Iraq

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July 27, 2010

GE Settles Oil-for-Food Matter

Posted by wrageblog under FCPA, Iraq, United Nations, enforcement | Tags: , , , , |
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On July 27, 2010, the SEC charged General Electric Company and two subsidiaries – formerly known as Ionics, Inc. and Amersham plc – with paying illegal kickbacks to the Iraqi Ministry of Health and Ministry of Oil in connection with sales of humanitarian goods under the United Nations (“UN”) Oil-for-Food Program.  Over $3.5 million in kickbacks were allegedly paid between 2000 and 2003 by GE subsidiaries Marquette-Hellige, OEC-Medical Systems (Europa) AG, Nycomed Imaging AS and Ionics Italba S.r.L.  GE, Ionics and Amersham consented to the entry of a final judgment permanently enjoining them from future violations of the FCPA’s books and records and internal controls provisions.  GE was ordered to pay $22.5 million in disgorgement of profits and prejudgment interest and a $1 million civil penalty.

The Compendium summary of this matter may be accessed here.

 

June 25, 2010

Ousama Naaman Pleads Guilty

Posted by wrageblog under FCPA, Indonesia, Iraq, UK Government, US Government, United Nations, enforcement | Tags: , , , , , , , |
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On June 25, 2010, Ousama Naaman, a Lebanese and Canadian citizen and Innospec’s middleman in Iraq during the United Nations Oil-for-Food Program, pleaded guilty in U.S. District Court for the District of Columbia.  He pleaded guilty to a two-count superseding information charging him with one count of conspiracy to commit wire fraud, violate the FCPA and falsify the books and records of a U.S. issuer; and one count of violating the FCPA.  Naaman, initially indicted on August 7, 2008, was arrested in Frankfurt, Germany on July 30, 2009 and later extradited to the United States.  He had initially entered a plea of not guilty on May 3, 2010.

Naaman admitted to orchestrating an arrangement whereby Innospec paid a 10% kickback to the Iraqi government between 2001 and 2003 to obtain five contracts under the Oil-for-Food program to supply an anti-knock fuel additive (tetraethyl lead) to Iraq’s oil refineries.  According to the DOJ press release, Naaman also paid or promised to pay over $3 million in bribes (in the form of cash, travel, gifts and entertainment) between 2004 and 2008 to officials of the Iraqi Ministry of Oil and the Trade Bank of Iraq on Innospec’s behalf in order to secure sales of tetraethyl lead and to secure more favorable exchange rates, respectively. 

Naaman’s sentencing has not yet been scheduled.  He faces up to 10 years in prison. 

On March 18, 2010, Innospec pleaded guilty to a twelve-count information charging, agreeing to a $14.1 million criminal fine and three-year compliance monitorship.  The company also settled with the SEC, agreeing to disgorge $11.2 million, and with the Treasury Department’s Office of Foreign Assets Control (OFAC) for $2.2 million.  On the same day, Innospec’s UK subsidiary pleaded guilty to paying bribes in Indonesia, receiving a $12.7 million criminal fine.  The Corruption Eradication Commission (KPK) in Indonesia appears to be conducting an ongoing investigation into the company’s activities in the country.

Today’s DOJ press release can be accessed here:  http://www.justice.gov/opa/pr/2010/June/10-ag-747.html

 

April 6, 2010

French Judge Places Total SA Under Formal Investigation

Posted by wrageblog under France, Iraq, United Nations, enforcement | Tags: , , , , , , , |
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Total SA, the large French oil and gas group, has confirmed that a French Investigating Judge placed the company under formal investigation in February 2010 in connection with alleged corruption in Iraq under the United Nations Oil for Food Program. For a summary of this enforcement action, please visit the TRACE Compendium.

