Prosecuting Agency:
U.S. Securities and Exchange Commission
Type of Action:
SEC Federal Court Proceeding
Docket or Case Number:
07-cv-02293
Court:
District of Columbia
Name of Prosecuting Attorneys:
Cheryl J. Scarboro, SEC Headquarters
Tracy L. Price, SEC Headquarters
Kelly G. Kilroy, SEC Headquarters
US Assisting Agencies:
U.S. Department of Justice
Foreign Enforcement Action/Investigation:
Unknown
Foreign Assistance:
United Nations Independent Inquiry Committee (UN)
Origin of the Proceeding:
United Nations Inquiry,
Voluntary disclosure
Whistleblower:
Unknown
Case Status:
Resolved
Summary
In August 1990, the U.N. adopted Security Council Resolution 661, which prohibited U.N. member-states from transacting business with Iraq, except for the purchase and sale of humanitarian supplies. In April 1995, the U.N. adopted Security Council Resolution 986, a limited exception to Resolution 661 which allowed Iraq to sell its oil so long as the proceeds from oil sales were used by the Iraqi government to purchase humanitarian supplies for the Iraqi people. The U.N. controlled the proceeds from all sales of Iraqi oil and approved payments to suppliers of humanitarian goods. This program became known as the Oil for Food Program. Beginning in approximately August 2000, the Iraqi government demanded that suppliers of humanitarian goods pay a kickback, usually valued at 10% of the contract price, to the Government of the Republic of Iraq in order to be awarded a contract by the government. Suppliers often caused the U.N. to unknowingly fund these improper kickbacks by including the cost of the kickbacks in the contract price.
Akzo Nobel N.V. was a Netherlands-based pharmaceutical company and issuer under the FCPA. From 2000 to 2003, two wholly owned subsidiaries of Akzo Nobel, Intervet International B.V. and N.V. Organon, authorized and made $279,491 in kickback payments in connection with their sales of humanitarian goods to Iraq under the U.N. Oil for Food Program. Invernet's share of the kickbacks was $38,741, and Organon's share was $240,750. Akzo Nobel gained $1,647,363 of profits from contracts connected to the bribery scheme.
On December 20, 2007, the SEC filed FCPA books and records and internal controls charges against Akzo Nobel, and on the same date the company entered into a Consent Agreement with the SEC. Azko Nobel consented to a judgment requiring it to disgorge the $1,647,363 of profits it gained as a result of kickbacks to the Iraqi government. The judgment also required Akzo Nobel to pay $584,150 in pre-judgment interest and a civil penalty of $750,000.
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