for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Oil and Gas

Akzo to pay up to $3.8 mln in oil-for-food settlement

AMSTERDAM, Dec 21 (Reuters) - Dutch chemical group Akzo Nobel NV AKZO.ASAKZOY.O said on Friday it has agreed to pay up to $3.8 million to U.S. authorities to settle Iraqi oil-for-food kickback charges.

An Akzo Nobel spokesman confirmed a U.S. Department of Justice statement saying Akzo units Organon and Intervet made improper payments to the Iraqi government between 2000 and 2002.

The Akzo units, bought by U.S. pharmaceutical company Schering-Plough Corp SGP.N. for 11 billion euros ($15.8 billion) in a deal completed last month, paid a total of about $280,000 to the Iraqi government by inflating contract prices, the DoJ said.

Organon is expected to reach a deal within 180 days with Dutch prosecutors and pay a fine of about 381,000 euros, or otherwise Akzo Nobel will pay $800,000 to the U.S. Treasury, Justice Department said.

An Akzo spokesman declined to say whether Akzo or Schering-Plough would pay the 381,000 euros fine.

The U.S. DoJ will not file criminal charges against Akzo or its subsidiaries in view of Organon’s expected deal with Dutch prosecutors, the Justice Department said.

Akzo Nobel also reached a settlement with the U.S. Securities and Exchange Commission and agreed to pay $750,000 in civil penalties and about $2.2 million in disgorgement of all profits, including interest, due to the kickback payments.

The contracts were part of the United Nations’ “Oil for Food” program, and usually contained a 10 percent mark-up concealed from the UN but paid to the Iraqi government, U.S. authorities said.

A U.N.-commissioned inquiry headed by former U.S. Federal Reserve Chairman Paul Volcker found last year the program was corrupted by 2,200 companies in 66 countries that paid $1.8 billion in kickbacks to Iraqi officials to win supply deals, and U.S. authorities have been probing companies.

Akzo Nobel joins the list of companies making settlements after U.S. oil company Chevron Corp CVX.N last month agreed to a $30 million U.S. settlement, while heating and air services firm York International Corp. JCI.N agreed in October to pay $22 million in settlements.

The oil-for-food program was established to help Saddam Hussein’s Iraq sell oil to buy humanitarian supplies while it was otherwise under U.N. sanctions due to its 1990 invasion of Kuwait. (Reporting by Gilbert Kreijger; Editing by David Cowell)

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up