Corporate Misconduct Case Study: Freepoint Commodities and the High Cost of Global Corruption

A Nation’s Wealth for “Breakfast”

For the average citizen of Brazil, the profits from their nation’s vast oil reserves, managed by the state-owned company Petrobras, represent a collective inheritance. This is money that belongs to the public—wealth that can build hospitals, pave roads, and fund schools.

But according to a federal criminal information filed in the United States, a Connecticut-based commodities firm, Freepoint Commodities LLC, saw this public wealth as a treasure chest to be plundered through a sophisticated, multi-million-dollar bribery scheme.

Every dollar allegedly paid in bribes by Freepoint to corrupt Petrobras officials was a dollar diverted from the Brazilian people. This is a story of how decisions made in a trading office in Stamford, Connecticut, contributed to the erosion of public trust and the theft of public resources thousands of miles away, all concealed under deceptive code words like “breakfast.”

The Corporate Playbook: A Recipe for Corruption

The U.S. government alleges that from 2012 to 2018, Freepoint Commodities engaged in a criminal conspiracy to violate the Foreign Corrupt Practices Act (FCPA). The goal was simple: to secure lucrative contracts for the purchase and sale of oil products from Petrobras. The method, however, was a complex web of deceit, shell companies, and secret communications.

At the heart of the scheme was a system designed to generate and conceal approximately $3.9 million in corrupt payments. Freepoint, allegedly through its senior oil trader Glenn Oztemel and others, funneled these payments to a Brazilian broker, Eduardo Innecco, knowing the money would be used to bribe key Petrobras officials, including a trader named Rodrigo Berkowitz.

The conspiracy allegedly operated through two primary channels:

1. Inflated “Commissions”: Freepoint paid millions in so-called “consultancy fees” and per-barrel commissions to shell companies controlled by Innecco in offshore havens like Liberia and the British Virgin Islands. A portion of this money was then allegedly passed on to the corrupt officials.
2. “Back-to-Back” Deals: Freepoint used a middleman company run by the trader’s brother, Gary Oztemel, to create a slush fund. This company would buy oil from Petrobras and sell it to Freepoint at an inflated price. The fake “profit” was then distributed as bribes.

To hide their tracks, the conspirators used personal email accounts, encrypted messaging apps, and coded language. In one email, Innecco referred to the need for “5 additional breakfast servings,” a term prosecutors say was code for bribe payments.

A Cascade of Consequences: The Real-World Impact

The immoral actions of Freepoint Commodities inflicted deep and lasting harm on both the market and the people of Brazil.

Economic Ruin and a Rigged Market

This was a direct assault on the economic sovereignty of a nation. By paying bribes, Freepoint ensured that contracts were awarded not based on merit or competitive pricing, but on corruption. This distortion of the market almost certainly meant that the Brazilian state—and by extension, its citizens—received less favorable terms on its oil deals. The scheme was wildly profitable for Freepoint, which earned approximately $30.5 million from the business it corruptly obtained.

Erosion of Community and Global Trust

Corruption on this scale is a cancer on public institutions. It hollows out trust in government and state-owned enterprises like Petrobras, fostering cynicism and the belief that the system is rigged for the benefit of a corrupt elite and their foreign corporate partners. This case perpetuates a destructive narrative of wealthy American corporations exploiting weaker regulatory environments in the developing world, undermining the principles of fair trade and the international rule of law.

A System Designed for This: Profit, Deregulation, and Power

This section is analysis.

The evil actions of Freepoint Commodities are not an aberration but a predictable outcome of a globalized neoliberal system that relentlessly incentivizes the pursuit of profit above all else. In the high-stakes world of international commodities trading, the pressure to secure access to resources is immense. For a firm like Freepoint, the Foreign Corrupt Practices Act may have been viewed not as a moral or legal red line, but as a risk to be managed.

The use of a sophisticated network of offshore shell companies, intermediaries, and opaque financial flows is standard operating procedure in a global economy designed to minimize transparency and accountability. This architecture of concealment is a feature, not a bug, of a system that enables capital to move freely across borders while evading legal and ethical scrutiny.

Dodging Accountability: The Corporate Shield

The charging document is filed against a single defendant: Freepoint Commodities LLC. While the company itself faces the consequences, the individuals—the traders, brokers, and executives who allegedly orchestrated and executed this six-year conspiracy—are referred to as co-conspirators. This common legal strategy often results in the corporate entity paying a large fine, which can be treated as a cost of doing business, while the human architects of the scheme are shielded from the full force of public and legal accountability. Justice is diluted when a legal fiction, the corporation, takes the fall for the actions of real people.

Reclaiming Power: Pathways to Real Change

Combating global corruption requires more than just corporate fines. True change demands aggressive, individual-focused enforcement of laws like the FCPA, ensuring that the executives who make corrupt decisions face personal consequences, including prison time.

It also requires a global effort to increase financial transparency and dismantle the shadowy world of offshore shell companies that make this kind of bribery possible. Empowering local journalists and civil society in countries like Brazil to expose corruption is equally critical to creating a system where such exploitation cannot thrive in the dark.

Conclusion: A Story of a System, Not an Exception

The case against Freepoint Commodities is a grim reminder that corporate decisions made in Connecticut boardrooms can have devastating consequences for the public good of a nation on another continent. It is a textbook example of how the relentless pursuit of profit in the global marketplace can incentivize actions that are not just illegal, but deeply harmful to the fabric of society.

This is a window into a global economic system where, too often, a nation’s wealth is just another commodity to be bought and sold.

All factual claims in this article regarding the case against Freepoint Commodities LLC are derived from the Information filed in the United States District Court for the District of Connecticut, Crim. No. 3-23-CR-224-KAD, on December 14, 2023.

Here is a press release from the DOJ’s website about the eventual fine that the company had to pay: https://www.justice.gov/archives/opa/pr/commodities-trading-company-agrees-pay-over-98m-resolve-foreign-bribery-case

Bro got convinced too!: https://www.justice.gov/archives/opa/pr/former-connecticut-based-energy-trader-convicted-international-bribery-scheme

As of market close on Feb 5, 2025, the Petrobas ($PBR) stock is trading at $13.92 USD per share on the New York Stock Exchange