Image credits: Vladimir Solomyani
News Article

PMI Suspends Business With Vitol Following Bribery Scandal

By Paloma Duran | Wed, 12/16/2020 - 11:14

 PEMEX International (PMI) has temporarily suspended business with Vitol, the world’s largest independent oil trader, after the company accepted accusations of paying bribes to PEMEX employees in exchange for lucrative contracts.

Vitol made illicit payments and agreements with PEMEX employees and intermediaries to have access to confidential information. These payments were made through false agreements that involved shell companies, according to Reuters.

Last week, Vitol agreed to pay US$164 million to settle the charges against the company of paying bribes totaling US$2 million to Mexico, Brazil and Ecuador, along with an attempt to manipulate benchmarks for fuel oil prices, reported Reuters.

According to Forbes, in 2018 PEMEX launched a tender to import liquid ethane for the first time to comply with the supply contract between Braskem and Grupo Idesa. Saudi SABIC won the tender offering US$231.3 million. However, SABIC never signed the contract because PEMEX decided to give it to Vitol, which sent the same amount of ethane to PEMEX for an additional US$6.3 million.

After the scandal, Petroecuador, Ecuador’s NOC, decided to exclude Vitol from its list of suppliers and clients. Moreover, PMI declared that it would not have commercial relations with the company until the situation was clarified. However, PEMEX has not made any statements, reported Financial Post.

It has not been clear if all trade between Mexico and Vitol has been suspended or only the fuel relations between PMI and Vitol. In addition, CFE said it has no fuel purchase agreements with Vitol and that its trading subsidiaries, CFE International and CFEnergia, are not allowed to do business with the company until the scandal has been clarified, reported Reuters.

President López Obrador said the government would investigate these accusations that involve PEMEX officials. According to Reuters, these bribes were made between 2015 and 2020. The president said if the allegations are true, those responsible would face consequences. He emphasized that during his mandate, the government will not tolerate acts of corruption, reported Financial Post.

However, analysts do not trust Mexico could carry out an effective process to prove which officials participated in the bribery. Moreover, analysts said López Obrador could use these allegations to target other energy traders, reported Financial Post.

Duncan Wood, Director of the Wilson Center’s Mexico Institute, said to Bloomberg that Mexico does not have the capacity nor the will to carry out this type of investigations. Wood said the president could instead increase its attacks against the private sector and foreign companies, reported Financial Post.

The data used in this article was sourced from:  
Reuters, Financial Post, Forbes
Photo by:   Vladimir Solomyani
Paloma Duran Paloma Duran Journalist and Industry Analyst