A&O Shearman FCPA Digest | United States v. AGCO Ltd. (D.D.C. 2009)

Source Documents

Nature of Business
AGCO Ltd. is the U.K. subsidiary of AGCO Corp. (“AGCO”), 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.

Following the creation of the U.N. Oil-for-Food Program in 2000, AGCO Ltd. hired a Jordanian agent to help increase its business with Iraq. From 2001 to 2002, AGCO Ltd. paid approximately $553,000 to the former Iraqi Ministry of Agriculture through its Jordanian agent to secure three contracts for the sale of agricultural equipment. To pay these kickbacks, AGCO Ltd. inflated the price of its contracts by 13 to 21% before submitting the contracts to the U.N. for approval. From 2001 to 2003, AGCO Ltd. falsely described these kickbacks in its books and records as “Ministry Accruals” it paid to its agent. AGCO’s legal department failed to review AGCO Ltd.’s contracts, agency agreements, and payment requests submitted to the U.N. in connection with AGCO’s Oil-for-Food contracts.

Enforcement
On September 30, 2009, the DOJ filed a criminal information against AGCO Ltd., charging it with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the FCPA. AGCO acknowledged responsibility for its subsidiaries’ actions related to the U.N. Oil-for-Food Program and entered into a three-year deferred prosecution agreement (“DPA”) with the DOJ.

Under the DPA, AGCO agreed to pay a penalty of $1.6 million and cooperate with the DOJ in further related investigations. AGCO also agreed to implement an anti-corruption compliance program and review, and modify if necessary, its internal controls. If AGCO abides by the terms of the DPA, the government will dismiss the criminal information filed against AGCO Ltd. at the end of the three-year term of the agreement.

AGCO also settled related civil charges with the SEC and 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, AGCO Danmark A/S.