MEXICO CITY: Mexico is looking to renegotiate some of its hundreds of millions of dollars-worth of contracts with Vitol SA after the global energy trader acknowledged paying kickbacks to win business with state oil company Pemex, Reuters has learned.
The dispute in Mexico, the world's fourth-largest importer of refined oil products, is part of the fallout from a December agreement that Houston-based Vitol Americas made with the U.S. Department of Justice (DOJ).
The energy trader agreed to pay US$164 million to U.S. and Brazilian authorities after admitting it bribed officials in Mexico, Brazil and Ecuador between 2015 and 2020 to obtain and retain business with state oil companies there, the deferred prosecution agreement showed.
Mexican President Andres Manuel Lopez Obrador on March 3 announced his government has launched its own criminal investigation into the scheme.
In addition, Pemex is scouring existing contracts with Vitol for signs of anything "irregular," and will be looking to jettison provisions it considers unfavorable, Chief Executive Octavio Romero Oropeza told Reuters in an interview Thursday.
"Now we need to question practically everything," Romero Oropeza said. "If we can't come to an agreement, we'll stop doing business with Vitol."
The Mexican government's push to seek better terms from Vitol has not been previously reported.
Collectively, Pemex's deals with the global trader amount to "more than US$1 billion" said a person with direct knowledge of the review. "The whole universe of contracts, any contract (Pemex) considers disadvantageous, is going to be taken to the negotiating table," the person said.
Beyond confirming that the Vitol contracts are under review, Pemex, or Petroleos Mexicanos, did not respond to detailed questions from Reuters.
Vitol would not comment on how many active contracts it has with Pemex, the value of those deals or whether Pemex is looking to renegotiate some or all of those agreements. The Geneva-based company said it had a longstanding and respectful relationship with Pemex and "always cooperates with the relevant authorities."
The Vitol corruption case is the latest graft scandal to explode in the region since Brazil's Operation Car Wash, a public contracting kickback scheme whose tentacles reached across Latin America.
Since taking office in 2018, Lopez Obrador has taken ever-bolder steps towards rebalancing Mexico's energy markets in favor of Pemex and federal power utility Comision Federal de Electricidad (CFE).
Mexico has renegotiated several contracts with international companies, including pipeline operators, changes the government claims have saved taxpayers hundreds of millions of dollars. Such moves reflect Lopez Obrador's desire to strengthen Mexico's state-run companies, and his belief that previous governments awarded contracts to private-sector companies in exchange for kickbacks.
For Vitol, the world's largest independent oil trader, the prospect of Mexico unearthing more evidence of corruption could result not only in costly renegotiations of its contracts, but further damage to its reputation.
Competition for government energy contracts in oil-producing countries such as Mexico is often fierce, several sources familiar with the market said.
PHONE LOGS, EMAILS, TRAVEL RECORDS
In all, Reuters spoke to seven people with knowledge of Vitol's business dealings in Mexico. The news organization reviewed internal communications of Pemex and Vitol, including letters, memorandums and shipping documents, as well as a Pemex contract obtained through searches of publicly available company archives.
The sources and documents, along with Romero Oropeza's comments, reveal heightened scrutiny by Mexican officials regarding the government's business with Vitol.
As part of the process, Pemex has ordered an internal evaluation of all company pacts with Vitol since 2015, warning employees not to delete any correspondence with the trader, including emails, phone logs and travel records, according to a source familiar with the situation and company memorandums viewed by Reuters.
Executives of various Pemex units have been asked by the company's legal department to identify contract terms they would like changed in negotiations with Vitol, the person familiar with the review said.
Several Pemex units have contracts with Vitol, including the trading arm PMI Comercio Internacional, gas trader Mex Gas Supply Ltd and petrochemical unit Pemex Transformacion Industrial, the person said.
Two other sources familiar with the situation estimated the company had more than ten contracts with Pemex.
Among them is a deal for Vitol to supply Pemex with ethane gas. That 2018 agreement is worth about US$230 million. As of early March, Pemex was still importing shipments of ethane as part of that contract, according to a person familiar with Vitol's transport of ethane and Refinitiv Eikon tanker tracking data.
That ethane contract, reviewed by Reuters, was signed by Javier Aguilar, a former Vitol trader at the heart of the DOJ investigation into the company's business in Ecuador, according to the DOJ's deferred prosecution agreement.
Aguilar could not be reached for comment. His attorney said in a statement that "the Department of Justice determined this matter did not warrant formal prosecution." He declined further comment.
Aguilar last year was charged with conspiring to violate the anti-bribery provisions of the Foreign Corrupt Practices Act and money laundering conspiracy for his alleged involvement in a scheme that paid bribes to Ecuadorian government officials. The case is still ongoing, a review of court records shows.
SNUB OF US$30 MILLION
Earlier this month, Lopez Obrador said Vitol had offered to pay Pemex around US$30 million in damages for the alleged bribes in Mexico. He said he was not satisfied with that offer, in part because Vitol declined to reveal who it had paid off and for which contracts.
In the case unveiled in December, the DOJ said Vitol employees and agents had used an intermediary to bribe Mexican officials in order to receive inside information to obtain a contract with an unidentified Pemex subsidiary.
Unnamed Mexicans set up sham consulting agreements with shell companies that issued fake invoices to disguise the bribes, the deferred prosecution agreement showed. The DOJ said it detected more than US$2 million in bribes paid by Vitol between 2015 and 2020 in Mexico and Ecuador alone. It did not name the officials bribed in the scheme.
The DOJ declined to comment.
Lopez Obrador said on March 3 that Pemex had referred the case to Mexico's Attorney General's office, and that he hoped prosecutors would seek details of the alleged wrongdoing from U.S. authorities.
The Attorney General's office and Pemex did not respond to requests for comment about the complaint or whether Mexico is seeking information from the United States.
(Reporting by Stefanie Eschenbacher and Adriana Barrera in Mexico City, and Ana Isabel Martinez in Villahermosa; additional reporting by Marianna Parraga in Mexico City, and Dmitry Zhdannikov and Jonathan Saul in London; editing by Frank Jack Daniel and Marla Dickerson)