Commodities trader Gunvor held criminally liable for acts of corruption
Bern, 17.10.2019 - The Office of the Attorney General of Switzerland (OAG) has ordered the company Gunvor to pay the sum of almost CHF 94 million, including a fine of CHF 4 million. The Geneva commodities trader has been convicted of failing to take all the organisational measures that were reasonable and necessary to prevent its employees and agents from bribing public officials in order to gain access to the petroleum markets in the Republic of Congo and Ivory Coast.
In a summary penalty order dated 14.10.2019, the OAG convicted Gunvor (Gunvor International BV, represented by its Geneva branch, and Gunvor Ltd in Geneva) and ordered the payment of close to CHF 94 million, including a fine of CHF 4 million. Due to serious deficiencies in its internal organisation, the oil trading company failed to prevent the bribery of public officials in the Republic of Congo and Ivory Coast between 2008 and 2011, (Art. 102 para. 2 Swiss Criminal Code [SCC] in conjunction with Art. 322septies SCC). These acts of corruption, which had the aim of securing access to the petroleum markets in the countries mentioned, was the subject of a previous judgment issued by the Criminal Chamber of the Federal Criminal Court on 28 August 2018 (SK.2018.38).
Serious organisational deficiencies
The investigation revealed that during the period under scrutiny, Gunvor had taken no organisational measures to prevent corruption in its business activities: the company did not have a code of conduct to give a clear signal and guidance to its employees on their activities, nor did it have a compliance programme. In addition, it did not have an internal audit procedure and had not appointed a staff member to take charge of identifying, analysing or reducing the risk of corruption. Moreover, no internal guidelines were in place and no training was offered to raise employee awareness and reduce the risks associated with corruption. It therefore seems that Gunvor accepted that a risk of corruption was inherent in the company's commercial activities, at least in the relevant markets.
Increased risk from using agents
Furthermore, the company did not attempt to manage the risk of corruption associated with using agents to obtain petroleum shipments, for which commissions of several tens of millions of US dollars were paid between 2009 and 2012. In particular, Gunvor had no formal selection process for any of the agents that it used and it did not carry out any checks on their activities, despite the fact that Swiss and international anti-corruption standards (OECD, ICC, SECO) specifically highlight the increased risk of corruption associated with agents' activities. The standards recommend that properly documented due diligence be carried out, that the selection process is regulated, that warning signs are defined to detect potentially illegal activities and that regular checks are made, in particular when agents’ invoices are paid.
It was also found that at the time of the events, warning signs had been ignored and other irregularities had occurred, including authorisation being given for a substantial number of payments to third party offshore companies unrelated to oil activities and the backdating of supporting letters to banks.
Gunvor ordered to pay around CHF 94 million
Under Art. 102 para. 3 SCC, the fine to be imposed on an undertaking found criminally liable is largely determined by the seriousness of the offence and of the organisational deficiencies, the loss or damage caused and the economic capacity of the undertaking. The maximum fine is CHF 5 million (Art. 102 para. 1 final sentence SCC). Gunvor has been fined CHF 4 million, which takes account in particular of efforts it has made since 2012 to improve the way it is organised and to prevent corruption by implementing measures based on recognised standards. In addition, the OAG has ordered Gunvor to pay compensation of almost CHF 90 million, which corresponds to the total profit that Gunvor made from the business in question in the Republic of Congo and Ivory Coast. Under Art. 71 para. 1 SCC, compensation is payable if there are no assets directly available for forfeiture.
This summary penalty order is the outcome of the investigation that the OAG has been conducting since December 2011 into Gunvor’s activities in the Republic of Congo and Ivory Coast. Other individuals, including a former employee of the company and certain financial intermediaries, are currently under investigation, notably on suspicion of bribing foreign public officials (Art. 322septies SCC), money laundering (Art. 305bis SCC) and criminal mismanagement (Art. 158 SCC).
As always, the presumption of innocence applies to all suspects. The OAG is unable to comment any further on the ongoing criminal investigations.
The summary penalty order may be examined on request, subject to the usual conditions, by contacting the OAG Legal Services Section (email@example.com)
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Office of the Attorney General of Switzerland