WASHINGTON - By agreeing to pay $30 million, Chevron Corp. has reached the largest of five settlements in the government's ongoing investigation of illegal kickbacks made to Iraq in connection with the United Nation's oil-for-food program.
The Securities and Exchange Commission yesterday said Chevron settled charges brought under the Foreign Corrupt Practices Act without admitting or denying allegations that kickbacks were made as part of oil purchases in 2001 and 2002. But the US attorney for the Southern District of New York said the nation's second-largest oil company still could be prosecuted for criminal tax violations.
Chevron agreed to remit $25 million in profits, pay a $3 million civil penalty, and pay the Office of Foreign Asset Controls $2 million.
Four other companies have agreed to settle SEC corruption charges stemming from alleged kickbacks to Saddam Hussein's regime: oil and gas company El Paso Corp. ($7.7 million), diversified manufacturer Textron Inc. ($4.6 million), diversified industrial company Ingersoll-Rand Co. ($6.7 million), and York International Corp. ($22 million), purchased in 2005 by Johnson Controls Inc.
The SEC said Chevron found out in 2001 that Iraq's State Oil Marketing Organization was demanding surcharges, and that the company adopted a policy prohibiting payment. The company then purchased, through intermediaries, about 78 million barrels of crude oil from Iraq under 36 contracts between April 2001 and May 2002. But these traders failed to follow the company's prohibition against kickbacks, and Chevron's management did not ensure compliance, the SEC said.
One person whose company occasionally sold oil to Chevron said Chevron's trader and his bosses always knew about the illegal surcharge demands by Iraq.
The oil-for-food program let Iraq sell oil primarily to buy humanitarian goods.