U.K. Regulator Reviewing Criminal Probe of Oil Benchmarks
A second U.K. agency said it’s considering a criminal probe into oil-price manipulation as European Union officials conduct a civil investigation into industry benchmarks.
The Office of Fair Trading is liaising with U.K. agencies including the Serious Fraud Office and Financial Conduct Authority “to establish whether there is sufficient available evidence to warrant a criminal investigation, and if so who is best placed to take action,” it said in a statement today. Prosecutors at the SFO said in May that they were “urgently reviewing,” whether to start a criminal inquiry.
Antitrust officials from the European Commission raided the offices of Royal Dutch Shell Plc (RDSA), BP Plc (BP/), Statoil ASA (STL) and Platts, an energy-news and price publisher, in May to investigate allegations of price manipulation and collusion by traders in crude, refined-product and biofuels markets. Platts publishes the Dated Brent benchmark that helps determine the price of more than half the world’s oil.
Platts’s oil-assessment process “is unparalleled in its transparency, providing in real time the name of each company supplying bids, offers and transactions data, as well as providing details of cargo size, delivery terms and other information,” the company said in an e-mailed statement. “No other price-discovery mechanism identifies counterparties by company name in real time.”
David Nicholas, a spokesman for BP in London, and Jonathan French, a spokesman for Shell, declined to comment. Officials at Statoil couldn’t immediately be reached when contacted by e-mail and telephone.
The European probe is the third in which global pricing benchmarks have drawn regulators’ scrutiny in the past year, following investigations into bank manipulation of Libor, and ISDAFix, the benchmark for the $379 trillion swaps market.
The U.S. Federal Trade Commission also started an early-stage investigation into BP, Shell and Statoil, a person familiar with the matter said last week. The FTC is looking at the impact possible manipulation of Platts benchmarks could have on markets in the U.S., said the person, who asked not to be named because the matter is confidential. It’s not clear whether Platts is a subject of the inquiry, the person said.
Platts, a unit of New York-based McGraw Hill Financial Inc. (MHFI), provides assessments on physical markets, using data on actual trades and its own editorial judgment.
Its North Sea Dated Brent benchmark sets the price of crude from Canada to Australia. Its kerosene assessments are used by the airline industry, where fuel accounts for about a third of operating costs. In the biofuels markets, the company assesses the price of ethanol and biodiesel as well as ethyl tert-butyl ether, an additive that’s used in gasoline production.
Today’s OFT’s statement was in response to a petition by campaigners calling for an investigation by the U.K.
“What we want is a full 18-month to two-year inquiry to find out what’s going on, why motorists are being ripped off,” Robert Halfon, a U.K. lawmaker, said today in London outside the OFT offices.
Halfon and FairFuelUK, a campaign group, delivered the petition with more than 30,000 signatures to the OFT today, calling for a parliamentary review of oil pricing. The regulator hadn’t seen any “credible evidence” of speculation or price manipulation after a study of gasoline and diesel markets, it said in January.
“Consumers are furious, resentful, bitter and angry,” Quentin Willson, a spokesman for FairfuelUK, said in an interview. “Their ire is focused at the government. And they, like us, are surprised that nothing has been done.”
“We don’t think there’s enough accountability” in the Platts pricing system,’’ Willson said. “Their safeguards to make sure that this is a true and accurate price of oil I don’t think are good enough.”
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