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.
Innospec Inc. is a Delaware corporation with its principal executive offices in the United States and Ellesmere Port, United Kingdom. Innospec manufactures, distributes and markets fuel and specialty chemicals to oil refineries and other chemical and industrial companies throughout the world. Its operations are divided into three distinct business areas: Fuel Specialties, Active Chemicals and Octane Additives. As part of its Octane Additives business, Innospec manufactures and sells Tetra Ethyl Lead ("TEL"), a product that is used to boost the octane value of leaded gasoline and certain types of jet fuel. Innospec is registered with the Commission under Section 12(b) of the Exchange Act and since March 21, 2006, it has traded on the NASDAQ under the symbol "IOSP." Prior to March 21, 2006, Irmospec's securities traded on the New York Stock Exchange.
Paul W. Jennings was hired by Innospec in 2002 as its CFO. Jennings was elevated to the position of interim CEO in April 2005, and in June 2005 he became the company's permanent CEO and President.
From 2000 to 2007, Innospec violated the anti-bribery, books and records and internal controls provisions of the Foreign Corrupt Practices Act ("FCPA") when it routinely paid bribes in order to sell TEL to government-owned refineries and oil companies in Iraq and Indonesia. In all, Innospec made illicit payments of approximately $6,347,588 and promised an additional $2,870,377 in illicit payments to Iraqi ministries, Iraqi government officials, and Indonesian government officials in exchange for contracts worth approximately $176,717,341 in revenues and profits of $60,071,613. Paul Jennings actively participated in the bribery schemes in Iraq and Indonesia beginning in mid to late 2004.
Without admitting or denying the allegations of the Complaint (except as to jurisdiction), Jennings entered into a consent agreement in January 2011 with the SEC over charges that he had violated the FCPA. The Consent Agreement permanently enjoined Jennings from future violations of the FCPA and required that he pay disgorgement of $116,092, prejudgment interest of $12,945, and a civil penalty of $100,000.
Innospec separately agreed to pay $40.2 million as part of a global settlement with the Securities and Exchange Commission, the Department of Justice, the UK's Serious Fraud Office, and the Office of Foreign Assets Control.
