An employee of an international oil trader spoke on the record to the FBI about kickbacks to officials and top managers of state-owned companies when purchasing raw materials.

The trial of former Vitol Group trader Javier Aguilar revealed patterns of modern corruption in the oil trade. The US investigation includes testimony from corrupt government officials, hidden records and spreadsheets showing how the money was distributed, Orda.kz reported, citing Bloomberg.

In 2020, the Swiss-Dutch company admitted that it had paid bribes in a number of countries where it purchased raw materials.

That same year, Javier Aguilar met with his partners, brothers Antonio and Enrique Pere, saying that Vitol had become more cautious amid a series of criminal investigations. He stated the need to close the network of offshore companies that were previously used to pay bribes and replace them with new ones. At that time, Aguilar did not know that the brothers were collaborating with the FBI – Enrique had a device in his watch that recorded the entire conversation. The Pere brothers became the main witnesses in the case against Aguilar.

On February 23, 2024, a New York City jury found Aguilar guilty of bribery and money laundering. The maximum penalty for these crimes is 30 years in prison. When the court finally delivers its verdict, Aguilar will be the first commodity trader to be sentenced to such a significant prison sentence for corruption. Although his lawyers insist that he became an unwitting participant in a scheme organized by others.

In addition, witnesses in the case described unprecedented corruption in Ecuador, which engulfed the country’s entire oil and gas industry. One of the officials of the Latin American state shared that he was bribed not only by Vitol, but also by Trafigura and Gunvor. All three companies are the largest of the four independent oil traders. A fourth company, Glencore, avoided charges of wrongdoing in Ecuador. However, in 2022 Glencore admitted to certain corruption episodes in eight other countries.

The largest oil trading companies have become so important to energy security that governments from Germany to Saudi Arabia are helping to finance them. Thus, traders operate without explicit regulation and supervision. Vitol’s sales in 2022 were $505 billion.

Bloomberg describes Ecuador in the 2010s as a cash-strapped country producing about 500,000 barrels of oil per day. The country was the main platform for any oil trader operating in Latin America.

Aguilar had to establish ties with the Ecuadorian government, which requires that the company purchasing the raw materials be owned by the state. According to a representative of the state-owned Ecuadorian Petroecuador, Trafigura and Gunvor used national companies from China, Thailand and Uruguay for this.

In 2015, Aguilar approached Antonio Pere, who had previously worked for the Ecuadorian government. In essence, the Pere brothers were an information center for bribes to Ecuadorian officials. By that time, they had already successfully proven themselves in working with oil traders who wanted to operate in Ecuador. Petroecuador’s head of international trade, Nielsen Arias, admitted to accepting bribes from the Pere brothers to select Vitol for a deal with the government. The Pere knew how to use a state-owned company to cover up a deal, since they had previously helped Trafigura and Gunvor in this.

For cover, Aguilar proposed using the trading division of the state-owned Oman Trading International, which Vitol helped create. In 2016, the parties entered into a contract to sell 17.1 million barrels of fuel oil to Oman in exchange for an advance of $300 million, which Vitol agreed to provide. The company was supposed to profit from this deal, organized by Aguilar and the Pere brothers.

Aguilar’s trial showed that modern oil traders have added more intermediate links between corrupt traders and officials compared to 20th-century practices.

In our country, in this region, it was common knowledge that in order to do business with the government, most of the time you need to pay bribes, Antonio Pere describes the methods of working with the Ecuadorian authorities.

The money of the three accomplices was managed by Lionel Hanst from the island of Curacao. He previously worked for other oil traders, including Addax and Mercuria. Hanst set up shell companies that redistributed Vitol funds to more than 12 other intermediaries. Pere received money for Ecuadorian officials from Curacao. Vitol signed false brokerage contracts with Hanst’s companies to make the cash flow appear respectable. In return, the island resident received a 5% share of all monetary transactions through his shell companies. Aguilar received more than $600,000 from Hanst into his personal accounts.

