As the sun rose over the Andean peaks on a crisp morning in 2012, few could have predicted that the deals being struck in Quito’s corridors of power would lead to one of the most significant corporate corruption cases of the decade. The stage was set for a drama that would span continents, implicate governments, and ultimately cost Swiss trading giant Gunvor S.A. over $661 million
The case, which unfolded over nearly a decade from 2012 to 2020, centers on Gunvor’s illicit efforts to secure lucrative contracts with Petroecuador, Ecuador’s state-owned oil company. According to court documents, Gunvor and its co-conspirators funneled more than $97 million through intermediaries, knowing that a significant portion of these funds would be used to bribe high-ranking Ecuadorean officials, including Nilsen Arias Sandoval, a former senior figure at Petroecuador.
The intricacy of the scheme was notable, involving shell companies in Panama and the British Virgin Islands, as well as the use of U.S. banks to route payments. In one particularly brazen move, a Gunvor employee reportedly instructed an intermediary to purchase an 18-karat gold Patek Philippe watch for Arias, underscoring the lavish nature of the bribes.
The payoffs yielded substantial returns for Gunvor. By circumventing competitive bidding processes and obtaining insider information, the company secured a series of oil-backed loan contracts with Petroecuador. These deals, facilitated through various state-owned entities acting as fronts for Gunvor, resulted in profits exceeding $384 million for the Swiss trader.
Acting Senior Counselor Brent S. Wible of the Justice Department’s Criminal Division emphasized the gravity of the offense, stating, “Foreign bribery emboldens corrupt officials and undermines the rule of law.” He added that the case demonstrates the Criminal Division’s commitment to holding both corporations and individuals accountable for bribing foreign officials.
The resolution of this case involved significant cooperation between international law enforcement agencies. The FBI Miami Field Office led the investigation, with crucial assistance from authorities in the Cayman Islands, Colombia, Curacao, Ecuador, Panama, Portugal, Singapore, and Switzerland. This collaboration underscores the global effort required to combat large-scale corporate corruption.
Gunvor’s guilty plea comes with a hefty price tag. The company has been sentenced to pay a criminal monetary penalty of $374,560,071 and to forfeit $287,138,444 in ill-gotten gains. The sentence includes provisions for credits of up to one-quarter of the criminal fine for amounts Gunvor pays to resolve parallel investigations by Swiss and Ecuadorean authorities, provided these payments are made within a year.
In a parallel action, the Office of the Attorney General of Switzerland announced a resolution of its investigation into Gunvor’s misconduct, resulting in an additional payment of approximately $98 million by the company to Swiss authorities.
In a shocking turn of events that absolutely no one saw coming, it turns out that bribing foreign officials is, in fact, illegal.
This is not Gunvor’s first brush with corruption charges. In October 2019, the company reached a settlement with Swiss authorities regarding a separate bribery scheme involving officials in Congo-Brazzaville and Côte d’Ivoire. The overlap between these cases has factored into the severity of the current resolution.
The Justice Department’s decision to pursue a guilty plea rather than a deferred prosecution agreement reflects the seriousness of Gunvor’s offenses and its history of misconduct. However, the company did receive credit for its cooperation with the investigation and subsequent remedial measures, including eliminating the use of third-party business origination agents, enhancing due diligence processes, and strengthening its compliance program.
The case has already led to convictions of four individuals implicated in Gunvor’s bribery scheme, including two former consultants, a former employee, and Nilsen Arias Sandoval, the former Petroecuador official.
For years, Nilsen Arias Sandoval wore his power like a second skin, his wrist adorned with an 18-karat gold Patek Philippe watch – a glittering symbol of his influence at Petroecuador. But little did he know that this luxurious timepiece would become a ticking bomb in a global corruption scandal that would bring a commodities empire to its knees.
This resolution sends a strong message to international businesses about the consequences of engaging in corrupt practices. I mean, this is the second foreign corruption story about Ecuador that I’ve written a blurb about this week….
There’s also a press release about the story here: https://www.justice.gov/opa/pr/commodities-trading-company-will-pay-over-661m-resolve-foreign-bribery-case