Department of Justice, Securities and Exchange Commission, Dep’t of Treasury’s Office of Foreign Assets Control, and United Kingdom’s Serious Fraud Office Guilty Plea and Civil Settlement March 18, 2010
Innospec Inc., a Delaware corporation, pleaded guilty to defrauding the United Nations (UN), to violating the FCPA, and to violating the U.S. embargo against Cuba. Specifically, Innospec admitted in its guilty plea that it conducted wire fraud in connection with its payment of kickbacks to the former Iraqi government under the United Nations Oil-for-Food Program (OFFP), as well as FCPA violations in connection with bribe payments made to Iraqi Ministry of Oil officials. Innospec also admitted to selling chemicals to Cuban power plants in violation of the U.S. embargo against Cuba.
Innospec manufactures and sells a compound used in leaded gasoline. According to court documents, from 2000 to 2003, Innospec’s Swiss subsidiary, Alcor, was awarded five contracts valued at more than $40 million in exchange for payments (or promises to pay) at least $4 million in kickbacks to the former Iraqi government. Alcor inflated the price of the contracts by about 10 percent to cover the costs and falsely characterized the payments on the company’s books and records as “commissions.” Innospec also admitted to paying and promising to pay more than $1.5 million in bribes, in the form of cash and travel, to Iraqi Ministry of Oil officials to secure sales in Iraq from 2004-2008, as well as paying $150,000 in 2006 to Iraqi officials to ensure a competing product was not approved for use in Iraqi refineries.
As part of its plea agreement with the DOJ, Innospec agreed to continued cooperation, payment of $14.1 million in criminal fines, and to retain an independent compliance monitor for a minimum of three years. The SEC separately settled a civil complaint with Innospec, charging violations of the FCPA’s anti-bribery, internal controls, and books-and-records provisions in connection with the misconduct described in court documents. Innospec agreed to disgorge $11.2 million in profits to the SEC.
Innospec also admitted that it paid approximately $2.9 million in bribes to Indonesian officials to secure approximately $20 million in sales of fuel additives to Cuba without a license from OFAC, in violation of the Trading With the Enemy Act. Innospec agreed to pay $2.2 million to resolve matters with the OFAC related to the U.S. embargo against Cuba.
Finally, Innospec also pleaded guilty to charges brought by the United Kingdom’s Serious Fraud Office (SFO), developed as a result of a referral from the DOJ in October 2007. Innospec will pay a criminal penalty of $12.7 million in connection with SFO charges brought in connection with the corrupt payments to Indonesian officials.
Together, Innospec’s fines total $40.2 million.