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State of Financial Crime 2023 Report

DOJ Charges Two Oil and Gas Traders with Bribery and Money Laundering

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On February 17, the United States Department of Justice (DOJ) indicted a senior oil and gas trader and a Brazil-based intermediary in relation to a bribery and money laundering scheme allegedly centered around securing contracts with the Brazillian energy company Petrobras.

According to unsealed court documents, oil and gas trader Glenn Oztemel worked at two Connecticut-based trading companies. Between 2010 and 2018, Oztemel and his co-conspirators allegedly paid multiple bribes to Petrobras officials in exchange for confidential information regarding the firm’s fuel oil business. 

To obfuscate the trail of the bribes, Oztemel conspired with Eduardo Innecco, who worked as an oil and gas broker and agent for the two Connecticut-based companies. Over eight years, Oztemel caused the companies to make corrupt payments to Innecco, with the knowledge that he would give a portion of those funds to the Petrobras officials. To conceal the scheme further, the defendants allegedly used coded language to refer to the bribes and communicated via encrypted messaging applications and personal email accounts.

According to the press release, the defendants are charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA), three counts of violating the FCPA, two counts of money laundering, and conspiracy to commit money laundering. The investigation led by the Federal Bureau of Investigation (FBI) is ongoing.

Bribery and Money Laundering Guidance

In its 2022 Foreign Public Corruption Advisory, the Financial Crimes Enforcement Network (FinCEN) noted that bribes and extortion payments are often made through third-party facilitators and legal entities that are controlled by relatives and close associates (RCAs). In many cases, payments are laundered through:

  • A network of shell companies
  • Offshore financial centers
  • Professional service providers

In this case, Innecco used fake invoices to disguise the bribery payments as commissions and consulting fees.

To mitigate the risk of money laundering as a result of bribery or other corrupt activities, the DOJ and the Securities and Exchange Commission (SEC) highlight the hallmarks of an effective compliance program in its Resource Guide to the US Foreign Corrupt Practices Act. These include:

  • A commitment from senior management and a clearly articulated policy against corruption.
  • An up-to-date and robust code of conduct and compliance policies and procedures.
  • Oversight, autonomy, and resources assigned to one or more specific senior executives. 
  • A comprehensive risk assessment implemented in good faith.
  • Periodic training and certification for all directors, officers, relevant employees, and, where appropriate, agents and business partners.
  • Appropriate and clear disciplinary procedures that are applied reliably and promptly, and are commensurate with the violation in question.
  • A risk-based due diligence process for third parties, including ongoing monitoring of account relationships.  

Anti-Corruption Initiatives

Countries worldwide have been focusing on anti-corruption initiatives, with the United Nations calling on firms to “develop policies and programs to address all forms of corruption.” In our 2023 global compliance survey, we asked 800 C-suite and senior compliance decision-makers across North America, Europe, and Asia Pacific which area of their organization they were most focused on improving in regard to AML compliance. 32 percent said anti-bribery and corruption, ahead of adverse media screening and sanctions screening. Supply chain risk came out on top after being selected by 45 percent of our respondents. While this is undoubtedly due in part to the intense geopolitical polarization between the US and China that has caused supply chains to become increasingly disrupted, third-party corruption in supply chains may also be a contributing factor.  

Firms seeking to uplevel this area of their compliance program should ensure they keep up to date with any developments from the 2nd Summit for Democracy, which is due to be co-hosted by the US from March 29-30 2023. The goal of the summit is to promote democracy at home and abroad and to develop common approaches to tackling cross-border corruption. The first Summit for Democracy was held in December 2021 and was followed by the “Year of Action” in which the US and its partners worked to advance the commitments made to strengthen democracy, promote respect for human rights, and counter corruption. Since then, the White House has highlighted several of the Summit’s achievements, including:

Key Takeaways

In the DOJ and SEC’s resource guide, firms are reminded that when it comes to compliance, there is no one-size-fits-all approach. Compliance programs that employ a “tick-box” strategy may be inefficient and, more importantly, ineffective. In light of this bribery and money laundering scheme, compliance staff should ensure they adopt a risk-based approach to due diligence, employing higher levels of scrutiny when dealing with high-risk industries, such as:

  • Oil and gas (extractive industries)
  • Defense
  • Pharmaceuticals
  • Construction
  • IT

Fundamentally, compliance staff should ensure they are confident in their understanding of the nature and purpose of account relationships, asking granular questions as required about whether certain transactions make sense or are expected. 

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Originally published 23 February 2023, updated 23 February 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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