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Created on: 2016-11-01 00:00:00
Last update: 2017-05-24 11:32:12 BankTrack
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Trafigura, headquartered in Singapore, is a multinational commodity trading company founded in 1993 that trades in base metals and energy, including oil. It moved its headquarters from Geneva, where it maintains a significant presence, to Singapore in 2012. Its immediate holding company is Trafigura Beheer, based in the Netherlands, and its ultimate holiding company is Farringford N.V., incorporated in Curacao. The company was established in 1993 by Claude Dauphin and Eric de Turckheim.
Trafigura sources, stores, blends and transports raw materials including oil, refined petroleum products and non-ferrous metals (iron ore and coal), and has built or purchased stakes in pipelines, mines, smelters, ports and storage terminals. In 2016 the company overtook Glencore to become the world’s second biggest independent oil trader (behind Vitol), after deals with Russia’s largest oil producer Rosneft and US shale operators led to an almost 50% rise in shipments.
Trafigura is perhaps best known for the 2006 scandal in which a ship chartered by the company, the Probo Koala, was caught dumping toxic waste in Abidjan in Ivory Coast. More than 100,000 people needed medical assistance as a result, and the former CEO Claude Dauphin spent five months in an Ivorian jail.
Trafigura's involvement, with Vitol, in the scandal of dumping high-sulphur fuel in several African countries, is the subject of BankTrack's 2017 briefing, Banks and Dirty Diesel.
Ocean Financial Centre, 10 Collyer Quay, No. 29-00
Jeremy Weir |
Shares in the company’s immediate parent, Trafigura Beheer B.V., are owned by employees and management.
Human rights and social issues
Trafigura is heavily involved in trading toxic diesel to Africa. The UN Guiding Principles on Business and Human Rights, unanimously adopted by the UN Human Rights Council in 2011 as a “global standard of expected conduct for all business enterprises wherever they operate”, leave no doubt that the corporate responsibility to respect human rights “exists over and above compliance with national laws and regulations”. Because of dirty fuels, African countries will face a major health crisis. As urban areas and the number of cars continue to grow steadily, any improvement in air quality must start with the adoption of tighter standards for diesel and gasoline. Without low-sulphur fuels, emission control technologies in vehicles simply do not operate. As a result, illnesses and deaths because of traffic-related air pollution will dramatically increase across the continent. By moving to ultra-low sulphur diesel, however, Africa could prevent 25,000 premature deaths in 2030 and almost 100,000 premature deaths in 2050. This is to say nothing of the millions more people who could be protected from a wide-range of respiratory diseases. Nor does this take into account the health damaging effects of the high levels of aromatics and benzene in fuels.
Waste dumping in the Ivory Coast The 2006 Ivory Coast toxic waste dump was a health crisis caused by a Trafigura-chartered ship offloading waste in the Ivorian Capiotal Abidjan, in order to avoid the surcharge on dumping fees Amsterdam Port Services had imposed to discourage waste disposal there in response to local complaints about smell. A local contractor dumped the toxic waste at as many as 12 sites in and around the city of Abidjan in August 2006. The gas caused by the release of these chemicals is blamed by the UN and the government of Côte d'Ivoire for the deaths of 17 and the injury of over 30,000 Ivorians, with injuries that ranged from mild headaches to severe burns of skin and lungs. Almost 100,000 Ivorians sought medical attention for the effects of these chemicals.
Trafigura claimed the substance it dumped was "slops", or waste water from washing the Probo Koala's tanks. An inquiry in the Netherlands, in late 2006, revealed the substance to be more than 500 tonnes of a mixed of fuel, hydrogen sulfide, and sodium hydroxide, known as caustic soda. Trafigura chose not to pay a EUR 1,000 per cubic metre disposal charge at the port of Amsterdam. The Probo Koala was turned away by several countries before offloading the toxic waste at the Port of Abidjan.
Trafigura denied any waste was transported from the Netherlands, saying that the substances contained only tiny amounts of hydrogen sulfide, and that the company did not know the substance was to be disposed of improperly. In early 2007, the company paid USD 198 million for cleanup to the Ivorian government without admitting wrongdoing, and the Ivorian government pledged not to prosecute the company.
