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RIO DE JANEIRO, June 13 (Reuters) - Brazil's Petrobras found suspicious activity in its oil trading business - and failed to stop it - six years before an alleged bribery scandal erupted in that unit in 2018, according to three people with knowledge of the situation and documents seen by Reuters.
A 2012 internal probe at the state-run oil company turned up more than two dozen instances in which traders in Petrobras' Singapore office overpaid for fuel, the people said. Big oil companies frequently purchase and sell petroleum products, taking advantage of price differences to maximize profits. Some employees in 2013 recommended halting transactions with one particular fuel brokerage that had consistently sold fuel to Petrobras at above-market prices, according to the people.
But the deals continued at the behest of at least three senior company managers, the people said.
The little-known fuel broker Seaview Shipbroking Ltd - was subsequently implicated by prosecutors in Brazil's long-running "Car Wash" corruption investigation centered on contracting graft at Petrobras. Authorities say this latest chapter of Car Wash is just ramping up.
Prosecutors in December alleged in public documents that four of the world's largest commodities trading firms - Vitol SA , Trafigura, Glencore PLC and Mercuria Energy Group - used Seaview or other intermediaries to funnel at least $31 million in bribes to corrupt Petrobras employees.
In return, prosecutors say, these insiders would buy oil and derivatives at inflated prices or sell at discounted prices, thus delivering outsized profits to the parties on the other end of those trades. Prosecutors allege such transactions were routine between at least 2011 and 2014 among some employees in the Petrobras trading unit, which has offices stretching across the globe.
Reuters was unable to locate active contact information for Seaview. Brazilian prosecutors investigating the brokerage have focused on Konstantinos Kotronakis, a former Greek consul in Rio de Janeiro. They allege Kotronakis used a Seaview bank account that he controlled in Luxembourg to administer kickbacks related to Petrobras fuel trades. Kotronakis has not been charged with a crime.
In Brazil, it is not uncommon for prosecutors to allege wrongdoing by suspects in publicly available documents - and cite evidence to that effect - without immediately charging those people. Prosecutors so far have charged 14 individuals, six of them former Petrobras employees, and have said more charges are coming.
A lawyer for Kotronakis said he was unaware of the Petrobras audit, and that his client was not one of Seaview's owners.
Glencore, whose subsidiaries likely channeled bribes through Kotronakis, according to prosecutors, declined to comment on its alleged dealings with the businessman.
Petrobras' decision not to cut ties with Seaview - despite evidence turned up by its own probe that something was amiss - is a case that challenges the company's oft-repeated narrative that it was an unwitting victim of corruption.
Petroleo Brasileiro SA, as the state-run firm is formally known, declined to comment on the internal probe of its Singapore trading desk. A spokeswoman referred Reuters to previous statements in which the company said it is committed to rooting out graft and has made strides in improving its compliance programs since the Car Wash scandal exploded in 2014.
Petrobras last month disclosed that the U.S. Commodity Futures Trading Commission had requested information about aspects of its trading operation related to the Brazilian bribery investigation. The U.S. Federal Bureau of Investigation has also joined the probe.
Mercuria, Vitol, Trafigura and Glencore said they are cooperating with the Brazilian investigation. All stressed their commitment to ethical business practices. Mercuria has denied wrongdoing.
Mercuria and Trafigura did not respond to additional requests for comment regarding this story. Vitol declined to comment.
SUSPECT FUEL TRADES
According to an internal Petrobras report from December 2012 and the people familiar with the matter, company managers tipped off by a whistleblower examined 29 purchases of fuel by the firm's Singapore trading desk from January through November of that year.
In 28 of those transactions, according to the report, Petrobras paid above prevailing rates for bunker fuel, a type of fuel often used by ships. In ten of those instances, the report said, the premium came to at least $20 per metric ton. Documents viewed by Reuters did not provide a cumulative amount that Petrobras allegedly overpaid. But given the large volumes of product involved, prosecutors have said even tiny overcharges per unit of product could deliver huge illicit profits to shady traders over time.
According to a non-public 2017 federal police document seen by Reuters examining trading irregularities at Petrobras, as well as two people familiar with the matter, Seaview was among the firms facilitating suspect trades in Singapore. Prosecutors say Seaview essentially functioned as an intermediary that helped large commodities trading firms fleece Petrobras. Seaview executed advantageous fuel trades on their behalf, and it routed bribes through offshore accounts, authorities said.
In the first months of 2013, an internal debate emerged at Petrobras about whether to halt business with Seaview, according to the documents and the people. Petrobras declined to do so, they said, after some senior managers argued that the oil company could lose money by limiting the number of brokers it interacts with.
Among the people who supported maintaining the relationship was Marco Antonio Costa Tritto, who was then a manager of Petrobras' bunker fuel operations, according to the people and documents, dated early 2013. He is now general manager of one of Petrobras' European subsidiaries, according to UK registration documents.
Costa Tritto referred Reuters to Petrobras headquarters for comment. Petrobras declined to comment.
Another Petrobras employee who supported sticking by Seaview, Jorge de Oliveira Rodrigues, was charged by prosecutors in December for money laundering and pocketing bribes in connection to the alleged oil trading scheme.
A lawyer for Oliveira Rodrigues declined to comment.
Prosecutors have identified suspicious transactions involving Seaview as late as February 2014.
Following two additional audits in 2013, Petrobras singled out at least three staffers for improper conduct, none of whom was fired, the people said.
Among them, the people said, was Cesar Joaquim Rodrigues da Silva. Brazilian authorities arrested him in December, accusing him of money laundering and taking kickbacks in connection with the alleged scheme.
A lawyer for Rodrigues da Silva declined to comment.
Another trader, Daniel da Silva Gomes Filho, was also found at fault by Petrobras for irregular trading operations, according to the people. The 2012 Petrobras audit said an internal whistleblower alleged Gomes Filho made "under the table" arrangements with counterparties in fuel trades. He has not been implicated by prosecutors.
Gomes Filho wrote in an e-mail to Reuters that he was suspended for 29 days for the alleged incident and had been subject to three Petrobras internal investigations. He said he traveled to the southern Brazilian city of Curitiba, where the Car Wash probe is based, to answer questions from authorities there.
"Even after six years, they have not been able to discredit me," he wrote.
He said he retired from Petrobras in 2018.
(Reporting by Gram Slattery in Rio de Janeiro; Additional reporting by Julia Payne in London; Editing by Brad Haynes and Marla Dickerson)