Petroleo Brasileiro's Reduc refinery in Duque de Caxias, Brazil. Picture: BLOOMBERG
Petroleo Brasileiro's Reduc refinery in Duque de Caxias, Brazil. Picture: BLOOMBERG

New York — A Brazilian facing allegations  that he bribed officials at state-run oil company Petroleo Brasileiro on behalf of Vitol Group, Glencore and other major oil-trading groups has been arrested in the US.

Authorities said on Tuesday that Luiz Eduardo Loureiro Andrade was detained in the US on December 20, an arrest that was disclosed in a Brazilian court document seen by Reuters. He was arrested with the help of US Immigration and Customs Enforcement (ICE). Besides handling deportation cases, ICE investigates transnational crime.

An email included in the court document from a Brazilian federal police official based in Miami indicated that Andrade is being held in an undisclosed place in the US and that Brazil has requested his extradition. It was not clear when he may be sent back to Brazil.

ICE did not respond to requests for comment. An investigator with Brazil’s federal police confirmed the arrest,  but declined to give more details.

Sweetheart deals

Andrade was charged in Brazil with acting as a middleman between top executives at Vitol, allegedly funnelling bribes to Petrobras officials in exchange for sweetheart deals from the state-run company. Officials allege that he also carried out the same services for Glencore and other big oil-trading groups to win sweetheart contracts with Petrobras.

Two former Trafigura executives were charged in the same scheme on December 14.

The cases are the latest part of Brazil's “car wash” investigation, launched in 2014 to investigate contracting graft at Petrobras. The probe and resulting trials have toppled scores of powerful business and political figures, including construction industry moguls and former presidents of Brazil and Peru.

Brazilian prosecutors have said they will pressure the middlemen charged and arrested to turn state’s witness and testify against powerful executives at the oil trading firms, the same method they have used for years to take down top targets.

Prosecutors alleged in their charges against Andrade that Vitol’s head of US operations Mike Loya and its Latin American and Caribbean boss Antonio Maarraoui had full knowledge of the scheme. Loya and Maarraoui have not  been charged. Neither of the executives replied to repeated requests for comment.

Prosecutors said at least $2.85m in bribes were involved in the cases involving the oil traders, and have called their discoveries so far the “tip of the iceberg”.

A Vitol spokesperson declined to comment on Tuesday, but said the company would always co-operate with investigators.

A Glencore spokesperson said his group took ethics and compliance seriously but could not comment further. He said that Glencore would co-operate with Brazilian authorities.

The stakes are high for both trading groups. Brazilian prosecutors allege some of the crimes were carried out by Petrobras traders based in Houston and that some illicit funds moved through the US and European banking systems, raising the chance that jurisdiction for investigating the case could widen. Brazilian and US prosecutors have worked closely in the past on Car Wash cases.

The probe has already frozen current business for the trading firms in Brazil, an increasingly important global oil producer, but not yet a major source of revenue for the firms.

Trafigura said its turnover in Brazil last year was $300m, a fraction of its overall revenue of $136bn in 2017. Glencore and Vitol would not give revenue details, but said Brazil was a minor market.

Vitol has a deal pending to buy a stake in Petrobras’ prized Nigerian oilfields. Petrobras has said there are no indications of wrongdoing in that deal, but it would be up to Brazilian regulators to make the final determination.