January, 8 2019 (Reuters)
SAO PAULO (Reuters) – A Brazilian man facing allegations of bribing officials at state-run oil company Petroleo Brasileiro SA (PETR4.SA) on behalf of Vitol Group [VITOLV.UL], Glencore (GLEN.L) and other major oil trading firms has been arrested in the United States, authorities said Tuesday.
Luiz Eduardo Loureiro Andrade was detained in the United States on Dec. 20, an arrest that was disclosed in a Brazilian court document seen by Reuters. He was arrested with the help of U.S. Immigration and Customs Enforcement (ICE). Besides handling deportation cases, ICE investigates transnational crime.
An email included in the court document from a Brazilian federal police official based in Miami indicated that Andrade is being held in an undisclosed location in the United States and that Brazil has requested his extradition. It was not clear when he may be sent back to Brazil.
ICE did not respond to requests for comment. An investigator with Brazil’s federal police confirmed the arrest on condition that they not be named as they were not authorized to speak with the press, but declined to provide more details.
Andrade was charged in Brazil for acting as a middleman between top executives at Vitol, allegedly funneling bribes to Petrobras officials in exchange for sweetheart deals from the state-run firm. Officials allege that he also carried out the same services for Glencore and other big oil trading firms to win sweetheart contracts with Petrobras.
Two former executives of Trafigura [TRAFGF.UL] were charged in the same scheme on Dec. 14.
The cases are the latest part of Brazil’s “Car Wash” investigation, launched in 2014 to investigate contracting graft at Petrobras. The probe and resulting trials have toppled scores of powerful business and political figures, including construction industry moguls and former presidents of Brazil and Peru.
Brazilian prosecutors have said they will pressure the middlemen charged and arrested to turn state’s witness and testify against powerful executives at the oil trading firms, the same method they have used for years to take down top targets.
Prosecutors alleged in their charges against Andrade that Vitol’s head of U.S. operations Mike Loya and its Latin American and Caribbean boss Antonio Maarraoui, had full knowledge of the scheme. Neither Loya nor Maarraoui has been charged. Neither of the executives has replied to repeated requests for comment.
Prosecutors said at least $2.85 million in bribes were involved in the cases involving the oil traders, and have called their discoveries so far the “tip of the iceberg.”
A Vitol spokeswoman declined to comment on Tuesday, but said the company would always cooperate with investigators.
A Glencore spokesman said the firm took ethics and compliance seriously but could not comment further. He added that Glencore would cooperate with Brazilian authorities.
The stakes are high for both trading firms.
Brazilian prosecutors allege some of the crimes were carried out by Petrobras traders based in Houston and that some illicit funds moved through the U.S. and European banking systems, raising the chance that jurisdiction for investigating the case could widen. Brazilian and U.S. prosecutors have worked closely in the past on Car Wash cases.
The probe has already frozen current business for the trading firms in Brazil, an increasingly important global oil producer, but not yet a major source of revenue for the firms.
Trafigura said its turnover in Brazil last year was $300 million, a fraction of its overall revenue of $136 billion in 2017. Glencore and Vitol would not provide revenue details, but said Brazil was a minor market.
Vitol has a deal pending to purchase a stake in Petrobras’ prized Nigerian oilfields. Petrobras has said there are no indications of wrongdoing in that deal, but it would be up to Brazilian regulators to make the final determination.