Energy Trader Pleads Guilty to Bribery Scheme

The US Department of Justice (DOJ) has announced (click here) that ex-Vitol trader Javier Aguilar has pleaded guilty for his role in a scheme to bribe Mexican government officials to secure gas contracts for Vitol, his employer at the time. This follows from recent reports that this conviction on separate but related charges had been rejected by a New York court. The announcement is briefly summarised as follows:

• According to court documents in this case, Aguilar and his co-conspirators allegedly paid bribes to two senior officials at PEMEX Procurement International, Inc. (PPI), the wholly owned affiliate of the Mexican state-owned oil company, in exchange for assistance in winning business for Vitol;
• This guilty plea follows Aguilar’s conviction on related charges in February this year as mentioned above;
• Between 2017 and 2020, Aguilar, who was a trader in Vitol’s Houston office, and his co-conspirators, paid around USD $600,000 in bribes to two senior officials at PPI to supply “hundreds of millions of dollars” of ethane contract to PEMEX;
• To conceal the scheme the co-conspirators used a series of fake contracts, sham invoices and shell entities incorporated in Curaçao and Mexico;
• The co-conspirators used alias email accounts to communicate about the scheme and code words, including “shoes”, “medicine”, “invitations” and “coffee” to describe the bribes;
• Aguilar pleaded guilty to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to a violation of the Travel Act;
• The FCPA conspiracy charge brought by a grand jury in the Southern District of Texas, related to conduct that was initially charged in the Eastern District of New York;
• As part of Aguilar’s guilty plea deal he consented to transfer the Texas case to New York in order to consolidate the cases. He also agreed to forfeit USD $7,129,938;
• Aguilar faces a maximum sentence of 20 years in prison on the money laundering offense and five years for each of the other offenses;
• A federal district court judge will determine any sentence after considering the US Sentencing Guidelines and other statutory factors;
• Deputy Assistant Attorney General at the DOJ commented:

"Javier Aguilar has now admitted that he bribed foreign officials to win business when he worked as an oil and gas trader at Vitol Inc, using shell companies, fake contracts, sham invoices, and alias email accounts. His illegal conduct netted Vitol hundreds of millions of dollars in contracts, and now he will pay the price"

• From the Vitol perspective, in December 2020, the company admitted (click here) to bribing officials in Ecuador, Mexico, and Brazil in violation of the anti-bribery provisions of the FCPA;
• The company entered into a deferred prosecution agreement (DPA) with the US Attorney’s Office of the Eastern District of New York and agreed to pay a combined USD $135 million in penalties in a coordinated resolution with the DOJ, the CFTC and authorities in Brazil;
• So far seven of Aguilar’s co-conspirators have pleaded guilty for their role in the scheme and are awaiting sentencing, as well has having agreed to forfeit more than USD $63 million in connection with this and related schemes;
• The US Attorney for the Southern District of Texas commented:

"The Southern District of Texas is ground zero in the fight against foreign bribery and corruption in Latin America…My office’s prosecutors - experts on the Foreign Corrupt Practices Act - will continue to bring to justice those who damage the integrity of Texas’s vital energy sector with illegal advantages fuelled by greed. This guilty plea begins the process of repairing the damage caused by Aguilar as well as putting on notice those who might seek to emulate him and his cohorts."

 RegTrail Insights

With only sentencing outstanding, this announcement likely indicates that the long-running Aguilar bribery saga is drawing to a close. The anticipated heavy prison time and large cash forfeiture by Aguilar is clearly designed to send a message to US firms and individuals doing business in Latin American energy markets that bribery will not be tolerated by the US authorities. This also provides a useful case study reference for Compliance when discussing the potential consequences of FCPA breaches and, as such, should be communicated to Front Office and included in the appropriate anti-bribery training materials.