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

 

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.