Chevron On Iraqi Kickbacks: My Bad

Chevron is gearing up to answer federal prosecutors' $30 million question: Did it know about $1.8 billion in kickbacks the Iraqi government received under a defunct United Nations oil-for-food program?

As part of a settlement being negotiated by U.S. prosecutors, Chevron C.E.O. David O'Reilly, above, is close to acknowledging that his company should have known that middlemen were paying kickbacks to Saddam Hussein, the New York Times reports.

Under the settlement, Chevron would pay a fine of $25 million to $30 million, the Times reports.

An investigation led in 2005 by former Federal Reserve chairman Paul A. Volker revealed that the Iraqi government violated U.N. sanctions under the limited-oil-sales program by skimming money off the top. Revenue from oil sales was meant to pay for food and humanitarian aid for the country, but illegal surcharges ended up lining Saddam's pockets too.

Chevron is on the verge of acknowledging that it was one of several buyers on the other side of the bargaining table when the illegal payments took place. The company won't admit to violating sanctions, but appears to be ready to concede that it "should have been aware" that millions of dollars worth of kickbacks were taking place.

by Liz Gunnison

Photograph of David O'Reilly by Nicholas Kamm/AFP/Getty Images