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United States v. Fiat S.p.A.

 
:
Fiat - Fiat S.p.A.
:
DOJ Criminal
:
December 22, 2008
:
United States v. Fiat S.p.A.
:
United States v. Fiat S.p.A. et al.
:
In this Oil-for-Food case, the DOJ charged three subsidiaries of Fiat and entered into a DPA with Fiat itself, which had delisted from the NYSE since the events at issue, alleging among other things, violations of the FCPA's books and records provision based on Fiat's former status as an issuer.
:
Automotive
:
Iraq
:
2000; 2001; 2002
:
Iraqi government, including Ministry of Irrigation, Commission of Electricity, Ministry of Housing and Construction, Ministry of Oil, and Ministry of Agriculture
:
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%. Iveco S.p.A. ("Iveco"), a wholly-owned subsidiary of Fiat S.p.A. ("Fiat"), is an international manufacturer and supplier of commercial trucks, parts, and diesel engines. Between October 2000 and June 2001, Iveco, through an unnamed Lebanese company acting as agent and distributor and an unnamed United Arab Emirates company acting as a conduit for payments to the Iraqi government, was awarded sixteen contracts worth approximately €31.9 million to supply Iveco trucks and parts to the Ministry of Irrigation, Commission of Electricity, Ministry of Housing and Construction, and Ministry of Oil of the Republic of Iraq. To obtain these contracts, Iveco, through the agent and distributor and the conduit, paid approximately $3.17 million in kickbacks to the Government of Iraq.

CNH France S.A. ("CNH France"), formerly known as Case France, 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 June 2001 through July 2001, CNH France obtained three contracts worth approximately €2.2 million with the Government of Iraq to supply construction vehicles and spare parts. To obtain these contracts, CNH France, through an unnamed Lebanese company acting as distributor, paid approximately $188,000 in kickbacks to the Ministry of Oil of the Government of Iraq.

CNH Italia S.p.A. ("CNH Italia"), formerly known New Holland, is a wholly-owned subsidiary of CNH Global N.V. 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.

Iveco and CNH Italia improperly characterized payments to the third-party agent and distributor, part of which were paid as kickbacks to the Iraqi government, as service and commission payments. Their 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.

Fiat entered into a three-year deferred-prosecution agreement, accepting responsibility for the actions of its subsidiaries and agreeing to pay a fine on behalf of itself and those subsidiaries. While the deferred-prosecution agreement did not require the appointment of a compliance monitor, Fiat agreed to review its compliance program and make any necessary improvements.
:
Conspiracy - Books & Records
:
Conspiracy - Wire Fraud
:
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.
:
7,000,000
:
0
:
Issuer
:
Foreign
:
Contract Procurement/Retention
:
48,000,000
:
Wire/check
:
Sales Agent/Consultant, Subsidiary Company
:
4,400,000
:
No