How the Gunvor case revealed the heart of corruption

2018-12-06

A case involving a Swiss commodity trading company and its dubious oil deals in the Republic of Congo has highlighted a need for a shift in focus in the fight against corruption in Central Africa.

On 28 August, Pascal Collard, a Belgian national and former trader at Gunvor, was given an 18-month suspended prison sentence, following a plea deal in a corruption and money laundering case that left many bewildered. Collard was considered a ‘star trader’ at Gunvor, the world’s fourth-largest oil trading company.

Gunvor was founded in 2000 – although an investigation by anti-corruption organisation Public Eye traces its creation by Russian tycoon Gennady Timchenko and Swedish businessman Torbjorn Tornqvist to 1997. It quickly became ‘the top trader in Russian oil’, and sought to expand its activities globally around 2006.

The Public Eye investigation shows that Gunvor’s first success in Africa came in the Republic of Congo through intermediaries that linked the company’s executives to Denis-Christel Sassou Nguesso, the president’s son and Deputy Director at Congo’s national oil company. Starting in June 2010, Public Eye shows that Gunvor ‘had lifted 22 shipments of crude oil, totalling about USD 2.2 billion’ by 2012.

The Gunvor case highlighted a need for a shift in focus in Central Africa’s fight against corruption

To remunerate traders, Gunvor developed a complex mechanism involving the sale of crude oil to traders at a lower rate than official market prices. In return, they increased their commission margin, which was partially used to ‘repay’ officials. In effect, traders were acting as ‘providers of access to the Congolese government’. Public Eye’s investigation shows that Gunvor made over US$73 million profits between 2010 and 2012, including US$31 million through ‘door opening deals’.

In December 2011, Credit Suisse alerted Swiss federal prosecutors over ‘suspicious movements’ on the accounts of four companies, including cash withdrawals of several millions of dollars. The accounts were previously held at Clariden Leu, a bank acquired by Credit Suisse in November 2011. The companies involved were linked to two intermediaries between Gunvor and Congolese officials, who had been hired by Pascal Collard on behalf of Gunvor.

Yet, at the time, Gunvor representatives said that the company knew nothing of the deals involving Collard, whom they claimed had acted alone. Gunvor even filed a suit against Collard for money laundering, fraud, breach of trust and unlawful business practices.

The seven-year investigation resulted in Collard admitting in 2017 to ‘having been actively involved in paying commissions which he knew were meant for foreign officials – in particular President Sassou Nguesso’s clan’. Denis-Christel Sassou Nguesso argued that Congo is a sovereign country, free to choose its business partners.

Current anti-corruption measures focus largely on African actors, often overlooking the corruptors or foreign companies

Gunvor continued to deny knowledge of the deals, while federal prosecutors reached a plea bargain with Collard, which included testifying against Gunvor in a future case for ‘possible organisational shortcomings’.

Gunvor’s website no longer shows Congo on its location map. It has also moved its African operations from Switzerland to Dubai after revamping its leadership, including hiring a new head of crude oil trading.

The case reveals the heart of corruption in Central Africa. It also shows that actors outside of Africa are equally complicit; quick to give a bribe to loot the continent’s resources. Current anti-corruption measures focus largely on African actors, often overlooking the corruptors or foreign companies. If campaigners are serious about stamping out graft, they should seek equally to stem foreign-induced corruption.

For Congo, the legal implications are minimal, as no one would dare to prosecute the president’s family. The case was only made possible because of the whistle-blowing by Credit Suisse. The Swiss commodity trading sector is still governed by the principle of self-regulation. Anti-corruption campaigners have called for stricter laws that are rigorously enforced.

Until this happens, foreign traders can continue to be door-openers, as actors such as the Sassou family privatise oil and other commodities for family benefit across Central Africa.

 Agnes Ebo’o, ENACT Regional Organised Crime Observatory Coordinator – Central Africa, ISS

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