Published: Friday, 17 May 2013 | 3:54 AM ET
European anti-trust investigators searched the offices of price agency Platts and at least one major oil company for a third day on Thursday, hunting for evidence of possible price manipulation on oil markets, witnesses said.
Authorities raided the London bureau of Platts in Canary Wharf and the offices of Statoil, Royal Dutch Shell and BP on Tuesday in the biggest trading probe since the Libor scandal.
At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during the Platts market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.
With attention focused on the role of Platts in setting oil price benchmarks, the publisher – a unit of McGraw-Hill – is in lockdown during the European Commission’s inspection, say sources familiar with the company.
A team of inspectors is gathering evidence from laptops, the witnesses said.
“We are all in the dark about it. The investigators will likely be here all week,” said one member of Platts staff. “We have all been told explicitly not to speak to anyone about it.”
Platts continues to operate business as normal, traders said.
As investigators raided the office, reporters were told by Platts management to cooperate. Editorial director Dan Tanz stood up to say it was the “price of being relevant”.
A spokeswoman for Platts did not immediately respond to a request for comment.
Britain’s Serious Fraud Office said it had not yet decided whether to “accept this matter as a criminal investigation”.
“Subject to discussions with other agencies, it is likely that the SFO could be the appropriate authority to investigate allegations of price fixing,” the SFO said in a statement.
The European Commission also is examining whether companies were prevented from taking part in the price assessment process.
A Hungarian ethanol producer on Wednesday was the first company to identify itself as having complained to the European Commission about a Platts procedure that vets companies before they are permitted to participate in its price setting mechanism.
Pannonia Ethanol said it approached Platts last spring to gain access to contribute to the market-on-close window.
It said Platts refused to give the company access, citing “editorial discretion”.
Platts said its established procedure was to vet new participants and had followed the process with Pannonia Ethanol.
Commission inspectors are also continuing their search at the offices of Norwegian Statoil.
“As far as I know, the inspectors are still at our office,” said Statoil spokesman Jannik Lindbaek. “When they came they said that they would spend some days.”
BP and Shell said they were still cooperating with the European authorities.
London is home to some of the biggest trading desks in the oil business. Following the Libor scandal, in which banks have admitted trying to manipulate interest rates, Britain approved legislation making a criminal offence of false or misleading statements in relation to the setting of financial benchmarks.
Britain would be unable to use that law to act against any oil companies found guilty of price manipulation because the law does not include energy benchmarks and punishment would not be doled out retrospectively, the prime minister’s office said on Thursday.
That leaves the European Commission, which can impose large fines, as the most likely source of any sanctions.
Thomson Reuters, parent of Reuters news, competes with Platts in providing news and information to the oil market.
By John Donovan