In 2008 a civil lawsuit in London was launched by almost 30,000 Ivorians against Trafigura. In May 2009 Trafigura announced it would sue the BBC for libel after its Newsnight program alleged the company had knowingly sought to cover up its role in the incident. In September 2009 The Guardian obtained and published internal Trafigura emails showing that the traders responsible knew how dangerous the chemicals were. Shortly afterwards Trafigura offered an unnamed settlement figure to the class action suit against it. In 2010 a Dutch court found Trafigura guilty of illegally exporting toxic waste from Amsterdam.
In 2016 a new massive claim against Trafigura, on behalf of ‘Victimes des Déchets Toxiques Côte d’Ivoire’, a cooperation of 25 victim organisations, is being prepared in Amsterdam by Beer Advocaten. It concerns a possible 70,000 people who are registered as victims or as affected by the waiste dumping in 2006 in the Ivory Coast.
Chemical explosion in Norway On 24 May 2007 an explosion occurred in Sløvåg Gulen, Sogn og Fjordane, Norway in a tank owned by Vest Tank, that had severe environmental and health consequences for people living nearby. In 2008 the Norwegian Broadcasting Corporation published the 50 min documentary "Dirty Cargo" disclosing what had happened in the small community prior to the explosion. The company Vest Tank was trying to neutralize the same kind of chemical waste that was dumped in Côte d'Ivoire when the explosion occurred. The owner of the waste was Trafigura, on whose behalf Vest Tank was working.
Trade of toxic diesel to Africa In 2016, the Swiss non-governmental organisation Public Eye published the results of its report Dirty Diesel showing how traders, especially Trafigura, prepare and sell "African quality" toxic fuel to Africa, with high levels of sulphur causing particulate matter pollution harming people's health.
Applicable norms and standards
Five African countries ban 'dirty fuels' from Europe
Five countries in West Africa have decided to stop importing "dirty fuels" from Europe, the UN Environment Programme says. A recent report revealed that European companies were exploiting weak regulations in West Africa to export fuels with high levels of sulphur. Nigeria, Benin, Togo, Ghana, and Cote d'Ivoire agreed on the import ban. The UN says the move will help more than 250 million people breathe safer and cleaner air. The sulphur particles emitted by a diesel engine are considered to be a major contributor to air pollution and are ranked by the World Health Organization (WHO) as one of the top global health risks. It is associated with heart disease, lung cancer and respiratory problems (source BBC).
Public Eye publishes its Dirty Diesel report
Swiss commodity trading companies, including Trafigura and Vitol, take advantage of weak fuel standards in Africa to produce, deliver and sell diesel and gasoline, which is damaging to people’s health. Their business model relies on an illegitimate strategy of deliberately lowering the quality of fuels in order to increase their profits. Using a common industry practice called blending, trading companies mix cheap but toxic intermediate petroleum products to make what the industry calls “African Quality” fuels. Read the full report here.
According to its 2015 Annual report Trafigura has lending arrangements in place with 126 banks, ranging from short term facilities to maturities greater than 10 years.
On 24th March 2016 Trafigura Group signed a USD 5.1 billion European multicurrency syndicated Revolving Credit Facility (ERCF) and a JPY 46 billion denominated three year loan, a so called Samurai Loan. The ERCF was arranged by Lloyds Bank, Societe Generale, Unicredit Bank, ING, RBS and Rabobank. In total 45 banks joined the syndication. Bank of Tokyo Mitsubishi UFJ and Mizuho Bank acted as lead arrangers for the Samurai Loan. In total 12 Japanese financial institutions supported this loan.
On 7th of October 2016 Trafigura closed a USD 1.665 billion Syndicated Revolving Credit Facility and Term Loan Facility. Mandated lead arrangers were ANZ, DBS Bank, United Overseas Bank (UOB) and Sumitomo Mitsui Banking Corporation. Eleven financial institutions joined the syndication.
Banks provide billions for Dirty Diesel traders while failing to act on human rights, says new briefing
- Of 26 banks contacted, not one has pressured companies over toxic fuel exports to Africa