Thursday, March 20, 2008
The SEC settled Foreign Corrupt Practices Act books and records and internal controls charges against AB Volvo in the U.S. District Court for the District of Columbia. AB Volvo is a Swedish company that provides commercial transport solutions, including trucks, buses and construction equipment. (Volvo is not the company that currently makes the "Volvo" brand car.) The Commission's complaint alleges that from 1999 through 2003, two of AB Volvo's subsidiaries and their agents and distributors made approximately $6,206,331 in kickback payments, and authorized additional payments of $2,388,419 in connection with their sales of humanitarian goods to Iraq under the United Nations Oil for Food Program (the "Program"). The kickbacks were characterized as "after-sales service fees" ("ASSFs"), but no bona fide services were performed. One of Volvo's subsidiaries also made other types of illicit payments to Iraq. The SEC alleged that AB Volvo either knew or was reckless in not knowing that illicit payments were either offered or paid in connection with these transactions and failed to maintain an adequate system of internal controls to detect and prevent the payments, and its accounting for these transactions failed properly to record the nature of the payments. AB Volvo consented to the entry of a final judgment permanently enjoining it from future violations, ordering it to disgorge $7,299,208, in profits plus $1,303,441 in pre-judgment interest, and to pay a civil penalty of $4,000,000. AB Volvo will also pay a $7,000,000 penalty pursuant to a deferred prosecution agreement with the U.S. Department of Justice, Fraud Section.