Chevron to Pay $30 Million to Settle Charges For Improper Payments to Iraq Under U.N. Oil For Food Program

The Securities and Exchange Commission has charged Chevron Corporation for its role in illegal kickback payments that were made to Iraq in 2001 and 2002 in connection with the company’s purchases of crude oil under the U.N. Oil for Food Program.

Chevron, based in San Ramon, Calif., agreed to pay $30 million to settle the charges brought under the Foreign Corrupt Practices Act (FCPA) without admitting or denying the SEC’s allegations.

The U.N. Oil for Food Program was intended to provide humanitarian relief to the Iraqi people while Iraq was subject to international trade sanctions. According to the Commission’s complaint, third parties under contract with Chevron made approximately $20 million in illicit payments that bypassed the Oil for Food escrow account and were paid directly to Iraqi-controlled bank accounts in Jordan and Lebanon. The SEC alleged that Chevron knew, or should have known, that third parties were using portions of the premiums they received from Chevron’s oil purchases to pay illegal surcharges to Iraq. The SEC also alleged that Chevron failed to devise and maintain a system of internal accounting controls to detect and prevent such illicit payments, and Chevron’s accounting for its Oil for Food transactions failed to properly record the true nature of the company’s payments to third parties.

“This is the Commission’s fifth action against a company for participating in the Oil for Food kickback scheme and demonstrates our continuing commitment to combating violations of the Foreign Corrupt Practices Act,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.

For more see the SEC Complaint filed in the U.S. District Court for the Southern District of New York.

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