Corrupt Commodity Tenders: Bought Pricing Information and Manipulated Benchmarks

Commodity trading bribery that buys confidential pricing information for physical or derivatives transactions has led to CFTC fraud actions by the Commodity Futures Trading Commission. A procurement employee may know who supplied the winning price. Someone in finance may know what the intermediary’s invoice really paid for. Someone on the trading desk may know which position benefited. We connect those parts of the transaction to show how the advantage was bought and used.

How a Tender Price Reaches the Trading Desk

A corrupt tender gives a bidder the price it needs to win before the competition is over. The advantage reaches beyond that cargo when traders use confidential supply forecasts, import plans and pricing formulas in related futures and swaps trades.

The trade itself explains why these connections matter. Oil moves among producers, refiners, storage facilities, shippers and buyers. Physical oil contracts commonly price against a published benchmark, with an agreed adjustment for quality or other terms. Related futures and swaps reference the same benchmark. A change in the reference price reaches several transactions at once.

The Global Integrity Anti-Corruption Evidence program’s 2022 report, Merchants of Integrity? Commodity Trading and Corruption Research for a World in Transition, describes the commercial incentive:

The report identifies overlapping intermediaries and offshore financial centers as features of the trade. It also identifies paper documentation handled across numerous intermediaries as a corruption risk. For an insider, that puts the agent’s invoice beside the cargo contract and the payment: different documents can explain different parts of the same deal.

Vitol and the Price That Would Win

Vitol’s December 3, 2020 CFTC settlement order addressed allegations that bribes and kickbacks bought preferential treatment, access to trades and confidential information. Its account covered conduct at various times from 2005 through early 2020.

In the Brazilian scheme, the CFTC alleged that a Vitol supervisor obtained confidential information from employees of state-owned companies and passed it to traders in Houston. Their jobs required them to keep that information secret. The information included the exact price Vitol understood would win a tender and an opportunity to match or beat the best competing bid, including winning a tie.

The order reproduces the Vitol supervisor handing Houston traders the price to beat:

According to the CFTC’s account, a Houston trader then entered a trade for 275,000 barrels of high-sulfur diesel with the state company’s U.S. subsidiary. The price referenced a U.S. oil benchmark. We call that a purchased advantage: a supposedly competitive tender came with the answer already supplied.

The alleged information supply went beyond individual bids. It included forecast supply and demand and historical import and export data. The order describes traders taking derivatives positions before the state company obtained its physical position, and transactions exchanging futures positions for physical oil.

The Commodity Futures Trading Commission alleged that offshore bank accounts, shell entities and deceptive third-party invoices concealed corrupt payments. Some invoices described the supposed services as “market intelligence” or “sell support.” Houston personnel allegedly knew of, oversaw and approved payments. The order separately described payments through intermediaries for preferential treatment and trading access in Ecuador and Mexico between about 2015 and 2020.

The order imposed an $83 million civil penalty, but up to $67 million could be covered by payments in the Justice Department and Brazil cases. It also required Vitol to return $12,791,000 in gains, with credit for gains returned in the Justice Department case.

What Vitol Admitted in the Criminal Matter

Under its deferred prosecution agreement, Vitol admitted bribery schemes involving Brazil, Ecuador and Mexico. The Justice Department’s account of the admissions describes a consultant conducting back-channel negotiations with a Houston-based Petrobras official, followed by staged negotiations that settled on a prearranged price allowing for bribe payments.

Vitol also admitted using sham consulting agreements, shell companies, fake invoices and offshore transfers in the Ecuador and Mexico scheme. The FBI’s International Corruption Unit investigated that criminal matter. Those admissions explain what the payment paperwork concealed. The Commodity Futures Trading Commission’s civil action addressed the deception in commodity trading and attempted benchmark manipulation under the Commodity Exchange Act.

Trafigura and the Gasoline Import Plan

Trafigura Trading LLC’s June 17, 2024 settlement addressed allegations that it obtained confidential Mexican gasoline information between 2014 and April 2019 and traded while knowing it had that information. The Commodity Futures Trading Commission’s settlement announcement describes the documents: pricing formulas used by a Mexican trading entity to sell gasoline, its planned import volumes, the types of gasoline it would import the next month and the destination ports. Sometimes the information included competitors’ prices in bilateral negotiations.

According to the CFTC, an employee of the Mexican trading entity supplied the information in breach of employment duties, for benefits that included improving his status within that business. Trafigura’s Houston traders allegedly used the information in physical and derivative gasoline transactions. The Commission alleged that some documents were hand-delivered from Mexico to the United States on paper, leaving no electronic record that Trafigura possessed them.

That detail matters to someone who saw a document arrive, knew who carried it or recognized the counterparty’s pricing sheet. The information could reach the desk without passing through its email system.

The Commission imposed a $55 million civil penalty to resolve allegations of misuse of confidential information, fuel-oil benchmark manipulation and agreements that impeded voluntary communications with the agency. It credited authorities in Mexico, Switzerland and the United Kingdom with assistance in the matter.

