Intermediary involves senior Vitol and Trafigura executives in alleged bribes

BRASILIA / RIO DE JANEIRO (Reuters) – An intermediary of a broad corruption plot in Brazil's state-owned company Petrobras involved the president of operator Vitol and two members of his rival Trafigura's board in a bribe operation to obtain oil contracts, according to testimonies from a plea agreement reviewed by Reuters.

The people mentioned in the documents, who had not been reported before, are Ian Taylor, the president of Vitol; Claude Dauphin, the former executive president and president of Trafigura. Trafigura's oil trade co-director, José Larocca, and the operations director, Mike Wainwright, were also involved in the alleged plan.

According to the documents, which summarize an agreement in August with federal prosecutors, businessman Carlos Henrique Nogueira Herz testified that senior executives of raw material operators – including Vitol president Ian Taylor – knew about the payment of millions of dollars in bribes to Petrobras employees.

Herz, a connoisseur of the oil industry with decades of experience, pleaded guilty last month to charges filed by Brazilian prosecutors who pointed out that he formed a "criminal association" that allegedly used his contacts in the sector to channel bribes from Vitol and Transfigure Petrobras employees between 2011 and 2014, in exchange for favoring them in oil operations.

If their accusations are proven, Herz's testimony will deepen an ongoing investigation in Brazil to the sector of intermediaries of raw materials, called “Operation without limits”, since it takes accusations of irregularities to the highest levels of some of the largest firms of the sector.

Herz provided dozens of email pages and bank statements, reviewed by Reuters, detailing the plot of bribes.

However, he did not provide documentary evidence linking Taylor with allegedly illegal conduct. Herz said one of his partners, a close associate of Taylor, informed him about the alleged involvement of the Vitol manager in the bribe plot.

He did provide documents that show that Trafigura's Wainwright was copied in an email that refers to what Herz claims were bribe payments. In his August testimony, Herz said Wainwright was involved in facilitating payments.

Nor did Herz provide documentary evidence showing the participation of Trafigura Dauphin and Larocca executives, who, according to him, knew about the bribe plot but were not directly involved.

PARALLEL CHANNEL FOR PAYMENTS

In his testimony, Herz said he knew about the involvement of executives in the alleged plot, since he personally established a parallel financial channel through which Trafigura bribes could be paid to Petrobras employees.

Herz provided the prosecutors with dozens of email and bank statement pages detailing alleged aspects of those negotiations.

Reuters could not independently confirm Herz's accusations about any of the executives.

Reuters also failed to determine what advantage Herz gets from its agreement with prosecutors. However, defendants in Brazil generally receive reduced penalties in exchange for their cooperation. A lawyer from Herz did not respond to requests for comments through Facebook and LinkedIn. Lawyer offices did not answer multiple phone calls. Prosecutors, meanwhile, did not immediately comment on the matter.

In a statement, Vitol said it would not be appropriate to comment, "beyond reiterating our zero tolerance policy regarding bribery and corruption and our policy of cooperating fully with the relevant authorities in all jurisdictions in which we operate."

Vitol said Taylor had nothing to add. Taylor, who was also executive president at the time of the alleged events, did not respond to a LinkedIn message sent by Reuters.

Petrobras said he immediately started internal consultations as soon as he learned of the plea agreement and that he removed from his posts the employees mentioned in the testimony.

Trafigura said in a statement that he was aware of reports on Herz's testimony, but that he had not been contacted by the Brazilian authorities regarding the allegations.

"The suggestion that Trafigura's current management knew that payments to an intermediary would be used to make improper payments to Petrobras employees is not correct."

"Any suggestion that the current Trafigura management knew that their payments would be used to make improper payments to Petrobras employees is not correct," the statement said.

"Trafigura has a zero tolerance policy against bribery and corruption."

The firm did not make Wainwright and Larocca available for comment and the two executives did not respond to Reuters emails. Dauphin, who resigned as CEO of Trafigura in 2014, died in 2015.

“PRIVILEGED INFORMATION”

The investigation is part of a larger investigation, the Lava Jato operation, which began in 2014 and has brought dozens of elite businessmen and politicians to justice across Latin America that until recently were considered untouchables.

The investigation into the oil marketing companies was made public in December, when prosecutors accused Vitol, Trafigura, Glencore Plc and Mercuria Energy Group of using intermediaries to pay at least $ 31 million in bribes to Petrobras employees, so that they would sell them crude at prices below those of the market and have access to privileged information, which gave them an advantage when negotiating with the oil company.

The companies, which together control around 10 percent of the world's daily oil consumption, have said they are cooperating with research in Brazil.

In his testimony, Herz said his business partner, Bo Ljungberg, negotiated a parallel channel through which Vitol paid bribes to Petrobras employees in exchange for confidential information about the company.

Ljungberg, a Swedish citizen, was accused by Brazilian authorities in December of facilitating the alleged payments. The operator did not respond to Reuters messages on Facebook and LinkedIn requesting comments.

There is an Interpol alert for Ljungberg. Brazilian prosecutors said that in December he had returned to Sweden. Reuters could not locate his lawyer.

Herz said Taylor was directly involved in the negotiation of bribes, which reached around 10 to 20 cents for every barrel of oil traded between the companies.

Herz said he was aware of the interactions between Ljungberg and Taylor through conversations with the Swede, with whom he was co-owner of several companies active in commerce, according to the documents.