You have to give the Justice Department credit — after two slow enforcement years, DOJ is starting off 2024 with a relative “bang;” first, DOJ reached a large settlement with SAP in January, and now, DOJ has reached a blockbuster settlement with Gunvor S.A. for $661 million.

Gunvor is one of the world’s largest commodities trading companies.  DOJ’s settlement represents a “return” to its long-standing aggressive approach to FCPA enforcement.  DOJ did not permit Gunvor to enter into a deferred or non-prosecution agreement.  Instead, DOJ required Gunvor to plead guilty to one count of FCPA conspiracy. 

Gunvor entered into a plea agreement and pleaded guilty to an information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Following the plea, the court sentenced Gunvor to pay a criminal monetary penalty of $374,560,071 and to forfeit $287,138,444 in ill-gotten gains. The sentence includes credits of up to one-quarter of the criminal fine each for amounts Gunvor pays to resolve investigations by Swiss and Ecuadorean authorities into the same misconduct so long as the payments are made within one year.

The Office of the Attorney General of Switzerland simultaneously announced a parallel resolution of its investigation into Gunvor’s misconduct that involved payment of approximately $98 million by Gunvor to Swiss authorities.

Gunvor’s conduct stretched over nearly a decade and involved systemic bribery payments to officials of the Ecuadorian Ministry of Hydrocarbons and Petroecuador, the Ecuadorian state-owned oil company, in exchange for valuable contracts to acquire oil products.  In total, Gunvor earned more than $384 million in profits from the business it corruptly obtained related to Petroecuador. 

DOJ’s previously secured convictions of four individuals involved in Gunvor’s

bribery scheme, including:

• Antonio Pere Ycaza, a former consultant for Gunvor, pleaded guilty on October 7, 2020, to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering.
• Enrique Pere Ycaza, a former consultant for Gunvor, also pleaded guilty on Oct. 7, 2020, to one count of conspiracy to commit money laundering and to violate the FCPA.
• Raymond Kohut, a former Gunvor employee and agent, pleaded guilty on April 6, 2021, to one count of conspiracy to commit money laundering.
• Nilsen Arias Sandoval, a former senior Petroecuador official, pleaded guilty on Jan. 19, 2022, to one count of conspiracy to commit money laundering.

In support of its action, DOJ cited the following factors, including the nature and seriousness of the offense; and Gunvor’s credit for its cooperation with the investigation, which included: (i) producing documents to DOJ from multiple foreign countries expeditiously while navigating foreign data privacy and criminal laws; (ii) providing information obtained through its own internal investigation to DOJ, which allowed DOJ to preserve and obtain evidence as part of its investigation; (iii) making detailed, factual presentations; (iv) arranging for the interview of an employee based outside the United States; (v) promptly collecting, analyzing, and organizing voluminous information, including complex financial information, at the request of DOJ, and producing an analysis of trading activity conducted by multiple outside forensic accounting firms retained by Gunvor; (vi) translating foreign language documents to facilitate and expedite review by the department; and (vii) imaging the phones of relevant custodians at the beginning of Gunvor’s internal investigation, thus preserving business communications sent on mobile messaging applications.

Gunvor also engaged in timely and appropriate remedial measures, including: (i) eliminating the use of third-party business origination agents; (ii) enhancing its third party due-diligence process; (iii) developing and implementing a control framework for internal business developers and additional layers of review and approval for counterparty payments; (iv) enhancing the independent compliance committee with responsibility for reviewing high-risk transactions; (v) engaging resources to review its compliance program and test the effectiveness of its overall reporting process, its reporting hotline and the effectiveness of the investigation of reports made through the hotline; (vi) evaluating and updating its compensation policy to better incentivize compliance with the law and corporate policies; (vii) hiring additional compliance personnel; (viii) testing and enhancing its compliance program, including by conducting compliance culture reviews, testing new third party due diligence process and payment controls, and evaluating controls around business development activities; and (ix) developing and implementing a risk-based business communications policy that addresses the use of ephemeral and encrypted messaging applications.

DOJ also cited Gunvor’s history of misconduct. In October 2019, Gunvor reached a resolution with the Office of the Attorney General of Switzerland concerning a corrupt scheme to bribe officials in Congo-Brazzaville and Côte d’Ivoire to secure oil contracts obtained between approximately 2009 and 2012. As part of the 2019 Swiss resolution, Gunvor admitted that it lacked sufficient controls to prevent the underlying misconduct and failed to take “all the reasonable organizational measures” required to prevent Gunvor’s employees and agents from engaging in bribery. The conduct that is the subject of the United States guilty plea occurred, in part, at the same time as the prior Swiss investigation and resolution.

Applying DOJ’s Corporate Enforcement Policy, DOJ determined that Gunvor should be required to plead guilty to one count of conspiracy to violate the FCPA.

The criminal fine calculated under the U.S. Sentencing Guidelines reflects a 25% reduction off the 30th percentile of the applicable guidelines fine range, taking into account Gunvor’s cooperation and remediation, as well as its prior history.

DOJ did not insist on appointment of an independent compliance monitor.