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.
ABB Ltd. was a Swiss corporation headquartered in Zurich, Switzerland. ABB was a global provider of power and automation products and services that operated through hundreds of subsidiaries worldwide. ABB's American Depositary Shares were registered with the SEC since April 4, 2001, and traded on the New York Stock Exchange.
From 1997 to 2004, ABB, through a U.S. subsidiary and six foreign-based subsidiaries, offered and paid bribes to government officials in Mexico to obtain and retain business with government owned power companies, and paid kickbacks to Iraq to obtain contracts under the United Nations Oil for Food Program (the "Program"). In all, ABB's subsidiaries made at least $2.7 million in illicit payments in these schemes to obtain contracts that generated more than $100 million in revenues for ABB.
On September 29, 2010, the SEC filed a three count complaint in the District of Columbia against ABB alleging violations of the anti-bribery, books & records, and internal controls provisions of the FCPA. On October 12, 2010, ABB entered into a Consent Agreement with the SEC. Under the terms of the agreement and without admitting or denying the allegations in the Complaint, ABB agreed to be permanently enjoined from future violations of the FCPA; to pay disgorgement of $17,141,474, plus prejudgment interest of $5,662,788, and a civil fine of $16,510,000; and to file periodic reports with the SEC for a term of three years on the status of ABB's remediation and implementation of anti-corruption compliance policies and procedures.
