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SEC v. AB Volvo

 
:
AB Volvo - AB Volvo
:
SEC Civil
:
March 20, 2008
:
SEC v. AB Volvo
:
SEC v. AB Volvo, No. 1:08-cv-00473 (D.D.C. 2008)
:
Although AB Volvo had delisted from American exchanges, the SEC brought this action based on activities that took place while AB Volvo was still an "issuer."
:
Automotive
:
Iraq
:
1999; 2000; 2001; 2002; 2003
:
Government of Iraq, including State Oil Marketing Organization; Ministry of Housing and Construction; Ministry of Interior
:
In April 1995, the U.N. adopted Security Council Resolution 986 which permitted Iraq to sell its oil and to use proceeds from those sales to purchase humanitarian supplies such as food for the Iraqi people ("U.N. Oil-for-Food Program" or "OFF"). In an extensive scheme, the Iraqi government received illicit payments in the form of surcharges from oil purchasers and kickbacks, often termed "after sales service fees," from humanitarian goods suppliers. The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.

From approximately 1999 through 2003, AB Volvo allegedly violated the books and records and internal controls provisions of the FCPA when two of its subsidiaries allegedly provided the Iraqi government with approximately $6,206,331 in kickback payments and allegedly authorized additional payments of $2,388,419 in connection with the OFF program. One of AB Volvo subsidiaries, Renault V.I., now Renault Trucks SAS, was contracted to provide vehicles to various Iraqi ministries. In performing these contracts, Renault hired a Swiss bodybuilder company to tailor the vehicles to the buyer's specifications. Renault allegedly provided the bodybuilder company with additional payments to be passed onto the Iraqi government to procure additional contracts for Renault.

Another AB Volvo subsidiary, Volvo Construction Equipment International ("VCEI"), now Volvo Construction Equipment AB, also contracted to sell vehicles to various Iraqi ministries. VCEI sold these vehicles through a Jordanian agent and a Tunisian distributor. Large kickbacks allegedly were included in the contract prices to procure the contract. VCEI also allegedly provided its Jordanian agent with $19,000 to purchase a car for the Iraqi Ministry of Interior.

As in the majority of Oil for Food cases, the government did not allege any improper payments to any individual foreign officials.

On March 20, 2008, the SEC and the parent company, AB Volvo, entered into a consent agreement.

In March 2009, three unnamed executives at Volvo Construction Equipment were criminally charged by Swedish prosecutors for their involvment in the bribery scandal. They could face jail sentences if convicted.
:
Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Civil Settlement, Disgorgement, Injunction/Cease and desist, Prejudgment Interest
:
Disgorgement of $7,299,208.00 plus pre-judgment interest of $1,303,441.00 plus civil penalty of $4,000,000.00.
:
12,602,649
:
0
:
Issuer
:
Foreign
:
Contract Procurement/Retention
:
7,299,208
:
Gifts, Wire/check
:
Sales Agent/Consultant, Subcontractor, Subsidiary Company
:
8,594,750
:
Jordan
:
Jordan
:
No
:
Sweden