 

March 18, 2010

Innospec Reaches $40.2 Global Settlement

Posted by wrageblog under FCPA, Indonesia, Iraq, UK Government, US Government, enforcement | Tags: , , , , , , , |
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Today, March 18, 2010, Innospec reached a formal settlement with the DOJ, SEC and SFO resolving the agencies’ coordinated bribery investigation into the company and its subsidiaries’ activities in Iraq and Indonesia.  To read a full summary of the investigation and settlement, please visit the TRACE Compendium.

 

February 26, 2010

SFO Charges Innospec’s UK Subsidiary With Bribery in Indonesia

Posted by wrageblog under FCPA, Indonesia, Iraq, UK Government, US Government, commercial intermediaries, enforcement | Tags: , , , , , , , , , |
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On February 25, 2010, the United Kingdom’s Serious Fraud Office announced that it had brought charges against Innospec Inc.’s wholly-owned UK subsidiary, Innospec Ltd., concerning “bribery on a significant scale by Innospec and its agents in Indonesia.”  The company was charged with conspiracy to corrupt, in contravention of Section 1 of the Criminal Law Act 1977, in connection with its sales of tetra ethyl lead (“TEL”), an anti-knock fuel additive used in oil refineries, to the Indonesian government between February 2002 and December 2006.  Innospec Ltd. is due to appear in the Southwark Crown Court on March 4, 2010.

Innospec has been under investigation by US and UK authorities for several years.  In 2006, the Securities and Exchange Commission and Department of Justice began investigating the United Nations Oil for Food (“OFF”) Program activities of Innospec and its Swiss subsidiary, Alcor Chemie Vertriebs GmbH.  The investigation was subsequently expanded to include the company and its agents’ business activities involving foreign governmental entities in other countries.  The DOJ is also investigating Innospec for possible anti-trust violations related to the tetra ethyl market and the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) is investigating possible sanctions violations.

Innospec and Alcor’s former agent for Iraq and other markets, Ousama M. Naaman, was indicted in August 2008 in connection with his alleged role in an eight-year conspiracy to defraud the UN OFF Program and bribe Iraqi officials in order to secure sales of the company’s chemical additives.  Naaman was arrested in Frankfurt in July 2009 and the U.S. is currently seeking his extradition.

The SFO’s investigation began in May 2008 and initially concentrated on Innospec Ltd.’s OFF activities.  Based on the SFO press release today, it appears that it has determined to concentrate its prosecution on the activities of the company and its agents in Indonesia rather than Iraq.

For a detailed summary of the Innospec investigation and other international anti-bribery enforcement actions, please visit the TRACE Compendium.

 

October 21, 2009

Reneging on Dirty Deals

Posted by wrageblog under Iraq, US Government | Tags: , , , , , |
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We hear anecdotes about employees involved in bribery schemes who also embezzle from their companies. Once they have figured out how to work the books to generate cash for bribes, keeping some of it themselves is simple enough. Or we hear stories of sales agents who work out arrangements whereby the employee championing the agent proposes a higher commission in return for a kick-back. That scheme is almost impossible to uncover, especially when the employee is posted far from headquarters in the country in which the agent is operating. While neither of these schemes implicates the FCPA, they both illustrate the slippery slope into criminality that keeps many of us up at night.

An article in the New York Times today describes the arrest of Richard Lopez Razo, of the US Department of State. Prior to joining the State Department, while employed by Innovative Technical Solutions, Inc., Razo is alleged to have accepted bribes paid to get an Iraqi – Hayder Al Batat – hired as a subcontractor. After joining the State Department, Razo is alleged to have hit up Al Batat’s brother for additional payments in exchange for business in Iraq.

Setting aside the abuse of office by this US government official in an environment as sensitive as Iraq and setting aside the discomfort that Innovative Technical Solutions Inc. must be experiencing right now, one other point leaps off the page: Razo couldn’t get Al Batat to pay up. It is not clear how much Razo ever collected from the alleged bribery scheme. The article refers to “dozens” of emails demanding payment. I’d like to see those emails. Sadly, it’s just not that difficult for most of us to imagine a bribe-demanding government official, stiffed for the bribes he was promised, puffed-up with indignation and livid about the injustice of it all.