On 3 December, the U.S. Department of Justice (DOJ) and the CFTC announced that the commodity company Vitol was held liable for foreign bribery. According to the case file, the company paid for purported consulting services with a part of that money employed to bribe officials of public companies in Brazil (Petrobras), Ecuador (Petroecuador) and Mexico (PEMEX) in order to win fuel oil contracts and receive confidential information. In the years 2005 through 2020 it paid roughly $10 million in bribes.
The proceedings led to the conclusion of a deferred prosecution agreement between the DOJ and Vitol Inc. and Vitol Holding B.V., the American subsidiary of the Dutch company. The company is obliged to pay a criminal fine of $135 million, $45 million of which will be paid to the Brazilian authorities in the framework of parallel proceedings and the remaining $90 million will go to the United States.
Besides the criminal sanctions, civil-law sanctions were also imposed on the company under the proceedings conducted by the CFTC in cooperation with the DOJ: Vitol will disgorge $12.8 million to compensate misappropriation in a corruption scheme and other $16 million will be paid as a fine for having pre-arranged oil prices (initially the fine amounted to $83 million, however it was subsequently decreased by $67 million because of the payments made under the proceedings conducted by the DOJ and Brazil).
The Vitol case was the first one where the CFTC held a foreign company liable for having bribed foreign officials. The possibility of a non-American company to be sanctioned by the United States is normally related to the U.S. Foreign Corrupt Practices Act (FCPA) and the respective powers of the Department of Justice and the Securities and Exchange Commission (SEC), its key enforcement bodies. However, the CFTC, whose jurisdiction covers the violations of the Commodity Exchange Act (CEA) can also hold companies liable for bribery in certain cases. Here, the reference is made to the situations where the bribery of foreign officials affects commodity market prices: in this case bribes may be considered as a violation of the provisions of the CEA concerning, for instance, the conclusion of contracts designed to defraud or mislead (§6b) or prohibition regarding manipulation and false information (§9). The regulator resorted to the last option in the Vitol case: Vitol had increased its profit from physical and derivatives trading in international oil markets by receiving confidential information from public companies about their demand forecasting, supply and strategic planning in oil markets all over the world, including the U.S. markets.
The engagement of the CFTC in extraterritorial law enforcement is a significant event at least because it entails increased risks for foreign companies to be sanctioned by the United States. Some experts stress that the engagement of the CFTC in this process may further expand the pool of companies to be sanctioned. The Commodity Futures Trading Commission, in particular, exercises jurisdiction over the companies that are exempt from the jurisdiction of the SEC (i.e. those that are not accountable to the SEC) such as hedge funds that must register with the SEC but act as operators of the investment pool. In addition, law enforcement by the CFTC can partly plug the gap in the use of cryptocurrencies for bribery payments: considering the fact that cryptocurrencies can be qualified as a “good” under the CEA, their employment for bribing foreign officials can be subject to the jurisdiction of the CFTC.
Two other major oil trading companies competitors of Vitol, Glencore and Trafigura, are currently under investigation. It is highly likely that they will be held liable as well not only by the DOJ and/or the SEC, but also by the CFTC.