In a coordinated enforcement action with the DOJ, the CFTC filed and simultaneously settled charges against Vitol Inc., the U.S. affiliate of one of the world’s largest energy trading firms. This marks the CFTC’s first foray into enforcing conduct related to foreign corrupt practices after publishing an advisory press release on this issue in March 2019. The CFTC brought the charges under 17 C.F.R. Section 180.1, the Agency’s general anti-fraud provision, which prohibits the employment of manipulative devices, schemes or artifices to defraud in connection with any swap, commodity or futures contract. Unlike the SEC, which has specific civil authority to enforce the FCPA both with respect to the anti-bribery provisions of the statute and the accounting provisions of the statute (e.g., books and records, internal controls, and reporting provisions), the CFTC has no such specific authority.
The CFTC and DOJ Vitol cases action involve related but separate activity. DOJ’s DPA involves bribes the company paid to government officials in Brazil, Ecuador and Mexico from 2005 through 2020. The CFTC enforcement action involves trading activity not covered under the DOJ’s deferred prosecution agreement with Vitol. The CFTC found that Vitol engaged in manipulative conduct by (1) submitting manipulative bids and offers relating to physical fuel oil price benchmarks, (2) using misappropriated and corruptly obtained nonpublic information related to Vitol’s transactions with the Brazilian state-owned entity, including confidential information concerning the state-owned entity’s projected supply, demand, and strategic planning related to oil products markets around the world, including U.S. markets, and (3) obtaining improper preferential treatment and access to trades from agents of its counterparties as a result of corrupt payments. The CFTC found that Vitol’s conduct was intended to secure unlawful competitive advantages in trading physical oil products and related derivatives in the U.S. derivatives markets. Vitol agreed to pay the CFTC disgorgement of almost $12.8 million and to pay a penalty of $16 million (after taking into account DOJ offsets). Thus, the CFTC’s action applied the policy that it set out in its advisory press release -- pursuing violations of the Commodity Exchange Act that involve foreign corrupt practices and working with law enforcement partners, such as the DOJ, to do so.
In a related matter, U.S. v. Aguilar, EDNY No 1:20-cr-00390, the Department of Justice charged Javier Aguilar, a Vitol employee, with conspiring to violate the anti-bribery provisions of the FCPA and conspiring to launder money in connection with his involvement in a scheme to pay approximately $870,000 in bribes to Ecuadorian government officials in exchange for helping Vitol win a $300 million deal involving Petroecuador. According to the government, the conspiracy stretched from 2015 to July 2020. The indictment alleges that Vitol paid $1.4 million to consultants who in turn paid bribes to the Ecuadorian officials. Aguilar denies the allegations.
For a more detailed discussion of these cases, see Orrick’s Insight, For the First Time, the CFTC Uses Its Powers to Combat Foreign Corruption.