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Exclusive-JPMorgan faces oil bribery probe in Brazil By Reuters


© Reuters. FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company JPMorgan Chase (JPM) is seen in Los Angeles, California, United States, in this October 12, 2010 REUTERS/Lucy Nicholson/File Photo/File Photo

By Gram Slattery

RIO DE JANEIRO (Reuters) – Brazilian authorities are investigating whether JPMorgan Chase & Co (NYSE:) played a role in an alleged bribery and money laundering scheme dating back to 2011 and involved state-run oil company Petrobras, according to documents reviewed by Reuters and two law enforcement sources. According to court documents and anonymous sources who asked anonymity for an ongoing investigation, the police are currently focusing their efforts on JPMorgan’s purchase of approximately 300,000 barrels Petrobras oil fuel in 2011.

Reuters has seen the documents. They include emails between alleged accomplices, witness testimony, and bank records. Sources said that authorities continue to investigate whether the alleged corruption continued into the future. Reuters obtained court documents that included witness testimony from Rodrigo Berkowitz (a former Petrobras oil trader). His plea deal with Brazilian authorities refers to two fuel cargoes that were purchased to JPMorgan units. The probe, which is in preliminary stages, is part of a larger investigation by Brazilian authorities who have been examining wrongdoing across the commodity trading industry for years. JPMorgan is the target of this investigation, as it is one the largest banks worldwide. The country’s federal police are working to determine if JPMorgan secured shipments of Petrobras fuel at artificially low prices by routing bribe payments to employees on Petrobras’ trading desk though a network of middlemen, according to the people and documents that relate to the investigation. Brazil’s Federal Police and JPMorgan have declined to comment. Rodrigo Berkowitz’s lawyer did not respond when asked. He previously stated that his client was cooperating with Brazilian and U.S authorities in their investigation into the commodities trading sector. Petroleo Brasileiro SA was formerly known as Petrobras. It stated in an email that it had “zero tolerance” for fraud and corruption. In an email, the company stated that it had assisted Brazilian authorities in numerous corruption investigations. The world’s largest commodity traders, including Switzerland’s Vitol, the world’s top independent oil trader, are also facing scrutiny globally after years of investigations into whether they offered bribes to win contracts in several countries in Latin America. Vitol, who admitted wrongdoing under a settlement agreement with Brazilian and U.S authorities in 2020, has indicated that they are happy about the outcome. The JPMorgan investigation has not seen any charges brought against Vitol. It is unclear if there will be. Reuters was able to review previously unknown documents, which Brazilian police presented this year, that included emails and WhatsApp messages among alleged complicits. These documents included testimony from an ex-Petrobras fuel trader and internal Petrobras files. INCREASED SCRUTINY Petrobras (the seventh-largest oil producer worldwide) routinely buys and trades petroleum products to obtain the lowest price. U.S. officials and Brazilian authorities claim that Petrobras traders accepted bribes from other counterparts over more than 10 years. The traders also allegedly bought fuel at an inflated price or offered it for a lower price. In December, Vitol agreed to pay $164 million and admit guilt to resolve allegations by U.S. and Brazilian authorities that it paid bribes in Brazil and other Latin American countries between 2005 and 2020. In November, Brazilian prosecutors filed a civil lawsuit against Trafigura, alleging the Geneva-based trader and at least two subsidiaries paid Petrobras employees more than $1.5 million in bribes in 2012 and 2013. Trafigura has consistently denied the allegations leveled by Brazilian authorities and has said that outside counsel it hired “found no basis to conclude that Trafigura’s current management were involved in, or had knowledge of, alleged improper payments to Petrobras.” Reuters reported in recent months, citing law enforcement sources and Brazilian court documents, that U.S. and Brazilian authorities are also probing Connecticut-based trading house Freepoint Commodities for its dealings in Brazil from roughly 2012 to 2018. A Freepoint spokesperson wrote in an email at the time that the company “is strongly committed to following the laws everywhere we do business.” The company declined further comment. Sources said that Brazilian investigators had not shared with the U.S. their information regarding JPMorgan, but they will do so as the investigation progresses. Brazilian authorities seek to establish the chronology of the JPMorgan corruption operation. JPMorgan largely exited physical commodity trading in 2014, selling its operations to Swiss trader Mercuria for $3.5 billion in an all-cash deal. We don’t know if bribery took place prior to the date, or whether the wrongdoing involved only 2011 transactions.

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