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FCPA Blog Daily News

« Fighting On: A Look At Transparency International | Main | From Malaysia, Two Tales Of Corruption »
Wednesday
Apr132011

U.K. Jails Man For Oil For Food Kickbacks

The U.K. Serious Fraud Office said a British man who supplied surgical instruments to the Iraqi government was sentenced today by a London court to 24 weeks in prison.

Mark Rodney Jessop, 53,  admitted breaking United Nations sanctions during the oil for food program by making illegal payments to Saddam Hussein's government. 

The SFO said between 1996 and 2003, Jessop won 54 contracts, the most awarded to any medical goods supplier. The value of the contracts was $12.3 million.

Jessop paid €104,649 in bribes to the Iraqi regime, with a further €235,237 outstanding, unpaid because of military intervention in March 2003, according to the SFO. The bribes went through an intermediary in Jordan, a common scenario for oil-for-food kickbacks.

The U.S. DOJ and SEC have sanctioned about a dozen companies for oil-for-food offenses and collected more than $200 million in fines and other penalties.

The program was intended to provide humanitarian relief for the Iraqi population, which faced hardship under international trade sanctions. It allowed the Iraqi government to purchase humanitarian goods through a U.N. escrow account. The Iraqi government instructed vendors to use middlemen and to inflate prices to fund the kickbacks.

The kickbacks went directly to Iraqi government agencies and not to individuals in the regime. But the FCPA's antibribery provisions only prohibit payments to foreign officials. So the companies -- including GE, Chevron, Total SA, AB Volvo, Innospec, Ingersoll-Rand, Akzo-Nobel, York, Textron, El Paso, Agco, Flowserve, Novo Nordisk, and Fiat -- were usually charged with books-and-records and internal-controls violations.

The only individual prosecuted in the U.S. for oil-for-food violations is Ousaama Namaan, Innospec's former agent in Iraq.

Namaan, 61, a Canadian citizen, was extradited from Germany. He pleaded guilty in June 2010 and is waiting to be sentenced.

In a superseding information that was part of his plea deal, he was charged under 18 U.S.C. §371 with conspiracy to defraud the U.N. oil-for-food program and to violate both the antibribery and books and records provisions of the FCPA. In a separate count, he was charged under 15 U.S.C. §78dd-l (the antibribery provisions) with violating the FCPA and under 18 U.S.C. §2 as an aider and abettor.

In the British case, the SFO said in 2001, Mark Jessop asked the U.K. Foreign and Commonwealth Office for advice on Iraqi government demands that contracts include 10% "after sales service fees" -- code, he said, for payments to the Iraqi regime.

Jessop was told not to proceed with contracts that would put him in breach of U.N. sanctions. "Despite this," the SFO said, "later that month Jessop applied for a licence to supply goods to Iraq in a contract that was inflated to pay the kickback."

View the SFO's April 13, 2011 release here.

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