SEC v. AGCO Corp. (2009)

• Case Name
• SEC v. AGCO Corp. (2009)

• Date Filed
• 11/04/2009

• Enforcement Agency
• SEC

• Countries
• Iraq

• Foreign Official
• Unspecified Iraqi ministries.

• Date of Conduct
• 2000 to 2003

• Nature of Business
• AGCO Corp. (“AGCO”) is a U.S. corporation based in Duluth, Georgia that manufactures and sells agricultural machinery and equipment.

• 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.
  
  According to the SEC, from 2000 through 2003 AGCO’s subsidiaries made approximately $5.9 million in kickback payments in connection with their sales under the U.N. Oil‑for‑Food Program.  AGCO Ltd., AGCO’s U.K. subsidiary, marketed and negotiated sales through the U.N. Program via two other European subsidiaries, AGCO S.A., located in France, and AGCO Danmark A/S, located in Denmark.  In connection with winning 16 sales contracts with the Iraqi Ministry of Agriculture for the sale of farm machinery and spare parts, an AGCO Ltd. business manager and his supervisor allegedly acquiesced to demands from Iraqi ministries for kickback payments.  These payments of approximately 10% of the contracts’ values were made through a third‑party agent based in Jordan.  According to the SEC’s complaint, AGCO Ltd.’s marketing staff created a fictional account in its books from which AGCO made these payments with virtually no review or verification from AGCO Ltd.’s finance department; AGCO’s legal department failed to perform due diligence on or training of AGCO’s Jordanian agent.

• Enforcement
• In a complaint filed on September 30, 2009, the SEC charged AGCO with violating the books and records and internal controls provisions of the FCPA.  Without admitting or denying the allegations contained in the SEC’s complaint, on July 31, 2009 AGCO consented to the entry of a final judgment, entered November 4, 2009, enjoining it from future similar violations and mandating that it disgorge $13,907,393,  plus $2 million in prejudgment interest, and pay a civil penalty of $2.4 million.
  
  AGCO also entered into a deferred‑prosecution agreement with the DOJ to resolve related criminal charges and settled other Oil‑for‑Food related charges brought by the Danish State Prosecutor for Serious Economic Crimes related to contracts executed by AGCO’s Danish subsidiary.

• Amount of the Value
• Approximately $5,900,000.

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Jordanian agents.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 18,307,393

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 19,907,393

• Related Enforcement Actions
• United States v. AGCO Ltd. (D.D.C. 2009)
  

AGCO Corp.

• Citation
• SEC v. AGCO Corp., No. 1:09-cv-1865 (D.D.C. 2009).

• Date Filed
• 11/04/2009

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States