SEC v. AB Volvo (D.D.C. 2008)
Case Details
- Case Name
- SEC v. AB Volvo (D.D.C. 2008)
- Date of Conduct
-
1999 to 2003
- Nature of Business
- AB Volvo is a Swedish company that provides commercial transport solutions, including trucks, buses, and construction equipment. Through the relevant period, AB Volvo’s American Depository Receipts were registered with the SEC and traded on the NASDAQ exchange.
- Influence to be Obtained
- In April 1995, the U.N. adopted Security Council Resolution 986, which permitted the government of Iraq to sell oil and to use proceeds from those sales to purchase humanitarian supplies such as food for the Iraqi people (“U.N. Oil‑for‑Food Program”). In an extensive scheme, the Iraqi government received illicit payments in the form of surcharges from oil purchasers and kickbacks, often termed “after sales service fees,” from humanitarian goods suppliers. The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.
From approximately 1999 through 2003, AB Volvo allegedly violated the books-and-records and internal controls provisions of the FCPA when two of its subsidiaries provided the Iraqi government with approximately $6,206,331 in kickback payments and authorized additional payments of $2,388,419. One of AB Volvo subsidiaries, Renault Trucks SAS (“Renault”), contracted to provide vehicles to various Iraqi ministries. In performing these contracts, Renault hired a Swiss “bodybuilder” to tailor the vehicles to the buyer’s specifications. Renault provided the “bodybuilder” with additional payments to be passed on to the Iraqi government. The purpose of these payments was to procure additional contracts for Renault. AB Volvo’s other subsidiary, Volvo Construction Equipment International (“Volvo Construction”), also contracted to sell vehicles to various Iraqi ministries. Volvo Construction sold these vehicles through a Jordanian consulting firm and a Tunisian distributor. Large kickbacks were included in the contract prices to procure the contract. Volvo Construction also made additional illicit payments, including providing money to purchase a car for the Iraqi Ministry of the Interior.
The government did not allege bribery of any individual foreign governmental officials.
- Enforcement
- The SEC brought suit against Volvo for failure to maintain internal controls and for books and records violations. On March 20, 2008, without admitting or denying the allegations of the Complaint, the parent company, AB Volvo, entered into a consent agreement with the SEC. The agreement called for disgorgement of $7,299,208, prejudgment interest of $1,303,441, a civil penalty of $4,000,000, and Volvo’s agreement to be permanently restrained and enjoined from violations of the FCPA’s books and records provisions. Separately, AB Volvo entered into a deferred prosecution agreement with the DOJ, agreeing to pay a fine totaling $7 million for FCPA violations by Volvo Construction and Renault. In June 2011, the court granted the DOJ’s motion to dismiss the information against AB Volvo because it had complied with the terms of the deferred prosecution agreement.
In March 2009, three unnamed executives at Volvo Construction were criminally charged by Swedish prosecutors for their involvement in the bribery scandal. They could face jail sentences if convicted.
- Amount of the Value
- $8,594,750.
- Amount of Business Related to Payment
- Not Stated.
- Intermediary
- Distributors; Agents.
- Citizenship of Parent Entity
- Sweden
- Total Sanction
- $ 12,602,649
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 19,602,649
Defendants
AB Volvo
- Citation
- SEC v. AB Volvo, No. 1:08-cv-00473 (D.D.C. 2008).
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- Sweden
