RIO DE JANEIRO/WASHINGTON: The US Justice Department is investigating Connecticut-based trading house Freepoint Commodities over whether payments to employees of Brazil’s state-run oil company broke US laws, two sources with knowledge of the matter told Reuters this week.
The criminal probe, which is being led by prosecutors in Washington, complements a separate, ongoing bribery investigation into the company by authorities in Brazil, said the sources, who requested anonymity to discuss confidential matters.
Brazilian prosecutors allege Freepoint bribed employees of Petroleo Brasileiro SA, or Petrobras, for a period of roughly seven years ending in 2018. The Justice Department is also probing those alleged payments and whether they may have breached U.S. antibribery law, the sources said. One of the people said the US probe is relatively advanced.
A spokesperson for the Department of Justice declined to comment.
A Freepoint spokesperson wrote in an email that the company “is strongly committed to following the laws everywhere we do business.” The Stamford-headquartered firm declined further comment.
Petrobras said in an email it has “zero tolerance in relation to fraud and corruption” and that employees involved in wrongdoing in its trading unit “were immediately fired for just cause in 2018.” It added that it has aided Brazilian authorities extensively with various corruption-related probes.
Reuters reported last month that Brazilian prosecutors were probing Freepoint, citing hundreds of pages of court documents and three sources, but the probe by the Justice Department – which has extensive powers to fine companies and curb their operations – significantly turns up the pressure on the company.
Authorities in both countries are investigating whether Freepoint passed bribes to Petrobras employees and whether payments were laundered through banks in third-party countries such as Switzerland and Uruguay, the sources said.
Probes do not necessarily indicate wrongdoing and it was unclear whether any charges would be brought in either jurisdiction.
The inquiry marks the latest in a broad push by U.S. authorities to root out fraud and misconduct within the commodities sector. Commodities traders, which buy and sell raw materials, often operate in jurisdictions where corruption is common, putting them at risk of running afoul of a U.S. law that prohibits paying bribes to foreign officials.
Global commodity traders connect producers and consumers, taking a cut along the way. Founded in 2011 by former Sempra Energy Trading executives, Freepoint has more than 500 employees globally and trades energy, metals and agricultural products.