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.
From approximately 2000 to 2003, two GE subsidiaries, Marquette-Hellige ("Marquette") and OEC-Medical Systems (Europa) AG ("OEC-Medical"), made approximately $2.04 million in kickback payments in the form of computer equipment, medical supplies, and services to the Iraqi Health Ministry under the UN Oil for Food Program. Two other current GE subsidiaries, Ionics Italba S.r.L. ("Ionics Italba"), and Nycomed Imaging AS ("Nycomed"), made approximately $1.55 million in cash kickback payments under the Program prior to GE's acquisition of their parent companies. Nycomed was a subsidiary of publicly-registered Amersham plc, which was acquired by GE in 2004 after the conduct at issue in the Complaint and is currently known as GE Healthcare Ltd. Ionics Italba was a subsidiary of publicly-registered Ionics, Inc., which was acquired by GE in 2005 after the conduct at issue and is currently known as GE Ionics, Inc. The kickbacks generated over $18 million in profits for the companies.
As a result of the bribery schemes, the SEC filed FCPA books and records and internal controls charges against General Electric and two GE subsidiaries — Ionics, Inc. (currently GE Ionics, Inc.) and Amersham plc (currently GE Healthcare Ltd.). All three defendants entered into a consent agreement with the SEC. Without admitting or denying guilt, the companies were enjoined from future violations of the FCPA, and GE was ordered to disgorge $18,397,949 plus pay pre-judgment interest of $4,080,665 and a civil penalty of $1,000,000, totalling $23,478,614.