Also through Hanst, Vitol bribed employees of the Mexican state-owned company Pemex and the oil refining group Citgo, owned by the state oil company of Venezuela.

Nielsen Arias and Antonio Pere named a number of Ecuadorian officials who received bribes, including the deputy finance and the head of the presidential administration. The brothers profited the most from about $100 million handed over from companies wanting to operate in Ecuador. They kept more than half of this amount for themselves.

Participants in corruption schemes actively corresponded in popular instant messengers and came up with code names for themselves, countries and companies. However, already in 2019, FBI agents searched the office of Antonio Pere in the suburbs of Miami, finding an array of documents that detailed corruption schemes. A short time later, the brothers agreed to cooperate with the FBI, which then recorded a significant amount of conversations with Aguilar and Arias.

In the summer of 2020, the bureau arrested Aguilar in Houston, Texas. The US government has plenty of evidence against Vitol. By the end of the year, the company had agreed to pay $164 million to defer prosecution. Vitol previously admitted to paying bribes in Ecuador, Mexico and Brazil over the past 15 years. Brothers Pere, Hunst and Arias also pleaded guilty.

Conversations from the wiretaps of Aguilar and the Pere brothers suggest that the bribery schemes were part of Vitol’s standard operating practice. The money for Hanst was transferred from Vitol’s bank account in London by employees of the company’s office in Geneva. Such transfers, bypassing the company’s normal systems, could only be made with the approval of Vitol’s accounting department.

What does Kazakhstan have to do with it?

In 2011, Vitol acquired a 60% stake in the French Maersk Oil, which was developing the Saiga oil field. The company received 100% of the shares of the enterprise and became the operator of the field.

Vitol has been cooperating with Kazakhstan for many years, purchasing oil from local producers, including the national company KazMunayGas. The company combines raw materials into large quantities and sells them on export markets. In the summer of 2016, a subsidiary of KazMunayGas, which owns a stake in the project to develop the Kashagan field – KMG Kashagan B.V. Private Limited Liability Company, sold Kashagan’s unproduced oil to Vitol SA for one billion dollars. Previously, KazMunayGas sold 30.1 million tons of oil to Vitol for three billion dollars.

In 2018, the Swiss non-governmental association Public Eye presented in its investigation connection between Vitol managers and representatives of the Kazakh elitein particular, with Timur Kulibayev – son-in-law of the ex-president Nursultan Nazarbayev and head of the KAZENERGY Association.

The press service of the latter confirmed that Kulibayev indirectly owns the Metrix offshore companies, which appears in the Public Eye investigation. However, KAZENERGY assured that the published information is not entirely accurate.

The statement that these companies (Vitol Central Asia SA, Ingma Holding BV and Euro Asian Oil AG) were ever part of Mr. Kulibayev’s operating companies is incorrect, the association’s press service said.

It follows from the investigation that in 2014 Vitol sold almost a quarter of all Kazakh oil intended for export. Then the company gained access to the country’s largest deposits.

From 2009 to 2016, Vitol handled approximately $93 billion in oil contracts. In this regard, the company was able to pay its shareholders dividends of more than $1 billion, which were distributed between Vitol and its partners. Among them are Kazakhs Dias Suleimenov and Daniyar Abulgazinwho held positions in the oil and gas sector of Kazakhstan and had connections with Timur Kulibayev.

Sources told Public Eye that Kulibayev’s assistance allowed Vitol to receive significant volumes of Kazakh oil for export at a price below the market price.

Between 2015 and 2018, Vitol provided $5.2 billion to KazMunayGas in exchange for crude oil shipments. The state-owned company was forced to sell oil to Vitol, probably at a lower price than for other traders. Thus, Vitol gained an advantage in access to oil from the largest fields in Kazakhstan – Tengiz, Kashagan and Karachaganak.

Despite a series of high-profile corruption scandals in several countries around the world, Vitol continues to cooperate with Kazakhstan.