PETR3 Petroleo Brasileiro S.A. Petrobras

By Jeffrey T. Lewis, Scott Patterson and Luciana Magalhaes 

SÃO PAULO -- Brazil's sprawling Operation Car Wash corruption probe is investigating mining giant Glencore PLC, Trafigura Group and Vitol Group for allegedly paying millions of dollars in bribes to employees of Brazilian oil company Petróleo Brasileiro SA, or Petrobras, in return for better terms on trading contracts.

Glencore and oil trader Vitol, both based in Switzerland, and Singaporean oil trader Trafigura are suspected of paying a total of about $15 million in bribes, and other trading companies also under investigation are suspected of paying a similar amount, prosecutors said Wednesday.

Spokespeople for Glencore and Trafigura declined to comment. A Vitol spokesman said the company is cooperating with authorities.

Prosecutors said they have ample documentary evidence, implicating top executives at the targets of the probe, that the companies bribed Petrobras employees to win more contacts to trade oil and derivatives and to win better prices on those contracts, among other things.

Investigators said they have evidence that at least 160 trading operations were affected by the scheme, and there is much more to be uncovered. Glencore, Trafigura and Vitol will face legal repercussions in other jurisdictions, they said.

"The early stages of the investigation are revealing only the tip of the iceberg," said prosecutor Athayde Ribeiro Costa, during a press conference in the Brazilian city of Curitiba, where Operation Car Wash is based. "The main executives of the trading companies had total and unmistakable knowledge" of the deals, Mr. Costa added.

The bribes were paid to executives of the marketing and trading department and the illicit deals were carried out by Petrobras workers in the company's Houston and Rio de Janeiro offices, according to prosecutors. Bribes were also paid to win contracts to store oil, they said.

Petrobras, which has changed its top management and implemented new ethics and compliance programs since the Car Wash probe began in 2014, has been cooperating with Brazilian investigators in the probe, turning over documents and other materials, according to prosecutors.

"This is important because it shows the company wants to help Brazilian authorities resolve these crimes," said Mr. Costa.

Allegations that the commodity trading houses used corrupt middlemen in dealings with Petrobras emerged in November in a report by London watchdog Global Witness. Glencore, in response to the report's allegations, denied wrongdoing. Vitol said in response to the report that it has a "zero tolerance policy in respect of bribery and corruption."

Global Witness investigator Daniel Balint-Kurti said the three trading firms "have a history of dealing with unsavory middlemen around the world."

Car Wash began as a probe of bribes paid to Petrobras employees by Brazilian construction companies that won contracts with the oil producer in return. Investigators found that part of the illicit cash generated by the scheme was delivered to politicians, who used the money to fund political campaigns, among other things.

Prosecutors jailed dozens of executives from the companies involved and named scores of politicians who allegedly benefited from the payments. The scandal weakened former President Dilma Rousseff and contributed to her being impeached and removed from office in 2016.

It also boosted the campaign of President-Elect Jair Bolsonaro, who in October won the country's presidential election with a strong law-and-order campaign.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com, Scott Patterson at scott.patterson@wsj.com and Luciana Magalhaes at Luciana.Magalhaes@wsj.com

(END) Dow Jones Newswires

December 05, 2018 10:04 ET (15:04 GMT)

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