Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

SEC v. El Paso Corporation

 
:
El Paso Corporation
:
SEC Civil
:
February 7, 2007
:
SEC v. El Paso Corporation
:
SEC v. El Paso Corporation, No. 07-CV-899 (S.D.N.Y. 2007)
:
The SEC appeared content to forgo a fine by practically giving the El Paso Corp. credit for having paid the DOJ fine and collect only disgorgement.
:
Energy (Non-Utility)-Oil & Gas-Petrochemicals
:
Iraq
:
2001; 2002
:
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.
El Paso Corporation ("El Paso") settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint:
In September 2000, Iraq’s State Oil Marketing Organization ("SOMO") and the Coastal Corporation (predecessor to El Paso Corporation) entered into a contract whereby Coastal purchased crude oil from the Iraqi government. SOMO demanded a kickback from Coastal for the contract and $201,877 was wired to an Iraqi-controlled bank account in Jordan in two installments in 2001 and 2002. After 2000, El Paso did not enter into further direct contracts with SOMO. However, El Paso purchased oil from third parties who were known to pay kickbacks to the Iraqi government. Beginning in June 2001, El Paso entered into fifteen additional third-party contracts and paid a total of $420,000,000 for approximately 21.4 million barrels of oil. Between June 2001 and June 2002, kickback payments totaling $5,500,000 were paid to SOMO. The SEC alleged that El Paso was aware of this scheme, failed to maintain a system of internal controls, and failed to maintain adequate records of its Iraqi crude oil contracts. In February 2007, the SEC and El Paso Corporation entered into a consent agreement.
:
Books and records (Issuer), Internal controls (Issuer)
:
Civil penalty, Civil Settlement, Disgorgement, Injunction/Cease and desist
:
Civil penalty of $2,250,000.00. A disgorgement of $5,482,363 ordered by the SEC was satisfied by a forfeiture payment in connection with a non-prosecution agreement with the DOJ.
:
2,250,000
:
0
:
Issuer
:
U.S.
:
Contract Procurement/Retention
:
420,000,000
:
Wire/check
:
Sales Agent/Consultant
:
5,500,000
:
Jordan, Lebanon
:
No