UPDATE 2-Swiss firm Vitol pleads guilty in UN oil/food case

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NEW YORK, Nov 20 (Reuters) - Swiss oil trader Vitol pleaded guilty to grand larceny on Tuesday for providing kickbacks to Iraq under the U.N. oil-for-food program, paying $17.5 million in fines but avoiding sanctions against individual executives.

Vitol, which had $114 billion of revenue in 2006, will pay restitution of $13 million to Iraq and $4.5 million to cover the cost of prosecution, Manhattan District Attorney Robert Morgenthau said in a statement.

Vitol is one of the world’s largest independent physical oil trading companies. It admitted to paying $13 million in kickbacks to Iraqi officials under Saddam Hussein to win oil supply contracts, and the plea ended the New York investigation.

A former Vitol trader said the company would celebrate the resolution of the case as a victory.

“They have excellent lawyers, as you would expect,” he said, speaking on condition of anonymity.

A lawyer for Vitol was not immediately available to comment.

The U.N. oil-for-food program was established to help Saddam’s Iraq sell oil to buy humanitarian supplies while it was otherwise under U.N. sanctions due to its 1990 invasion of Kuwait. The program ran from 1996 to 2003.

A U.N.-commissioned inquiry headed by former U.S. Federal Reserve Chairman Paul Volcker found 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.

Federal and state prosecutors in New York have won several convictions against individuals and companies in connection with the program, including Texas oil tycoon Oscar Wyatt, who pleaded guilty to federal wire fraud conspiracy on Oct. 1.

Wyatt agreed to forfeit $11 million and will be sentenced on Nov. 27.

Chevron Corp last week agreed to pay $30 million to resolve criminal and civil liabilities related to procurement of Iraqi oil under the program. The case was the result of a joint investigation by the U.S. attorney’s office and the Manhattan district attorney.

In February, Houston-based El Paso Corp agreed to pay $7.7 million to settle charges that it indirectly paid nearly $5.5 million in illegal surcharges to Saddam’s government.

Vitol is made up of a network of separate companies and privately owned by its staff. The group trades a wide range of energy products and is also involved in derivatives, finance, insurance, shipping, oil production, terminals and pipelines. (Additional reporting by Janet McGurty and Daniel Trotta; Editing by Patricia Zengerle)