay $145.6 million in a compensation claim to the Swiss Confederation.

Switzerland has been under pressure to prove it can be tough on a commodities industry that’s long operated under a light regulatory touch. The ruling is a historic moment, with Trafigura the first company of its size in Swiss history to be convicted at trial for allowing the payment of bribes. 

Industry under fire

The verdict caps a tough period for Trafigura, one of the world’s largest traders of oil, gas and metals. In a tumultuous two years, the company has suffered major losses from alleged frauds, has pleaded guilty to separate corruption allegations in the US, and has settled charges of market manipulation.

The case is the latest to shine a light on wrongdoing in the commodity trading industry. The judgment comes after most of the industry’s largest players, including Glencore Plc, Vitol Group and Trafigura itself, have admitted to historical corruption in countries from Brazil to South Sudan.

During a two-week trial in December, Swiss prosecutors sought to paint Trafigura, which is domiciled in Singapore but has its main trading operations in Geneva, as a company in which compliance was secondary to profit. 

It was a company, they argued, where “the wolves were guarding the sheep” because senior executives dominated its compliance committee. One of those executives was Wainwright, who sat on the oversight board along with Trafigura’s late founder and chief executive officer, Claude Dauphin. 

Lawyers for Trafigura countered during the trial that the bribery charges were part of an unjust “crusade” by Swiss prosecutors, who are scrutinising commodity trading practices in a major hub for the industry. 

Appeal possible

They argued that the evidence from key witness Mariano Ferraz – a senior Trafigura executive for several years – was compromised as it was given in exchange for a reduced sentence in a separate criminal case in Brazil. They had called unsuccessfully to have Ferraz’s testimony thrown out. 

The case revolved around allegations that Trafigura bribed an Angolan official with more than $5 million in payments and cash gifts in return for lucrative oil contracts that netted it some $151 million. The official, Paulo Gouveia Junior, who was also on trial for accepting the bribes, was found guilty.

A third person, Thierry Plojoux, a middleman and former Trafigura employee charged with conspiring with Wainwright to pay the bribes, was also convicted.

Trafigura said before the trial that its anti-bribery and corruption controls were “externally reviewed and assessed to have met legal requirements and international good practice standards applicable at that time.” Since 2019, it’s prohibited the use of middlemen for drumming up new business. 

The verdict is a preliminary decision that can be appealed first at the federal criminal appeals court and then, if necessary, up to the Swiss Supreme Court.

The court said that as the judgment hasn’t entered into force, the three men continue to benefit from the presumption of innocence. It’s a quirk of Swiss justice that an appeal becomes essentially a retrial of the facts, ensuring that Wainwright will not see the inside of a prison anytime soon.

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