Swiss Traders Bought $55 Billion of African Crude, Report Says

Swiss commodity traders bought about $55 billion of crude from African national oil companies in the past three years, non-governmental organizations said.

The firms bought about a quarter of the crude sold by governments of the 10-largest oil producing countries from 2011 to 2013, according to the report. The payments equal about 12 percent of the African governments’ total revenues, said the NGOs, who seek to promote disclosure by commodity companies.

“Opacity and secrecy is the condition to facilitate corruption,” said Marc Gueniat, a researcher at the Berne Declaration who was one of the authors of “Big Spenders: Swiss Trading Companies, African Oil and the Risks of Opacity.”

The report, also authored by the Natural Resource Governance Institute and Swissaid, covers firms based in Switzerland or that have major operations in the Alpine nation and calls on traders and government to release details of deals.

Trading companies don’t pose the same risks as extractive companies and so shouldn’t be subject to the same international transparency initiatives, according to Stephane Graber, secretary-general of the Geneva Trading and Shipping Association, representing traders in the Lake Geneva region.

“Due to the high number of transactions, the disclosure of these contracts between the producers and the trading companies would cause high implementation cost and not help in further preventing corruption,” Graber said in an e-mailed statement.

Largest Buyers

Swiss trading companies were the largest buyers of oil from the governments of Cameroon, Chad, Equatorial Guinea, Gabon and Nigeria in the three years, according to the NGOs’ study.

In Nigeria, Swiss companies including Glencore Plc (GLEN), Trafigura Beheer BV and Vitol Group, bought oil worth $37 billion in the period, more than 18 percent of the government’s revenues, the NGOs said. Glencore, the second-largest independent oil trader, buys all of the crude sold by Chad’s government and made payments worth 16 percent of the nation’s total state revenues in 2013, according to the report.

“We support fiscal transparency via our endorsement of the Extractive Industries Transparency Initiative,” Charles Watenphul, a spokesman for Baar, Switzerland-based Glencore, said in an e-mailed statement.

Individual countries decide whether or not to join the EITI, which requires the disclosure of payments made to governments by resource companies. Chad is an EITI “Candidate Country” that is implementing the EITI but hasn’t yet met all requirements, according to the EITI website. Glencore loaned Chad money to help it fund the $1.3 billion purchase of Chevron assets in Chad, the country’s energy minister said in June.

Libyan Rebels

The report said Vitol and Trafigura both bought crude from Libya’s rebel groups during the 2011 revolution, while the rebels purchased more than 30 tankers of refined petroleum products from Vitol during the conflict.

Vitol was among companies asked by Qatar International Petroleum Marketing Co. to sell oil from Libya’s AGOCO on behalf of what was then the National Transitional Council of Libya, Vitol spokesman Fabian Gmuender said in an e-mailed statement.

In exchange, they were asked to supply AGOCO with oil products for essential non-military needs, including power generation and transportation, he said. “Vitol agreed to the proposal at considerable commercial risk,” Gmuender said.

Andrew Gowers, a Trafigura spokesman, declined to comment.

Switzerland said in June it would consider regulations requiring the country’s $21 billion commodity trading industry to disclose payments to foreign governments. The Swiss Federal Council said it would only implement the measures if similar rules are adopted by the European Union and U.S.

To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editors responsible for this story: Timothy Coulter at tcoulter@bloomberg.net Tony Barrett, Reed Landberg

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