Glencore Connected the Information to the Negotiation

Glencore’s May 24, 2022 settlement order described alleged manipulation, corruption and misuse of confidential information from approximately 2007 to at least 2018. The Commodity Futures Trading Commission alleged that Glencore obtained confidential information directly and through intermediaries from employees of state-owned companies, including in Mexico, and used it in physical and derivatives trading. It described confidential information used to analyze a potential project and prepare negotiating positions for a meeting with the global head of the oil department. The alleged advantage reached the negotiation itself.

Separately, the order alleged corrupt payments for preferential treatment and access to trades in Brazil, Cameroon, Nigeria and Venezuela. Some payments allegedly moved as cash or through third-party invoices labeled “advance payment,” “marketing services” or “commission.” The Commission described supervisors as aware of, and sometimes directly involved in, the corruption.

The order required Glencore to pay an $865,630,784 civil penalty and return $320,715,066 in gains. Up to $852,797,810 of that combined bill could be covered by payments in the Justice Department cases. The order covered benchmark manipulation as well as the corruption and information allegations.

An invoice can describe a service while the communications explain the access or preferential treatment allegedly purchased. We examine both with the person who understands the deal.

Can the Commodity Market Be Manipulated?

Yes. Physical trades can influence a published benchmark that also prices futures and swaps. A trader with enough exposure in those related positions can benefit overall from paying more for physical goods or accepting less for them.

The Vitol order alleged attempted manipulation in August 2014 and July 2015. In the earlier episode, physical purchases and derivatives positions left Vitol benefiting from a lower New York Harbor fuel-oil benchmark. In the later episode, its futures positions benefited if the July U.S. Gulf Coast benchmark rose relative to August. The Commission alleged trading intended to push the relevant assessment in the desired direction in each episode.

Trafigura’s order describes a different exposure. In February 2017, the company allegedly held a long derivatives position larger than the physical position it was hedging for an export program from the U.S. Gulf Coast to Singapore. A higher benchmark would increase its derivatives gains by more than the added cost of buying the fuel oil. The Commodity Futures Trading Commission alleged that Trafigura bought 80 cargoes in the Platts trading window during the month and created artificially high benchmark values. The expensive cargo purchases made sense beside the larger position benefiting from them.

TOTSA Offered to Take Less for Its Gasoline

TOTSA TotalEnergies Trading SA illustrates the opposite direction. Its August 27, 2024 settlement order addressed attempted manipulation involving EBOB, a refined gasoline used mainly in European automobiles, in March 2018.

The Commission alleged that TOTSA sold physical gasoline at prices below what buyers indicated they would pay while holding a large short position in futures linked to the Argus EBOB benchmark. Lower reported physical prices could increase the futures position’s value. The order says TOTSA’s sales represented more than 60% of the volume transacted by brokered market participants that month.

A buyer offered more. The trader allegedly wanted less. The short futures position explains why accepting a worse physical price could serve the desk’s larger objective. The settlement imposed a $48 million civil penalty for attempted manipulation.

Why the Duty Behind the Information Matters

Bought pricing information connects access, a duty of confidentiality and the trader’s use of the information. The Commodity Futures Trading Commission’s insider-trading alert identifies trading on information obtained through fraud or deception, and trading that breaches an existing duty, as enforcement concerns.

In the Vitol allegations, the state-company employees’ confidentiality obligations mattered alongside the payments and the trades. In Trafigura, the Commission described an employee supplying protected information for benefits that included status within his employer. The reason the source disclosed the information belongs beside what the recipient knew about that disclosure. We examine who could access it, what duty controlled its use and how it reached the trading decision.

What Evidence Is Required to Prove Fraud?

The useful evidence connects the protected information or corrupt payment to a particular commercial decision and the positions that benefited. Tender records show the competing prices. Communications show when someone learned the price to beat. Invoices and payment records show the intermediary’s role, while employment terms and access permissions explain the duty behind the information.

The trading records supply the next connection: physical contracts, cargo quantities, pricing dates, futures and swaps positions, and the bids, offers and completed trades in the benchmark window. We read the physical and derivatives books together. The Trafigura and TOTSA allegations show why the desk’s reason for a transaction may become clear only when both are visible.

The person who understands those records can explain who directed the trade, how the price was chosen and why an invoice was approved. A procurement employee, operations employee or trader may hold a different part of that explanation.

Can I Get Paid for Being a Whistleblower?

CFTC whistleblowers can receive 10% to 30% of monetary sanctions collected in qualifying actions. An employee or another market participant may qualify. Whistleblowers outside the United States can qualify, and awards can also cover qualifying related actions brought by other authorities. We assess those possibilities with you.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That is a separate program. The civil trading actions discussed here were brought by the Commodity Futures Trading Commission. Questions about confidentiality or your own involvement belong in our conversation with you and the CFTC whistleblower lawyers we bring in.

When You Know Who Supplied the Price

If you know how confidential tender prices reached a trader, or why the desk wanted a benchmark to move, speak with our whistleblower experts about the transaction. We build the case with you around the information, payments and trading decisions, and bring in CFTC whistleblower lawyers who understand physical commodity markets and derivatives. We stay beside you throughout the process to build your strongest CFTC whistleblower case.