In the first of what is thought to be many Foreign Corrupt Practices Act (FCPA) charges to be brought to the energy trading community, a former Vitol trader was indicted on FCPA charges by the Department of Justice (DoJ). A previously sealed indictment (see here) was unsealed yesterday outlining the government’s case against Javier Aguilar.
The indictment alleges Mr. Aguilar used the mails and means of instrumentalities of the U.S. commerce system to send funds to influence acts of foreign officials. The indictment alleges that at least from March 2015 through to at least July 2020 that Mr. Aguilar had engaged in that activity.
The DoJ cites specific email communications between Mr. Aguilar, and Oman based State Owned Entity (SOE), at least two U.S. based consultants and an “Ecuadorian Official”. The government alleges these email communications reflect over acts to use Consultants as intermediaries to create over 30 fictitious invoices for work not performed. The indictment goes on to explain the trail of activity from the communications of the consultants to banks based in the Cayman Islands through correspondent banks in the U.S. to an account in Portugal for the Ecuadorian official. The emails surveilled include personal emails, not solely corporate email accounts.
The U.S. alleges this constitutes 18 U.S. Code § 371 et. el. Conspiracy to commit offense or to defraud United States. The indictment goes on the allege conspiracy to commit money laundering with the intent to violate the FCPA and the Ecuadorian Penal Code. The U.S. is seeking criminal forfeiture.
Observations
This is a profoundly serious first step in the government’s application of the FCPA to the commodity markets. Bloomberg is reporting this is fall out from the Brazil’s Operation Carwash and the Odebrecht SA debacle. Several reports indicate a high degree of cooperation with authorities by traders and marketers caught in this matter as they delve into Operation Car Wash. And again, it got down to communications.
Commodities compliance is in for a very rough patch. Hold on. More to follow.
