Icahn / Oxy, Phil Collins, Brazil
“We are deepening investigations and collecting more evidence we consider necessary before we can press charges,” Brazilian federal prosecutor Athayde Ribeiro Costa
BRAZIL & BRIBERY.
$412Bn in Revenue.
That’s what Vitol + Trafigura did last year.
They’re the 1st & 2nd largest privately-held oil traders in the world.
And they are in trouble.
On Thursday, as part of ongoing corruption investigations in Brazil, Swiss authorities executed search warrants at Vitol & Trafi’s Geneva offices.
Previously, Trafi had refused to hand over emails.
Notably, this raid follows testimony from Petrobras trader Carlos Roberto Martins Barbosa - aka “Phil Collins” - where, after incriminating Vitol, he said:
“In trading, when you want to get a bribe, you don’t make $10 a barrel in one cargo”
“It’s the perpetuity of a few cents in each sale, in each product, that provides the illicit gain”
Those aren’t the words of a kid selling his first dime-bag.
That’s a description of corrupt system.
Operation Car Wash, the massive Brazilian Corruption investigation, will have its 6th anniversary in March.
Three former Brazilian presidents, across political parties, have been indicted or jailed.
Eike Batista, formerly the wealthiest man in Brazil, is broke & in prison.
And now, “Phil Collins” has testified.
Eventually, Vitol & Trafi will have to face the Bossa Nova -
The numbers just don’t work.
To put it simply, Oxy’s shareholders will have lower returns as a result.
Vicki Hollub, Oxy’s CEO, has tried to play it dumb - earlier this year, Bloomberg ran a headline stating “Oxy’s CEO says she’s new to M&A”.
Here’s the thing - if you play the fool, you can’t go all the way.
In the end, you have to be a genius.
An idiot savant.
Otherwise, it’s… well, Tropic Thunder said it best:
“Dustin Hoffman, 'Rain Man,' look retarded, act retarded, not retarded”
“Tom Hanks, 'Forrest Gump.' Slow, yes. Retarded, maybe. Braces on his legs. But he charmed the pants off Nixon and he won a ping-pong competition”
“Sean Penn, 2001, ‘I Am Sam.’ Remember? Went full retard, went home empty-handed”
Icahn is (in)famous for his verbose use of hyperbole in activist proxy fights.
In this case - no exaggerations - Icahn’s right.
But he could’ve spared a few words.
He only had to say - Never Go Full Retard -
But it’s not a total exit.
The official statement is:
“what we’re looking for is a co-venturer, a company that shares our vision for increasing production on the North Slope”
Earlier this year, Hilcorp went long Alaska / short Shale - if they can find the money, they’d be a strong candidate.
Should Conoco find a taker, we wouldn’t be surprised if it’s a private firm, or an International name -
Shale / RBLs / Borrowing Base Reviews
The North Sea is Hot
The CEO of Tallgrass (an MLP) resigned - this may go down as one of the strangest HBS case studies of all-time, should it ever be written - long-story-short, an anonymous Twitter Account won a fight with a CEO
That’s it for this week - we’re taking Friday off - hope y’all are too