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Another Never-Ending Scandal?
It's getting hard to tell which will drag on longer, the war in Iraq or the scandal over the United Nations "oil for food" program in that country.
Federal prosecutors have taken another U.S. company to task for violating the rules of the oil-for-food program—not to mention the federal law forbidding American companies to offer bribes in return for contracts abroad.
Ingersoll-Rand Co., the diversified manufacturer, agreed to pay $6.7 million to settle wire fraud and other charges stemming from its agreement to pay kickbacks to corrupt Iraqi officials from 2000 until several months after the United States invaded three years later.
According to the court documents filed Wednesday by the Justice Department, which pursued criminal wire fraud charges against the company, three Ingersoll-Rand subsidiaries in Europe paid hundreds of thousands of dollars in kickbacks to corrupt Iraqi government officials.
The money came from inflating the price of contracts before submitting them to the United Nations for approval. The contracts concealed the bribes as "after sales service fees," even though no service was delivered and such payments were not permitted under the program.
The Securities and Exchange Commission, which had filed a civil lawsuit against Ingersoll-Rand for violating the Foreign Corrupt Practices Act, said the subsidiaries involved were a German unit that sells roadbuilding equipment, an Italian unit that sells air compressors, and an Irish division that sells refrigeration equipment.
In a statement issued from its headquarters in Hamilton, Bermuda, Ingersoll-Rand said it had "thoroughly cooperated with the investigation," and "took prompt remedial measures." That included firing "certain individuals who were involved with this matter," the company, which has executive offices in Montvale, New Jersey, and Davidson, North Carolina, said without further elaboration.
The kickbacks, the S.E.C. noted in its complaint, diverted funds from the U.N. escrow account that Iraqi officials used to purchase humanitarian supplies. The funds went, instead, to an Iraqi slush fund. Ingersoll-Rand did not admit or deny the allegations in the commission's complaint.
by Elizabeth Olson
