Vitol: The Winning Price Arrived Before the Bid

Vitol agreed to a $95.7 million CFTC bribery and manipulation settlement over bought tender information and attempts to move fuel-oil benchmarks. The Commodity Futures Trading Commission alleged that payments bought the price needed to win supposedly competitive oil trades, while separate trading sought to push benchmarks in the direction Vitol’s positions needed. A person who knew the tender, approved the intermediary’s invoice or understood the trading book could explain how the pieces fit.

The December 3, 2020 settlement concerned Vitol Inc., an energy and commodities trader with substantial operations in Houston. The Commission alleged that payments to employees and agents of state-owned companies in Brazil, Ecuador and Mexico bought preferential treatment and access to trades. Its account of corrupt commodity tenders in Brazil went further: confidential information reached traders handling physical oil and derivatives.

How a Physical Oil Price Reaches Futures and Swaps

A physical oil contract can carry a published benchmark price into the buyer’s bill, while futures and swaps reference the same assessment. That shared price is what makes a small trading window matter beyond the cargoes changing hands inside it.

The Commission’s order explains that physical oil contracts commonly use a benchmark plus or minus a negotiated differential reflecting product quality or other terms. Oil moves among producers, refiners, shipping and storage facilities, and consumers. Alongside those movements, traders use derivatives to manage price exposure or take positions on where prices will go.

For the fuel-oil benchmarks in this case, Platts used its market-on-close process. It considered information reported during the day and activity in a 30- or 45-minute trading window, depending on the period and product. Approved participants entered bids, offers and intentions to trade through eWindow, Platts’ online tool. At the close, Platts used that activity and other information to assess the day’s benchmark.

The commercial incentive is easier to see against the trade’s margins. The Global Integrity Anti-Corruption Evidence program’s 2022 report, Merchants of Integrity? Commodity Trading and Corruption Research for a World in Transition, describes a business with narrow margins, high volumes and profits from differences between purchase and sale prices. It also identifies overlapping intermediaries and offshore financial centers throughout the supply chain. In Vitol’s case, the alleged advantage was knowing the price another bidder could only try to beat.

The Gold Number and the Last Look

The Commission alleged that Vitol bought a last look at confidential competing prices, allowing it to match or beat the best offer and win even when it tied. According to the order, the exact price that would secure a trade was called the “gold number.”

The order reproduces an early 2013 exchange between a Vitol supervisor in Brazil and a Houston trader. According to the Commission, the supervisor had obtained the confidential price through corrupt payments:

The order says the Houston trader then entered a trade for 275,000 barrels of high-sulfur diesel with the state company’s U.S. subsidiary, priced against a U.S. oil benchmark. We see the unfairness in the exchange itself: the trader asks whether matching the number will secure the cargo, and the answer is already yes. The tender still produces bids and a winning transaction. The confidential conversation explains why the competition was hollow.

In a separate example, the Commission alleged that Vitol won a 300,000-barrel diesel cargo worth more than $30 million despite offering exactly the same price as a competitor. It described corrupt payments exceeding $20,000 to a state-company agent in connection with that cargo. The competing bidder had submitted a price. Vitol allegedly bought the tie-breaker.

What the Invoice Bought

The alleged payments bought both individual trading opportunities and a continuing supply of confidential information. The Commission described approximately $3 million paid to state-company agents and intermediaries in the Brazilian scheme, with Houston personnel knowing about, overseeing and approving the payments.

According to the order, offshore accounts and shell entities concealed payments. Third-party invoices sometimes described the services as “market intelligence” or “sell support.” Those descriptions sat over an alleged flow of protected information: forecast supply and demand, historical imports and exports, and prices competitors had submitted.

The Commission alleged that the state-company employees owed duties to keep that information confidential. A Vitol supervisor passed it to traders in Houston, and information also circulated to traders elsewhere. Communications carried “private and confidential” or “pnc” labels, which the order connected to efforts to prevent the state company from learning that Vitol possessed its information.

The trading use went beyond winning a cargo. The order describes Vitol exchanging futures positions for physical oil through Exchange of Futures for Physical transactions, and sometimes taking a derivatives position before the state company obtained its physical position.

What Vitol Admitted About Staged Negotiations

Under its criminal deferred prosecution agreement, Vitol admitted that consultants secretly negotiated Petrobras fuel-oil prices containing room for bribes and commissions. The parties then staged negotiations to make the prearranged deal look legitimate.

The bargaining had a script. The agreement’s statement of facts describes a consultant emailing officials under aliases, telling participants the opening price Petrobras should offer, the counteroffer Vitol should make and the price where they should finish. Vitol admitted completing more than 30 transactions in this or a similar way between 2011 and 2014. After trades were finalized and cargoes delivered, consulting-company invoices collected the commissions. The consultants kept a portion and used the balance for bribes.

