DOJ Charges Two Oil and Gas Traders with FCPA Bribery Scheme Involving Petrobras
In its first enforcement action of 2023, the Justice Department charged a Connecticut man and a foreign national with FCPA bribery and money laundering charges stemming from a bribery scheme to secure contracts with Petrobras in Brazil. Glenn Oztemel was a senior oil and gas trader at two trading companies., and Eduardo Innecco, a dual Italian and Brazilian citizen, was an oil and gas broker at Morgenstern Energy Trading Ltd. (“Morgenstern”) and Wertech S.A. (“Wertech”), and Brazilian Chemicals & Petroleum LTDA (“Brazilian Chemicals”) and Albatross Shipping Consultants Ltd. (“Albatross”).
As alleged in the indictment, between mid-2010 and 2018, Oztemel and Innecco paid bribes to Petrobras officials in helping their trading companies to obtain business with Petrobras. In exchange for the bribe payments, Oztemel and Innecco and others received confidential information regarding Petrobras’ fuel oil business. Oztemel and his co-conspirators arranged for the trading companies to make bribery payments that were disguised as consulting fees and commissions.
The case was built with the assistance of Francis Berkowitz, a former Petrobras trader, who plead guilty in 2019 to a single count of money laundering conspiracy in the Eastern District of New York. It is clear that Berkowitz provided important informati9on to assist the grand jury in its investigation and indictment.
In arranging the payments and discussing specific tasks and results, Oztemel and Innecco used coded language to refer to the bribes. In addition, the conspirators used personal email accounts, fictitious names and messaging applications.
The bribery payments were transmitted at the request of the two trading companies bank accounts in the United States to and through bank accounts in Switzerland and Uruguay. The payments were based on invoices sent from Oztemel and Innecco based on fake invoices for consulting fees and commissions.
The indictment outlines key overt acts related to the bribery scheme, starting in 2010, with a series of emails in which a 60 cent per barrel commission was established as a set fee which included a portion for paying bribes to Petrobras officials. In 2011, Innecco met with Petrobras officials and confirmed they would pay bribes ranging from 25 cents per barrel and up to $1 per barrel. In follow up emails, the parties referred to “breakfast servings” as payments to Petrobras officials. Oztemel and Innecco discussed in emails the applicable bribery payments ranging from 70 cents to 1 dollar. They agreed with Petrobras officials, for example, around 3 percent of a contract price as the formula for bribery payments.
Later in 2017, Oztemel and Innecco referenced important confidential information concerning competitive prices offered by other trading companies. As a result, Innecco and Oztemel agreed to bidding on numerous tenders, including ones which they intended to lose so that no questions were asked about their successful results with other tenders in which they paid bribes.
In a number of situations, Innecco communicated with Petrobras government officials and conveyed specific prices for upcoming product sales to ensure they were within the proper limit and would be successful.
Bribery payments were made through Uruguay bank accounts linked to the trading companies. Petrobras officials then were paid through these accounts.
Oztemel and Innecco are charged with conspiracy to violate the FCPA, conspiracy to commit money laundering, three substantive FCPA counts and two counts of money laundering.