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United States v. CNH Italia S.p.A.

 
:
Fiat - CNH Italia
:
DOJ Criminal
:
December 22, 2008
:
United States v. CNH Italia S.p.A.
:
U.S. v. CNH Italia (Case No. 1:08-cr-00378-RJL, D.D.C. 2008)
:
Agricultural/Construction Equipment
:
Iraq
:
2000; 2001; 2002
:
Ministry of Agriculture of the Republic of Iraq
:
In April 1995, the U.N. adopted Security Council Resolution 986, which permitted the government of Iraq to sell 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"). 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 approximately 10% of the contract value, though in this case sometimes as high as 15%.

CNH Italia S.p.A. ("CNH Italia"), formerly known as New Holland, is a wholly-owned subsidiary of CNH Global N.V. ("CNH Global"), an international manufacturer of agricultural and construction equipment. CNH Global is approximately 90% owned by Fiat. From December 2000 through June 2002, CNH Italia, directly and through an unnamed Jordanian company acting as agent and distributor, obtained four contracts worth approximately €12 million to supply agricultural equipment to the Ministry of Agriculture of the Republic of Iraq. To obtain these contracts, CNH Italia, through the unnamed agent and distributor, paid approximately $1 million in kickbacks to the Government of Iraq.

CNH Italia improperly characterized payments to the agent and distributor, some of which were paid as kickbacks to the Iraqi government, as "service fees." At the end of the fiscal year 2002, CNH Italia's books and records, including those containing false characterizations of the kickbacks paid to the Iraqi government, were incorporated into the books and records of Fiat for purposes of preparing Fiat's year-end financial statements.

As in the majority of Oil for Food cases, the government did not allege any improper payments to any individual foreign officials.
:
Conspiracy - Books & Records
:
Wire Fraud
:
Subject to Deferred-prosecution Agreement
:
Monetary payment of $7,000,000 to be paid by Fiat S.p.A. on behalf of Italia S.p.A., CNH Italia S.p.A., and CNH France S.A.
:
Not stated.
:
0
:
Issuer
:
Foreign
:
Contract Procurement/Retention
:
15,400,000
:
Wire/check
:
Sales Agent/Consultant
:
1,000,000
:
No