In the past two years, the oil industry has suffered the worst crisis in history, but the top oil companies can still barely survive and profit, which can't help but make many small oil traders look envious. Profitable traders include large oil companies and independent traders. According to warren buffett's guidelines, they maintain greater ambitions when everyone is at risk and take advantage of secret resources such as huge underground repositories.
However, these profitable traders have recently broken the scandal of behind-the-scenes trading. According to the U.S. Department of Justice's (DOJ) U.S. Commodity Futures Commission (CFTC), the world's largest oil trader, Victor Group has been implicated in oil deals in Brazil, Mexico and Ecuador. The company just agreed to pay a $164 million fine for it. In addition, Victor faced punitive measures from CFTC for attempting to manipulate two of S&P's global oil benchmark prices.
The doj documents show that Victor admitted to bribing government officials for more than a decade from 2005 to 2020. In addition, the company bribed Petrobras executives $8 million to obtain important information about oil bids. For years, Victor has insisted on zero tolerance for corruption.
CFTC disclosed that this was the first case seized by the investigation team in its efforts to combat foreign-related corruption.
Meanwhile, Trafigura ag and Glencore plc, as well as officials from Petrobras, Areo's independent trading partners, Trafigura AG and Glencore PLC, are currently under investigation for alleged corrupt activities and the use of company's proxies to win new business.
There is a growing awareness that corruption in the global oil trade is more prevalent than previously expected.
The following is an introduction to several recent cases of large oil traders profiting from improper means.
In 2018, Brazilian prosecutors launched an investigation into the alleged corrupt activities of Vitor, Tocque, Glencore PLC .vitol, Trafigura, glencore plc. The incident, which was recently disclosed, is part of six years of alleged car wash bribery in Brazil. After Brazil made serious allegations about it, doj launched an investigation into the three major traders.
In terms of different mining jurisdictions around the world, doj, cftc, the Swiss Ministry of Justice's office and the UK's serious fraud office investigating bribery and irregularities will conduct at least four independent investigations into Vidot.
Corruption appears to be intensifying in the oil trade, but oil traders are no strangers to more serious acts of corruption such as falsifying ledgers.
In April, Reuters reported that within a few years, the legendary Singaporean oil trading company, Xinliang Trading Ltd (PTE), had systematically falsified ledgers in an oil auction to cover up $800 million in oil futures losses. A wall Street Journal report highlighted the seriousness of his corrupt practices. Reports show that the companies routinely falsified ledgers on a large scale, misrepresenting assets of more than $3 billion.
A two-month investigation by court-appointed independent managers revealed that over the years, companies experiencing financial hardship have exaggerated their assets with puzzling accounts. Investigators found that Shin Leung Trading Co.,Ltd.'s real assets totaled just $257 million, accounting for only 7 percent of its $3.5 billion liabilities at the time. Most of the company's liabilities come from bank loans, including a stake in HSBC Holdings PLC.
The company announced that it had a net profit of $78 million after taking into account all liabilities by October 31, 2019, while its total assets were $4.56 billion. However, the survey revealed that the company's total liabilities were $4.05 billion, while its assets were only $714 million, with a deficit of $3.34 billion.
The court confession of Lin Chemeng, the son of the company's founder, shows that Xinliang secretly sold millions of barrels of refined petroleum products. The company had previously promised to make it an additional condition for borrowing from banks. This has led to a huge shortfall between the amount of inventory it promises to lenders and the amount it actually holds. This could also lead to huge losses on the part of the banks. Interestingly, deloitte & touche llp, which reviewed the company's pre-October 31, 2019 accounts, also failed to identify anomalies in its accounts.
Trade misconduct has plagued the oil market for decades, and the oil commodities trading industry has become famous. These culpable cases have seriously hindered the development of this industry.
In addition, more than a dozen other smart trading platforms, including equinor asa, have long been able to make billions of dollars in profit by manipulating futures premium games.
Translator: Han Yuemeng
Reviewer: Yang Yuqing
Editor: Xu Xiaoxue