At the end of 2016, the United States Department of Justice made it known that Ecuador was part of a corruption plot led by the Odebrecht company to obtain public contracts through the delivery of bribes. Last week, they clued Ecuador in to another scandal: between 2015 and July 2020, bribes were received by government employees to secure contracts for the purchase and sale of petroleum products.
As in 2016, the Ecuadorian Prosecutor’s Office, (previously with Galo Chiriboga at the head of the Odebrecht scandal) with Diana Salazar at the helm, has initiated a preliminary investigation into the events. The Prosecutor’s Office reported on Twitter that, “A new corruption scheme is revealed that involves several countries, including Ecuador. Thanks to the exchange of information between the Prosecutor’s Office and the United States authorities, a preliminary investigation is initiated.”
Back in December 2016, the Department of Justice had revealed that the Brazilian group Odebrecht paid about $439 million in bribes in twelve countries—including Ecuador, where it said $33.5 million was paid from 2007 to 2016, to secure contracts worth $116 million.
This time around, on December 3, 2020, they announced that Vitol Inc., a US subsidiary of the Vitol group of companies, which forms one of the largest commercial energy firms in the world, agreed to pay the United States Justice Department $135 million to resolve a bribery case that, among other things, involved Vitol SA paying $2 million to officials in Ecuador and Mexico to secure large commercial contracts and to illegally generate huge profits for the company.
Of those $2 million in bribes, according to the US investigation, around $870,000 was paid to Ecuadorian employees of Petroecuador in order to “obtain and retain business for the Trading Company,” specifically a $300 million contract for the purchase of fuel oil. Vitol also admitted that it paid bribes in Brazil as well.
The main conspirator accused in the events related to Ecuador is Javier Aguilar, a 46-year-old Mexican who lived in the US and worked for the oil intermediary Vitol SA, and who on September 22nd was indicted by a federal grand jury in the Eastern District of New York for his alleged role in the international corruption scheme deployed in Ecuador.
Aguilar faces a five-year sentence for conspiracy to violate the Foreign Corrupt Practices Act (FCPA), conspiracy to commit money laundering and bribery involving corrupt payments to Ecuadorian officials.
“As alleged in court documents, between approximately 2015 and July 2020, (Javier) Aguilar and others participated in a conspiracy to pay and hide bribes from Ecuadorian officials at the time, including the Empresa Pública de Hidrocarburos del Ecuador (Petroecuador),” announced the United States Department of Justice.
From the Ecuador side, US investigators say that “El Gordo” was the code name used by an Ecuadorian official who allegedly received bribes from the oil intermediary to secure contracts with Petroecuador. In neither of last week’s two communiqués did the Justice Department disclose the names of the public officials involved, though they have been fully identified.
In addition to Aguilar, the US Attorney’s Office maintains, an official from Petroecuador, another from the Ministry of Hydrocarbons, two consultants, an intermediary and a consulting company were part of the corruption scheme.
Like the Odebrecht scheme, evidence of the Vitol SA bribery conspiracy shows a multitude of players and different ways that money was transferred, hidden and justified with false documents.
What is known from court documents is that in September of 2016, Aguilar ordered “Consultant 2,” to send letters from an Omani state company to “Gordo,” also known as “Ecuadorian Official 1.”
The trail picks up again around March 7, 2018, when an intermediary forwarded to Aguilar’s email account, 39 “false invoices from a consulting company to a screen company.”
The receipts were made to appear to be from January 2017 to January 2018. The intermediary told Aguilar that “the Equatorenos” were sending those documents, in reference to two “consultants” and asked him to proceed.
In April 2018, a company related to the Vitol SA sent $750,000 from a London bank to a Curaçao bank, in the name of the screen company. And between May and June 2018, this company forwarded $231,000 and another payment of $19,000 to accounts of the “Consulting Company” in the Cayman Islands and Curaçao. The bank statements of the screen company contain as a reference, the same numbering of invoices that were forwarded to Aguilar.
Finally, according to prosecutors, in July 2018, “Consultant 1” and “Consultant 2” sent $225,000 from an account in the Cayman Islands to an account in a Portuguese bank of “Ecuadorian Official 1.” The money went through banks in the United States.
Vitol agrees to pay penalties to end casein US and Brazil
Now, according the Department of Justice, Vitol Inc., the U.S. subsidiary of the Vitol group of companies, will pay a total of $ 135 million to resolve the Justice Department investigation into violations of foreign law, Corrupt Practices Law (FCPA) and to resolve a parallel investigation in Brazil.
Vitol also agreed to return more than $12.7 million to the Commodity Futures Trading Commission (CFTC) in a related matter and to pay the CFTC a penalty of $16 million related to trading activity not covered by the settlement of deferred processing with the department.
“Over a period of 15 years, Vitol paid millions of dollars in bribes to numerous public officials—in three separate countries—to obtain improper competitive advantages that resulted in significant illicit profits for the company,” said Acting Assistant Attorney General Brian C Rabbitt, of the Justice Department’s Criminal Division.
“Today’s coordinated resolution with Brazil, along with our first coordinated FCPA resolution with the CFTC, underscores the department’s resolve to hold companies accountable for their crimes while, at the same time, avoiding unnecessarily duplicative penalties.”
“Vitol paid bribes to government officials in Brazil, Ecuador and Mexico to win lucrative business contracts and obtain competitive advantages to which they were not fairly entitled,” said Acting United States Attorney Seth D. DuCharme of the Eastern District of New York. “The United States Attorney’s Office for the Eastern District of New York will continue to hold accountable companies and individuals that attempt to defy United States law to the detriment of honest competitors.”
“This resolution demonstrates the FBI’s commitment to investigating foreign corruption and hold accountable those who circumvent the laws for financial gain at the expense of American consumers,” said Deputy Director-in-Charge Kristi K. Johnson of the FBI’s Los Angeles Field Office. “We’ll continue to work with our partners to root out corruption, whether it occurs domestically or abroad, to ensure trust on the international playing field.”
The Department of Justice will credit $45 million—approximately a third of the total criminal penalty—against the amount Vitol will pay to resolve an investigation by the Brazilian Ministério Público Federal, for conduct related to the company’s bribery scheme in Brazil.
As part of the deferred prosecution agreement, Vitol Inc. and Vitol S.A.have agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance their compliance programs; and to report to the department on the implementation of their compliance programs.
Petroecuador ‘excludes’ Vitol from list of suppliers and clients
On Sunday, Petroecuador EP reported that it has “excluded” Vitol Inc. from its list of suppliers and clients, after the allegations of its alleged acts of corruption in Ecuador became public.
In an official statement, Petroecuador indicated that it decided to exclude Vitol as part of its list of suppliers and customers and said it “will no longer be invited, nor will it be able to participate in international bids for the purchase-sale of hydrocarbons carried out by the Ecuadorian public company.”
The company also said in its statement that in the current government of Lenin Moreno, “all the international commercial transactions of hydrocarbons have been carried out through tenders, thus avoiding intermediaries.”
The statement also clarified that the “last contract that EP Petroecuador maintained with the company Vitol Inc., carried out through a public tender, was on April 7, 2020, for the export of 1,138,791.60 barrels of Fuel Oil 6, and ended in October of this year, while in the current administration of the public company no contest was held with this company.”