The same agreement supplies a distinct account of Ecuador. Vitol admitted arranging for Petroecuador to contract with another state-owned entity, with Vitol taking a back-to-back contract, to bypass competitive tendering. Per-barrel commissions to consultants would partly fund bribes to Ecuadorian officials. The statement of facts describes an email attaching 39 sham consulting invoices to an intermediary. For Mexico, Vitol admitted using sham consulting agreements and fake invoices to fund bribes for confidential information and business with a PEMEX subsidiary.

August 2014 and the Benefit of a Lower Benchmark

The Commission alleged that Vitol tried to push down the Platts New York Harbor No. 6 1% Fuel Oil benchmark in August 2014. The order describes a combined physical and derivatives book with net short exposure, meaning a lower assessment would benefit its positions.

Two purchases from a Brazilian state-owned company covered approximately 500,000 barrels of low-sulfur fuel oil. According to the order, Vitol entered those transactions while possessing improperly obtained confidential information. Both purchases referenced the New York Harbor benchmark.

The Commission’s account says Vitol did not hedge its daily benchmark exposure through derivatives that month. Its derivatives positions amplified the exposure instead. On numerous days, Vitol allegedly traded at prices and in a manner intended to lower the assessment and benefit its related positions.

The alleged commodity market manipulation becomes intelligible when the pricing window and the exposed positions are read together. The window shows the activity intended to move the price. The book shows why that direction mattered.

July 2015 and the Benefit of a Wider Spread

The July 2015 attempt allegedly aimed upward, toward a higher Platts U.S. Gulf Coast High Sulfur Fuel Oil benchmark. According to the Commission’s order, Vitol held a futures calendar spread with long exposure in July and short exposure in August. That spread would benefit Vitol if July’s average benchmark rose, or fell less, relative to August’s.

The order compares the desk’s behavior across months. Around that period, Vitol normally submitted bids and offers on both sides of the eWindow market. In July, with one exception, it participated only on the buy side. The Commission alleged that Vitol bid and bought cargoes on virtually every trading day that month at prices and in a manner intended to lift the daily assessment and widen the spread.

The intended effect reached other users of the benchmark. The Commission said a successful attempt would distort the futures, swaps and physical transactions priced from it, hurting participants with opposite exposure and businesses relying on the assessment as a fair reference.

What the Vitol CFTC Settlement Required

The Commodity Futures Trading Commission resolved allegations against Vitol involving corrupt tenders and benchmark manipulation under the Commodity Exchange Act. The action connected corrupt access to trades, misuse of confidential information and attempted benchmark manipulation to physical oil and derivatives markets. The agency described it as its first enforcement action involving foreign corruption.

The CFTC’s Division of Enforcement investigated the civil action. The Justice Department’s parallel criminal agreement addressed the bribery schemes under the Foreign Corrupt Practices Act. The FBI’s International Corruption Unit investigated the criminal case, which the Justice Department’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York handled.

The order required an $83 million civil penalty and $12,791,000 in disgorgement, the return of gains connected to the violations. The Commission credited Vitol’s cooperation with a reduced penalty. The order describes information from an internal investigation and assistance analyzing trading data. It also records Vitol’s representations that it strengthened third-party due diligence and approvals, reviewed payment processes and improved surveillance of oil-liquids market-on-close trading. Those changes reached the same places the allegations did: agents, payments and the pricing window.

Glencore’s separate CFTC settlement in 2022 also connected alleged corrupt practices, physical oil trading, benchmark pricing and derivatives positions. The recurring issue is the connection between the transaction used to influence a price and the wider book that stands to benefit.

What Evidence Is Required to Prove Fraud?

Our whistleblower experts help connect what you know about a payment or a trade to the decisions behind it. In the Vitol action, those connections ran from tender information and invoices to the trading book. Tender sheets and messages can show when the price to beat became known. Invoices, payment approvals and communications can explain what an intermediary was paid to deliver.

The Commission compared bids and purchases in eWindow with the physical contracts and derivatives positions that stood to benefit. An operations employee may understand when a cargo priced. Someone on the desk may understand why the same benchmark move helped one position and hurt another. Someone reviewing payments may recognize the consulting invoice that followed the trade.

We work with the person who understands those connections. Your knowledge of the transaction gives the records their commercial meaning, and helps us build the case around the decisions inside the business.

Can I Get Paid for Being a Whistleblower?

The CFTC program can award qualifying whistleblowers, collectively, 10% to 30% of monetary sanctions collected in qualifying actions. The False Claims Act has a separate reward program. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess how your information fits the CFTC whistleblower program with you.

You Know What the Desk Was Buying

If you saw a winning price arrive before the bid, a consulting invoice conceal a payment or trading aimed at a benchmark, speak to our whistleblower experts about what happened inside the desk. We turn that commercial knowledge into a case with you and bring in CFTC whistleblower lawyers who understand physical oil and derivatives. From the first conversation onward, we stay beside you as your partners in pursuing it.