Vitol, Gunvor and Trafigura say bribery is over – but reform will take more than words
The chief executives of Vitol, Gunvor and Trafigura declared the era of bribery in the sector to be over last week. But Rhodri Morgan argues that it will take a lot more than just words if the companies are serious about putting an end to corruption in the industry
Nothing closes the book on a decades-old problem quite like hundreds of millions of dollars in punitive charges.
And yet, the chief executives of Vitol, Gunvor and Trafigura, the world’s three largest commodity trading firms, considered the issue of bribery and corruption within the sector closed.
The problem with the commodity clan, onstage at the Financial Times’ Global Commodities Summit last week, saying that the era of bribery and corruption in the sector is over is, ‘does anyone believe them?’.
It didn’t take long, minutes in fact, for Jeremy Weir, the head of Trafigura, which was recently forced to hand over £95.8m in fines following an 11-year run of securing “improper advantages” in Brazil, to admit at the same conference that actually, “you can never say never.”
Not one, or two, but all three of the company’s represented on stage by their leaders have paid eye-watering settlements for bribery charges in recent years.
Some, like Gunvor, are merely months-removed from handing over the checks; a £600m settlement with the US authorities in March relating to illegal oil payments in Ecuador.
Vitol had a trader convicted on corruption charges in February after sending over £1m in illegal payments to Ecuadorian and Mexican officials over five years.
Meanwhile, Trafigura is currently working to resolve charges in Switzerland relating to alleged acts of bribery between 2009-2011 in Angola.
Separately, the son of the group’s founder recently accused his late father of painting him as a “scapegoat” for corruption charges brought against the company in the US.
To come together and declare the matter universally over is clearly easier said than done.
But to play devil’s advocate, what could these companies need to be doing to get their respective houses in order to make sure bribes won’t be paid in future?
Establishing a wining and dining line would be a start, says Matthew Nunan, a partner at London law firm Gibson Dunn and former head of wholesale enforcement for the Financial Conduct Authority (FCA).
“There will be situations where people genuinely didn’t realise what they shouldn’t be doing and yes of course you have to have hospitality for clients to build relationships, but where is the line drawn between a dinner once a month versus a 16-course, lavish meal with a plane to take them to the hotel?” he told City A.M.
All three companies will likely be refreshing their gifts and hospitality policies and making sure their employees know what constitutes appropriate behaviour.
But those meals, drinks, plane rides and other treats can sometimes be the difference between signing a deal and not and Nunan says that someone has to be the first head above the parapet to walk away.
“The firms have to get themselves into a position where they say, I don’t care if you leave money on the table, we have to do the right thing,” he said.
“When you’re the first company to do that, it feels very painful because you know your competitors are not walking away from that business.”
Far from a commitment to do just that from the three chiefs, whose companies earned a combined $46bn in 2022 and 2023, what the markets got felt like a soft pledge.
Gunvor and Trafigura both said that they had been increasing spending on compliance, with Gunvor confirming the number to be in the millions, as well as additional staff and training programmes to prevent corruption.
But, as Nunan points out, “If you skip the middle ground of saying ‘we want to’ and ‘we’re on our journey’ and skip straight to the end, “it’s done”, you could also ask yourself the question, well, really?”.
As another City lawyer told Morning Wire, “If someone came to you tomorrow and said, ‘I’ve eliminated all knife crime’, you wouldn’t believe it.”
If we are to take these companies at their word, and that they really are serious about ending bribery in the sector, they should at least be making sure they put their money where their mouth is and properly invest in their compliance procedures.
But delivering on this promise is also about changing corporate culture too. That will take time, energy and consistent top-level commitment – not just one-off pledges.