Innospec Inc agreed to pay a US$14.1 million criminal fine to resolve charges brought by the DOJ for wire fraud in connection with kickback payments to Iraq under the United Nations Oil for Food Program (OFFP) and for FCPA violations in connection with bribes made to officials in the Iraq’s Ministry of Oil and the government of Indonesia. Innospec admitted that its subsidiary, Alcor, paid or promised to pay at least US$4 million in kickbacks to the Iraq’s former government to obtain five OFFP contracts from 2000-2003 valued at more than €40 million to sell tetraethyl lead (TEL), a compound used in leaded gasoline, to refineries run by Iraq’s Ministry of Oil. Innospec falsely characterized the payments on the company’s books and records as “commissions” paid to its agent in Iraq. Innospec further admitted to paying and promising to pay more than US$1.5 million in bribes in the form of cash, lavish travel and high tech products to officials of the Ministry of Oil to secure TEL contracts in Iraq from 2004-2008, as well as paying US$150,000 to Ministry of Oil officials to ensure that a product that competed with TEL, was not approved for use in Iraq’s refineries. Innospec also admitted that it paid approximately US$2.9 million in bribes (referred to as “special commissions”) to officials in Indonesia to secure sales.
Innospec agreed to disgorge US$11.2 million in profits to settle a civil complaint filed by the SEC for violations of the FCPA’s anti-bribery, internal controls, and books and records provisions in connection with the payments made to government officials in Iraq and Indonesia to obtain and retain business.
In a related action brought by the SFO, Innospec’s British subsidiary, Innospec Ltd., pleaded guilty in connection with the payments made to government officials in Indonesia. As a result of the plea, Innospec Ltd. will pay a criminal penalty of US$12.7 million. The SFO action developed out of a referral from the DOJ in 2007.