Bidders to market Guyana’s crude… Pt 2 Four companies implicated in massive corruption scandal in Latin America

Latin America

By Mikaila Prince

Four of the companies that have submitted applications to market Guyana’s share of Stabroek Block oil were involved in what is considered the biggest corruption scandal in Latin America.
Petrobras SA, Mercuria Energy Trading, Vitol SA and Glencore PLC – leading petroleum companies and commodity traders in the world – were all involved in what is known as the Operation Car Wash scandal, the bribery scam that ultimately resulted in hundreds of criminal indictments and over 150 criminal convictions including a popular South American head of state.
These companies, according to public documents, funneled over US$31 million in bribes to corrupt Petrobras employees so that they may win big contracts, along with acquiring other benefits. The bribes took place between 2011 and 2014.
Further compounding the issue is the fact that top executives of Petrobras had “total and unequivocal” knowledge six years before the bribery scandal erupted, yet had refused to put a stop to it.
Operation Car Wash is the name of the investigation into what investigators have considered being the largest corruption scandal in the history of Latin America. Car Wash started in March 2014 initially headed by investigative Judge Sérgio Moro, and in 2019 by Judge Luiz Antônio Bonat—with the name chosen because the alleged masterminds of the scheme used a currency exchange and money transfer service at the Tower Gas Station and Car Wash in Brasília to move illicit payments.
Initially a money laundering investigation, Operation Car Wash expanded to cover allegations of corruption at Petrobras where executives allegedly accepted bribes in return for awarding contracts to construction firms at inflated prices.
Petrobras delayed reporting its annual financial results for 2014, but in April 2015, it released “audited financial statements” showing US$2.1 billion in bribes and a total of almost US$17 billion in write-downs due to overvalued assets. At least eleven other countries, mostly in Latin America, were involved, and the Brazilian Company, Odebrecht, was deeply implicated.
The corruption scandal grew in part because it challenged the impunity of politicians and business leaders that had prevailed until then. Structural corruption in the political and economic system, no longer tolerated or accepted, was being investigated and resulted in some criminal charges.
In fact, ‎429 individuals were indicted and another 159 officials were convicted including seemingly untouchable politicians like former presidents Luiz Inácio da Silva, fondly known to his supporters as Lula and Dilma Rousseff, his successor.
For his crimes Da Silva was in 2018 sentenced to 12 years imprisonment. However, illegal communications between Car Wash prosecutors and its lead judge, Sergio Moro, came to light in mid-2019, in which the parties suggested that their prosecutorial motive was to prevent Lula’s re-election. There were calls to release the former president before he was released on November 8, 2019 after a Supreme Court ruling.
And then there is Rousseff, who was formally impeached on April 17, 2016. On August 31, 2016, the Senate removed President Rousseff from office by a 61–20 vote, finding her guilty of breaking Brazil’s budget laws, charges linked to the Car Wash case.
According to an article by Reuters, federal prosecutors have alleged that Mercuria, Glencore and Vitol were part of a group of companies that “collectively funneled at least US$31 million in bribes over a six-year period to Petrobras employees.” Authorities related that in return those paid-off Petrobras employees offered bribers lower prices for oil, as well as storage tanks in more than 160 separate operations, then shared in the savings.
Emails accessed by Brazil’s federal police showed how the companies would use nicknames such as Flipper, Mr. M or Tiger and discussed below-market prices for oil or tanks, while invoicing their companies at the market rate. The differences could range from 10 cents to a dollar per barrel and the term to describe the bribes was “delta,” the article said.
The Reuters article further stated how the bribes moved through bank accounts in the US, Great Britain, Sweden, Switzerland and Uruguay, among others.
Given Petrobras’ size and the breadth of its reach in the country’s economy, Samuel Pessoa, a leading economist, projected that the company’s woes would reduce Brazil’s GDP by 0.75 percent in 2015. In the event, the faltering Brazilian economy not only plunged into recession but also became mired in an economic crisis that, according to some sources, was the worst Brazil had experienced since 1901, with inflation climbing. According to BBC, Petrobras agreed to pay more than US$853M to the US and Brazil ending the long-running corruption investigation into the matter.
Despite these tarnished records, these four companies submitted bids in Guyana, with the aim of securing the contract currently being offered by the Department of Energy, Ministry of the Presidency, to market Guyana’s share of profit oil for the next twelve months.
This compounds the issues raised in our previous article (“15 of 34 bidders to market Guyana’s crude linked to corrupt practices” May 1, 2020) which detailed how another 11 of the 34 applicants came with histories of questionable corporate behaviour including, crimes ranging bribery to unfair pricing practices.
Raising further concern is the fact that the National Procurement and Tender Administration Board (NPTAB), the body which is responsible for selecting the trader, has zero experience with electing one in this regard raises further concern. They have also refused to reveal details of the evaluators for the crude marketing bids.

List of applicants
Gunvor Group Limited Shell Western Supply & Trading
Bonroy Techchem Company Limited & Guyana Crude Oil (joint venture) Socoil Energy Equity Resources
China Offshore Oil Singapore International PTE Mercantile Maritime
Enteq Resources Unipec America
MAB Oil Limited BP Products North America
Hartree Partners Limited ExxonMobil
Mercuria Energy Trading PPT Energy Trading
BB Energy Freepoint Commodities
Cathay Petroleum International Sinochem
Cathay Petroleum International Heritage Petroleum
Concord Energy PetroCo Oil
Totsa Total Oil Trading Lukoil Oil Trading Shipping
Core Petroleum AISAA Petroleum Shipping
Centry Tamara Energy Services PetroChina International Brazil
Gladius Commodities Equinor
Vitol SA Glencore PLC
Petrobras Global Trading BV Interchem PTE
Aramco Trading

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