Swiss Attorney General Holds Commodities Firm Gunvor Group Criminally Liable for Foreign-Official Bribery, Orders Payment of Nearly $95 Million

On October 17, the Office of the Attorney General of Switzerland (OAG) announced that it had held global commodity-trading company Gunvor Group (Gunvor) criminally liable for acts of foreign corruption, and ordered it to pay nearly CHF 94 million ($95 million), including a fine of CHF 4 million ($4 million).

The OAG, whose investigation focused on Gunvor’s activities in the Republic of Congo and Ivory Coast between 2008 and 2011, found that “[d]ue to serious deficiencies in its internal organisation,” Gunvor failed to prevent the bribery of public officials in those countries, in violation of Article 102, paragraph 2 of the Swiss Criminal Code (SCC) (corporate criminal liability) in conjunction with SCC Article 322septies (foreign-official bribery).  Those acts of corruption, which had the aim of securing access to the petroleum markets in both countries, were the subject of a 2018 judgment by the Criminal Chamber of the Swiss Federal Criminal Court.

The OAG investigation identified numerous compliance failures by Gunvor during the 2008-2011 period under investigation:

  • Gunvor “had taken no organisational measures to prevent corruption in its business activities: the company did not have a code of conduct to give a clear signal and guidance to its employees on their activities, nor did it have a compliance programme.”
  • Gunvor also “did not have an internal audit procedure and had not appointed a staff member to take charge of identifying, analysing or reducing the risk of corruption.”
  • Furthermore, “no internal guidelines were in place and no training was offered to raise employee awareness and reduce the risks associated with corruption.” The OAG added that “[i]t therefore seems that Gunvor accepted that a risk of corruption was inherent in the company’s commercial activities, at least in the relevant markets.:
  • Gunvor “did not attempt to manage the risk of corruption associated with using agents to obtain petroleum shipments, for which commissions of several tens of millions of US dollars were paid between 2009 and 2012.” In particular, it “had no formal selection process for any of the agents that it used and it did not carry out any checks on their activities, despite the fact that Swiss and international anti-corruption standards (OECD, ICC, SECO) specifically highlight the increased risk of corruption associated with agents’ activities.”  Those standards, according to the OAG, “recommend that properly documented due diligence be carried out, that the selection process is regulated, that warning signs are defined to detect potentially illegal activities and that regular checks are made, in particular when agents’ invoices are paid.’
  • Finally, “It was also found that at the time of the events, warning signs had been ignored and other irregularities had occurred, including authorisation being given for a substantial number of payments to third party offshore companies unrelated to oil activities and the backdating of supporting letters to banks.”

In view of the findings of its investigation and the Swiss Federal Criminal Court’s 2018 judgment, on October 14 the OAG issued a summary penalty order that convicted Gunvor and ordered the payment of nearly CHF 94 million ($95 million), including a fine of CHF 4 million ($4 million).

The OAG explained that under the corporate criminal liability provisions in SCC Article 102, paragraph 3, “the fine to be imposed on an undertaking found criminally liable is largely determined by the seriousness of the offence and of the organisational deficiencies, the loss or damage caused and the economic capacity of the undertaking, with the maximum fine being CHF 5 million.  Gunvor’s CHF 4 million fine, in the OAG’s view, “takes account in particular of efforts it has made since 2012 to improve the way it is organised and to prevent corruption by implementing measures based on recognised standards.”

In addition to the fine, the OAG ordered Gunvor to pay compensation of nearly CHF 90 million.  That amount, according to the OAG, “corresponds to the total profit that Gunvor made from the business in question in the Republic of Congo and Ivory Coast.  Under Art. 71 para. 1 SCC, compensation is payable if there are no assets directly available for forfeiture.”

The OAG stated that other individuals, including a former Gunvor employee “and certain financial intermediaries, are currently under investigation, notably on suspicion of bribing foreign public officials (Art. 322septies SCC), money laundering (Art. 305bis SCC) and criminal mismanagement (Art. 158 SCC).”  It declined to comment further on the ongoing criminal investigations.

N.B.: This order and payment provide still more indications that law enforcement and regulatory authorities in multiple countries, such as Brazil and the United States, are paying increasing attention to compliance issues in the commodities sector.   Since the timeframe of the acts that prompted the fine and compensation, Gunvor has developed and implemented a compliance and ethics program that appears to address all of the compliance failures that the OAG identified.  Even so, chief compliance officers, in the commodities sector and other industries, should still review the OAG findings and use them as a point of comparison to check that their own anti-bribery and corruption compliance programs are not deficient in any of those respects.