SEC v. Innospec (D.D.C. 2010)

• Case Name
• SEC v. Innospec (D.D.C. 2010)

• Date Filed
• 03/26/2010

• Enforcement Agency
• SEC

• Countries
• Indonesia, Iraq

• Foreign Official
• Iraqi government officials (Ministry of Oil), Indonesian government officials (Ministry of Energy and Mineral Resources), and officials of state-owned oil and gas companies in Indonesia (BP Migas and Pertamina).

• Date of Conduct
• 2000 to 2007

• Nature of Business
• Manufacture and sales of fuel additives and other specialty chemicals by Innospec, Inc. (“Innospec”), a Delaware corporation based in the United Kingdom.

• 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 2000 to 2007, Innospec allegedly paid or promised more than $5.8 million in bribes and illicit payments to Iraqi government officials to obtain contracts for sales of tetraethyl lead (“TEL”).  The SEC alleges that Innospec’s Swiss subsidiary, Alcor, obtained U.N. Oil‑for‑Food Program contracts by paying kickbacks to Iraq and Iraqi officials through an Iraqi agent.  According the SEC, Innospec continued to use the Iraqi agent after the Oil‑for‑Food Program ended to pay bribes to Iraqi officials, including officials at the Ministry of Oil, to secure TEL business from Iraq.  Allegedly, the Iraqi agent also made payments to ensure the failure of a field test of a competitor’s product.  According to the SEC, Innospec also paid for lavish trips for Iraqi officials, including a honeymoon to Thailand for one and “pocket money” for others while on the trips. 
  
  The SEC also alleges Innospec paid $2,833,507 in bribes to Indonesian government officials and officials at state‑owned oil companies to win contracts for the sale of TEL to state‑owned oil and gas companies in Indonesia

• Enforcement
• Without admitting or denying any of the SEC’s allegations, Innospec has offered to pay $40.2 million as part of a global settlement with the SEC, the DOJ, the United Kingdom’s Serious Fraud Office (“SFO”), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”).  On March 18, 2010, Innospec agreed to pay disgorgement of $11.2 million to the SEC, a criminal fine of $14.1 million to the DOJ, a criminal fine of $12.7 million to the SFO, and $2.2 million to OFAC.  Innospec also agreed to injunctive relief and certain undertakings regarding its FCPA compliance program, including the appointment of an independent monitor for at least three years.

• Amount of the Value
• More than $8.6 million.

• Amount of Business Related to Payment
• More than $176 million.

• Intermediary
• Sales Agent/Consultant.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 11,200,000

• Compliance Monitor
• Yes

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 264,523,905

• Related Enforcement Actions
• United States v. Ousama M. Naaman (D.D.C. 2008)
  United States v. Innospec, Inc. (D.D.C. 2010)
  SEC v. David P. Turner and Ousama M. Naaman (D.D.C. 2010)
  SEC v. Paul W. Jennings (D.D.C. 2011)
  

Innospec

• Citation
• SEC v. Innospec, Inc., No. 1:10-cv-0048 (D.D.C. 2010).

• Date Filed
• 03/26/2010

• Filed Under Seal
• No

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

• Other Statutory Provision
• None

• Disposition
• Complaint and Consent Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States