IRELAND: Irish subsidiary implicated in Saddam fraud

Publisher Name: 
The Irish Times

The Irish subsidiary of US industrial group Ingersoll-Rand paid a
$53,919 (EUR 37,235) "kickback" to Saddam Hussein's regime
in Iraq in an effort to secure a UN contract, US regulators have

The subsidiary in question - Thermo-King Europe, which makes transport
temperature-control equipment - was among four of Ingersoll-Rand's
international divisions that paid bribes totalling $963,000 to win
business from the Iraqi government during the UN oil-for-food
programme between 2000 and 2003.

Ingersoll-Rand has agreed to pay fines of $6.7 million to settle
claims on foot of a court action by the US Securities & Exchange
Commission (SEC). The group will pay a $2.5 million fine to the US
justice department to avoid criminal prosecution and $4.2 million to
settle civil claims.

Ingersoll-Rand knew or was reckless in not knowing that illicit
payments were either offered or paid, the SEC claimed.

The SEC complaint, filed by the US district court for the District of
Columbia, said Thermo-King Europe authorised an "after-sales
service fee" payment on an Iraqi contract seven years ago. No
bona-fide services were performed in relation to such fees.

"On October 19th, 2000, the regional director for Thermo-King
Europe and Thermo-King Europe's Iraq dealer arrived in Baghdad to
finalise a contract for the sale of spare parts for refrigerated
trucks to the Iraqi government-owned General Automobile &
Machinery Trading Company (GAMCO)," the SEC said.

"At that meeting, the regional director signed a side agreement
to make an after-sales service fee payment of $53,919. The after-sales
service fee payment obligation was not reflected in the contract
documents submitted to the UN. The contract, however, failed to
receive UN approval for reasons unrelated to the after-sales service
fee payment."

In a statement, Ingersoll-Rand said it had consented to the entry of a
civil injunction in the SEC action and has entered into a three-year
deferred prosecution agreement with the department of justice.
"Under both settlements, the company will implement improvements
to its compliance programme. The company takes this matter - and all
compliance matters - very seriously," it said.

The case relates to a
2005 UN investigation which implicated more than 2,200 companies in
illegal payments totalling $1.8 billion during the oil-for-food
initiative. "The programme was intended to provide humanitarian
relief to the Iraqi population, which faced severe hardship under
international trade sanctions," the SEC said. "It allowed
the Iraqi government to purchase humanitarian goods through a UN
escrow account. The kickbacks paid by Ingersoll-Rand's subsidiaries
and third parties diverted funds out of the escrow account and into an
Iraqi slush fund. The contracts submitted to the UN did not disclose
that the illicit payments were included in the inflated contract

AMP Section Name:War & Disaster Profiteering
  • 21 Reconstruction