New Report Details Alleged Bunker Industry Role in "Car Wash" Corruption and Money Laundering Scandal

Thursday November 8, 2018

A new report by campaign group Global Witness has detailed the alleged involvement of bunker companies Cockett Marine and Ocean Connect Marine (OCM) as part of the bunker industry's role in Brazil's ongoing "Car Wash" corruption and money laundering scandal.

The investigation dates back to 2014 and, amongst other things, has engulfed state oil firm Petrobras.

The NGO's "Friends in Low Places" report centres around the alleged activities of global mega-traders Vitol, Glencore, and Trafigura.

All the players involved have denied any wrongdoing.

In the report, Global Witness cite court documents detailing that from February 2009 to November 2012 Cockett made payments of $8.2 million to Nelson Martins Ribeiro, an alleged money-launderer who features prominently in the Car Wash investigation.

Some $1.3 million of this was paid in 17 instalments after Vitol acquired its 50% stake in Cockett in July 2012, Global Witness says.

For its part, Vitol says it became aware of the payments in 2015 and has denied any wrongdoing: "Neither Mr Ribeiro nor any of his associated companies ever acted as an intermediary or representative of Cockett in respect of generating new business with Petrobras or other clients."

Cockett CEO, Cem Saral, was quoted in the report as saying. "Kindly note that neither Cockett nor any Cockett employee has been charged."

And in a statement released Thursday, Vital said it "has a zero tolerance policy in respect of bribery and corruption."

"In respect of Cockett: The arrangements in question were made three years prior to Vitol's investment in Cockett in July 2012. Cockett cooperated fully with the Brazilian authorities in 2015 and no charges of bribery have been brought. Cockett understands the matter to be closed."

Encom

The report also alleges Vitol had other bunker-related dealings connected to Car Wash via an entity called Encom. Owned by Swedish businessman Bo Ljungberg, he is said to be have acted as an agent for Vitol.

In emails found on a USB stick recovered as part of the wider Car Wash probe, Carlos Herz, a suspected associate of Ljungberg's, is reported to have detailed an April 2010 meeting where he proposed several deals that Encom could be involved.

"These included bunker(shipping) fuel; a fuel oil deal with Argentina involving a politically connected middleman there; Bolivian diesel; and finally oil sales to and from Brazil," the report says.

The meeting is said to have have taken place in Petrobras offices and attendees included Jorge Luz, who the report notes in 2017 was jailed for his part in orchestrating over $20 million in bribes in Petrobras deals.

Of the April meeting, Herz wrote: "I took advantage of the occasion to mention that Vitol … has no objection to working with us in bunkering fuel, heavy and light [crude], in brief in all sectors as long as PB [Petrobras] clearly signals that Encom is the marketing channel."

Vitol is said to have confirmed it made payments to Ljungberg in 2011 and 2012 "as a consultant, to support Vitol in identifying oil business opportunities in Brazil and to assist with operational aspects of the transactions," but denies connections to any wrongdoing.

"In respect of Encom: Vitol believes its dealings with, Mr Ljungberg, Encom Trading SA and Petrobras to be fully compliant with all relevant legislation. Appropriate due diligence was carried out prior to Encom's appointment in 2011. At this time, there was no information linking Mr Ljungberg with any of the alleged conduct referred to in the Global Witness report or anything else to suggest he may have been involved in criminal activity," Vitol said in a statement Thursday.

Ocean Connect Marine

As for wholly owned Glencore subsidiary, Ocean Connect Marine (OCM), between 2010 and 2014 the marine fuel player is alleged to have made 121 payments totalling $2.1 million to Konstantinos and Georgios Kotronakis - a father-and-son team that also feature heavily in Car Wash investigations.

The Brazilian authorities have not charged either of the men, the Global Witness report notes.

Glencore is reported to have told Global Witness that it had engaged the Kotronakises' firm Seaview Shipbroking Ltd, described as "an independent marine fuels broking company", for around 600 transactions with Petrobras.

"Seaview was on a panel of brokers approved by Petrobras to market the sale of bunker fuel at Brazilian ports and 'assist Petrobras in securing bunkers for Petrobras' tanker fleet at ports outside Brazil'," the report states.

The report cites guestbook records as indicating Georgios Kotronakis represented OCM when he visited Petrobras in February 2011.

While prosecutors have suggested the payments could have been used as bribes, Glencore says it was not aware the Kotronakises "paid bribes or that OCM [Ocean Connect Marine] payments were used to fund such bribes (much less if they were paid)."

"Neither your letters nor the documents you attached present credible evidence that a Glencore-related entity knowingly made corrupt payments, either directly or indirectly," a spokesman added.

Global Witness' report adds to a growing portfolio of alleged questionable conduct connected to the bunker industry, and follows news last week that Aegean Marine Petroleum Network [NYSE:ANW] believes up to $300 million of its cash and other assets were misappropriated through fraudulent activities that date back as early as 2010.

It was also this week four years ago that OW Bunker revealed a $125 million fraud at its at its Singapore-based subsidiary Dynamic Oil Trading (DOT), malpractice that ultimately led to the former bunker giant's collapse.

The International Bunker Industry Association (IBIA) Convention this week placed a particular emphasis on ethics in the bunker industry.