Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, November 14, 2007

Chevron Settles FCPA Charges Involving Iraq Oil for Food Program

Chevron Corp. becomes the fifth company that the SEC has gone after for violations of the FCPA in connection with 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 agreed to pay $30 million to settle the charges 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 have in place a system of internal accounting controls to detect and prevent such illicit payments.

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