GE agrees to settle SEC complaint in oil-for-food scandal

GE agrees to settle SEC complaint in oil-for-food scandal

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[JURIST] General Electric Co. (GE) [corporate website] on Tuesday agreed to a $23.5 million settlement [press release] after the US Securities and Exchange Commission (SEC) [official website] filed a complaint [text, PDF] accusing GE of bribing Iraqi officials to receive contracts under the UN Oil-for-Food program [official website; JURIST news archive]. The SEC claimed that, between 2000 and 2003, four of GE’s subsidiaries gave millions of dollars worth of computer equipment, medical supplies and services to the Iraqi Health Ministry in exchange for contract deals. The complaint described the impact of GE’s actions:

The Oil for Food Program was intended to provide humanitarian relief to the Iraqi population, then subject to comprehensive international trade sanctions. The Program allowed the Iraqi government to purchase necessary humanitarian goods, but required that all purchases be made through a UN-controlled escrow account. The kickbacks paid in connection with all four subsidiaries’ Oil for Food contracts had the effect of diverting funds out of the escrow account and…into an Iraqi slush fund.

The SEC complaint argued that GE’s kickbacks were in violation of the Securities Exchange Act of 1934 (SEA) [text, PDF] and called for GE to pay back all illegal profits with interest, as well as civil penalties. GE claimed that most of the disputed contracts occurred before the corporation gained ownership of the subsidiaries and that four of the contracts were improperly recorded. The US government will not take further action against GE [Independent report] after the settlement.

Several companies and individuals have been accused of participating in the Iraq oil-for-food scandal. In April, a Paris judge charged [JURIST report] French oil company Total [corporate website] with bribery and complicity in connection with the scandal. According to the 2005 Volcker report, published by a UN-appointed Independent Inquiry Committee [official website] investigating corruption in the oil-for-food program, oil companies like Total allegedly paid Iraqi officials over $1.5 billion in illegal kickbacks [materials] in exchange for being selected as oil purchasers. Over the last three years, oil company Chevron [corporate website] also paid a large settlement to the SEC concerning misuse of the program, and two Texan oil barons, David Chalmers and Oscar Wyatt Jr. [JURIST reports], were sentenced to prison for their roles in the scandal. The 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.