SEC v. David P. Turner and Ousama M. Naaman (D.D.C. 2010)
Case Details
- Case Name
- SEC v. David P. Turner and Ousama M. Naaman (D.D.C. 2010)
- Countries
- Iraq, Indonesia
- Foreign Official
- Iraqi Ministry of Oil and unspecified Iraqi and Indonesian government officials.
- Date of Conduct
-
2000 to 2008
- Nature of Business
- Ousama M. Naaman is a Lebanese/Canadian dual national, with principal business offices in Abu Dhabi, United Arab Emirates. Naaman acted as the agent in Iraq for Innospec Inc. (“Innospec”), a Delaware corporation based in the United Kingdom. In that role, Naaman negotiated contracts with the Iraqi Ministry of Oil for the provision of gasoline additives to oil refineries operating in Iraq. David Turner, a former Business Director for Innospec, was responsible for authorizing agreements with the Iraqi Ministry of Oil, as well as agreements to sell gasoline additives to various state owned oil companies in Indonesia.
- 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 from humanitarian goods suppliers. From 2001 to 2008, Naaman allegedly promised or made over $3.7 million in kickback and bribery payments to Iraqi government officials in exchange for contracts with the Iraqi Ministry of Oil to purchase a gasoline additive from Innospec.
Between 2001 and 2003, Naaman negotiated five agreements under the U.N. Oil-For-Food Program, including a 10% increase in the price of each to cover the kickbacks to three Iraqi Ministry of Oil refineries. Officials at Innospec devised a scheme to pay inflated commissions to Naaman that Naaman would use to funnel kickbacks to Iraq. Naaman allegedly made improper payments of approximately $1,853,754 and offered additional kickbacks of $1,985,897 to the Iraqi government. Innospec earned revenues of approximately $45,804,915 and profits of $23,125,820 under these agreements. Allegedly, Turner was aware of the alleged kickback scheme in Iraq and made false statements to internal auditors to conceal it.
From 2004 to 2008, Turner also allegedly approved $1,369,269 in bribes to Iraqi officials under a long‑term purchase agreement that Innospec entered into, through Naaman, with the Iraqi Ministry of Oil. Naaman paid these bribes and also paid an official in the Trade Bank of Iraq in exchange for a favorable exchange rate on letters of credit for purchases under the agreement. In 2008, a second long‑term purchase agreement was agreed to by Turner and entered into by Naaman under which Innospec would have paid $850,000 in bribes to Iraqi ministry officials. In addition, Turner allegedly directed Naaman to pay $155,000 in bribes to Iraqi Ministry of Oil officials to ensure Innospec’s competitors’ product would fail field trial tests. All of these payments were improperly booked as legitimate commissions to Naaman. From 2002 to 2008, Naaman, with Turner’s approval, also allegedly arranged or paid approximately $120,538 in travel, gifts, and entertainment expenses for Iraqi senior officials.
From 2000 through 2005, Turner allegedly authorized and directed the payment of bribes to Indonesian government officials in exchange for orders of gasoline additives by Indonesian state‑owned oil and gas companies. These bribes were made through an Indonesian agent who submitted fictitious invoices for the payments. The illicit payments totaled approximately $2,883,507 and were inaccurately recorded in Innospec’s books and records as “sales commissions.” Innospec’s revenues in connection with the bribes were approximately $48,571,937 and its profits were $21,506,610.
- Enforcement
- On August 5, 2010, the SEC filed an enforcement action against Turner and Naaman, charging them both with violating the FCPA, falsifying documents, and aiding and abetting Innospec’s violations of the FCPA. Without admitting or denying the SEC’s allegations, Turner and Naaman have consented to the entry of final judgments that permanently enjoin them from similar future violations. Naaman was ordered to disgorge $810,076 plus prejudgment interest of $67,030, and pay a civil penalty of $438,038. Turner will disgorge $40,000. Turner’s extensive and ongoing cooperation in the investigation was noted by the SEC
- Amount of the Value
- Approximately $6,347,588.
- Amount of Business Related to Payment
- Approximately $176,717,341 in revenues and $60,071,613 in profits.
- Citizenship of Parent Entity
- United Kingdom
- Reporting Requirements
- No
- Total Combined Monetary Sanction
- $ 917,106
Defendants
David P. Turner
- Citation
- United States v. Turner & Naaman, No. 10-cv-1309 (D.D.C. 2010).
- Other Statutory Provision
- Circumventing Internal Controls/Falsifying Books and Records;
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- United Kingdom
- Individual Sanction
- $40,000 (Turner).
Ousama M. Naaman
- Citation
- United States v. Turner & Naaman, No. 10-cv-1309 (D.D.C. 2010).
- Other Statutory Provision
- None
- Disposition
- Complaint and Consent Order
- Defendant Jurisdictional Basis
- Agent of Issuer
- Defendant's Citizenship
- Lebanon, Canada
- Individual Sanction
- $877,106
