A&O Shearman FCPA Digest | SEC v. El Paso Corp. (S.D.N.Y. 2007)

Source Documents

Nature of Business
El Paso Corporation (“El Paso”), a U.S. corporation, produces, processes, and markets petroleum and natural gas. The Coastal Corporation (“Coastal”) was the predecessor-in-interest to El Paso CGP Company, which now operates as a wholly-owned subsidiary of El Paso.

Influence to be Obtained
From approximately June 2001 through June 2002, El Paso allegedly purchased Iraqi oil from third parties, paying premiums to the third parties that, in turn, were paid to Iraq’s State Oil Marketing Organization as illegal surcharges for the third parties’ oil purchases.

Enforcement
On February 7, 2007, the SEC published a press release announcing the filing of a settled complaint against El Paso Corporation alleging violations of the FCPA’s internal controls and books-and-records provisions in connection with its participation in the Iraqi Oil‑for‑Food Program. El Paso neither admitted nor denied the allegations of the complaint, but consented to the entry of an injunction against it, as well as to a civil penalty of $2.25 million and disgorgement in the amount of $5,482,363. The disgorgement was agreed upon pursuant to a non‑prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York, which also requires El Paso to continue cooperating with the ongoing Oil‑for‑Food investigation. The U.S. Attorney’s Office intends to transfer the disgorged funds to the Development Fund for Iraq.