ACER issues REMIT 2 Guidance for PPAETs and Non-EU Firms
ACER has issued new REMIT 2 guidance, clarifying obligations for non-EU market participants and PPAETs, focusing on registration and reporting rules.
The article discusses the US Department of Justice's (DOJ) announcement of a $126 million fine imposed on Trafigura Beheer B.V. for violating the Foreign Corrupt Practices Act (FCPA). The violation involved paying bribes to Brazilian officials to secure favorable deals with Petrobras. The article also highlights the company's response and the broader implications for compliance within the commodity trading sector.
This case underscores the serious consequences of violating anti-bribery laws, particularly for companies operating in high-risk regions. The DOJ's actions emphasize the importance of robust compliance programmes and cooperation with authorities during investigations. The fines and penalties serve as a stark warning to other firms about the potential financial and reputational damage resulting from non-compliance.
Key takeaways include the need for companies to continually enhance their compliance frameworks, particularly in high-risk areas. The article also highlights the DOJ's expectations regarding third-party management and the importance of proactive cooperation during investigations. Firms are advised to review and strengthen their anti-corruption policies, ensuring thorough oversight of third-party relationships to avoid similar penalties.
This week the US Department of Justice (DOJ) announced (click here) that commodity trader Trafigura Beheer B.V. (Trafigura) was fined USD $126 million after pleading guilty to breaching anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) in relation to the payment of bribes to Brazilian government officials to secure favourable business with Petrobras, Brazil’s state-owned and state-controlled oil company.
In an unrelated December 2023 criminal indictment filed by the Office of the Attorney General of Switzerland (click here), Trafigura was investigated in connection with an alleged bribery scheme in Angola.
Trafigura issued a press release in response to the DOJ fine (click here) with Jeremy Weir, Executive Chairman and CEO of Trafigura, stating:
"These historical incidents do not reflect Trafigura’s values nor the conduct we expect from every employee. They are particularly disappointing given our sustained efforts over many years to embed a culture of responsible conduct at Trafigura. We are pleased the DOJ recognised the steps we have taken to invest in our compliance function: enhancing our policies, procedures, processes and controls and from 2019, prohibiting the use of third parties for business origination. Continuous improvement of our compliance programme and high standards of ethical behaviour will remain priorities for the Group."
This follows on the back of an ongoing spate similar enforcement actions by the DOJ in this region. Trafigura purportedly made over USD $61 million in ill-gotten profits from the scheme.
The announcement outlines the following details concerning the case (the final court order was not available at the time of publication):
"Trafigura’s corrupt practices violated the FCPA, and today’s resolution demonstrates that there are steep penalties for any company that tries to bribe government officials - Assistant Director of the FBI’s Criminal Investigative Division"
It is noteworthy that the DOJ highlights ongoing resistance by Trafigura during the early phases of the investigation as well as during the resolution process. The expectation of acquiescence by the DOJ may, to some, conflict with an organisation’s right to a robust defence and to due process. Compliance professionals involved in such investigations are advised to be sensitive to such pronouncements given they appear to have some bearing on both final penalties issued and public messaging by the DOJ. Giving the DOJ “the run-around” should be avoided. It is also noteworthy that the announcement does not mention the imposition of a monitor on Trafigura.
This week the DOJ also published (click here) a retrospective on their spate of FCPA-related enforcement actions against commodity firms since 2017 noting total fines, forfeitures and other penalties against six firms totalling more than USD $1.7 billion.
It is not clear whether this announcement draws a line under this series of enforcement actions. Regardless, firms that have not already done so are strongly advised to remain vigilant and ensure that their internal governance and control frameworks are robust and subject to regular review, particularly in high-risk regions with less fastidious anti-bribery and corruption business cultures.
Several lessons can be drawn from this fine which commodity firms can, where appropriate, leverage within their own Compliance Functions.
[1] Code of Conduct Policy Review + Updated Training to Staff
Trafigura provides a copy of its Code of Conduct Policy (drafted as of Oct 2022 - click here) on its public website. It is not clear whether this policy is an up to date policy or will be updated in due course as a result of the fine.
Nonetheless, given the significant fines issued to Glencore, Vitol, and Trafigura in recent times, commodity firms may use this opportunity to perform a self-initiated review of their current Code of Conduct policies to ensure they are up to date. In addition, firms have the opportunity to deliver updated training to staff of said policies in part to emphasise the seriousness of violating such policies.
The following employee obligation themes are included in the Code of Conduct and provide a foundation for other firms to compare and contrast against.
[2] Anti-Corruption Compliance Programme enhancements.
Based on the recent spate of fines issued by the DOJ to commodity firms, Compliance teams have the opportunity to review their anti-corruption programmes. Below are several observations for firms, where appropriate, to:
[3] Third-Party Management – DOJ expectations.
It is clear that third parties played a significant role in several of the FCPA enforcement actions and this area represents a key risk for firms. In March 2023 the DOJ issued an updated guidance note ‘Evaluation of Corporate Compliance Programs’ (ECCP) (click here) which is intended to assist prosecutors in making informed decisions as to whether, and to what extent, a corporation’s compliance programme was effective at the time of the offence, and is effective at the time of a charging decision or resolution, for the purposes of determining any prosecution and related monetary penalty.
Within the document, the DOJ provides guidance for managing third party risks. Below is a high-level summary and checklist which firms can use to benchmark against their current policies and controls and which the DOJ expects firms to have in place.
In addition, the DOJ provides a set of themes/questions firms can benchmark when developing / reviewing their current third-party risk management programmes as follows:
[A] Risk-Based and Integrated Processes
[B] Appropriate Controls
[C] Management of Relationships
[D] Real Actions and Consequences