A Collaboration with the University of Pittsburgh

Chevron settles SEC charges in oil-for-food scandal

[JURIST] The US Securities and Exchange Commission (SEC) [official website] on Wednesday agreed to a $30 million settlement of Foreign Corrupt Practices Act [materials; DOJ backgrounder] charges against Chevron [corporate website] in connection with the oil company's alleged involvement in a scheme to exchange illegal payments to Iraqi officials under the now-defunct UN Oil-for-Food program [official website; JURIST news archive]. The settlement [press release] requires Chevron to disgorge $25 million in profits, including $20 million by agreement with the US Attorney's Office for the Southern District of New York and $5 million by agreement with the Manhattan District Attorney's Office. Chevron must also pay penalties of $3 million to the SEC and $2 million to the Office of Foreign Asset Controls [official website] of the US Treasury Department. According to the SEC complaint [PDF text], Chevron paid more than $20 million in kickbacks taking the form of surcharges from third-party oil sellers that were exchanged for inflated premiums on future oil purchases during the period from April 2001 to May 2002. The complaint [litigation release] alleges that Chevron knew or should have known that the surcharges were being paid directly to Iraqi bank accounts in Lebanon and Jordan. Chevron instituted a ban on paying surcharges and implemented several management checks on oil purchases, but the SEC claims that the measures were ineffective due to management's reliance on the misrepresentations of the company's purchasers. Chevron has neither denied nor admitted wrongdoing in the settlement agreement.

The UN Oil-for-Food program allowed the Iraqi government of Saddam Hussein [JURIST news archive], under UN sanctions in the wake of the first Gulf War, to sell limited stocks of oil in return for foodstuffs and other humanitarian supplies. Hussein's regime nonetheless bribed foreign officials and commercial interests so it could sell oil on the black market, embezzling over $1 billion in program funds and perhaps as much another $10 billion from other sources. In August, David Chalmers, owner of Bayoil USA Inc and Bayoil Supply and Trading Ltd, pleaded guilty [JURIST report] to charges that he bribed Iraqi officials in connection with the scandal, while Ludmil Dionissiev, a Bulgarian oil trader who helped Chalmers buy Iraqi oil, pleaded guilty to smuggling. AP has more.

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.