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U.S. v. AGCO Ltd.

 
:
AGCO - AGCO Ltd.
:
DOJ Criminal
:
September 30, 2009
:
U.S. v. AGCO Ltd.
:
U.S. v. AGCO Ltd., No. 1:09-cr-249-RJL (D.C.C. 2009)
:
Agricultural/Construction Equipment
:
Iraq
:
2000; 2001; 2002; 2003
:
Former Iraqi 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 10% of the contract value.

Following the creation of the U.N. Oil-for-Food Program in 2000, AGCO Ltd., the U.K. subsidiary of U.S. parent company AGCO Corp. ("AGCO"), hired a Jordanian agent to help increase its business with Iraq. From 2001 to 2002, AGCO Ltd. paid approximately $553,000 to the former Iraqi Ministry of Agriculture through its Jordanian agent to secure three contracts for the sale of agricultural equipment. To pay these kickbacks, AGCO Ltd. inflated the price of its contracts by 13 to 21% before submitting the contracts to the U.N. for approval. From 2001 to 2003, AGCO Ltd. falsely described these kickbacks in its books and records as "Ministry Accruals" it paid to its agent. AGCO's legal department failed to review AGCO Ltd.'s contracts, agency agreements, and payment requests submitted to the U.N. in connection with AGCO's Oil-for-Food contracts.

On September 30, 2009, the Department of Justice filed a criminal information against AGCO Ltd. As seen in other U.N. Oil-for-Food related prosecutions, the DOJ did not allege violation of FCPA bribery provisions, rather only conspiracy to commit wire fraud and to violate the FCPA's books and records provisions. AGCO has acknowledged responsibility for its subsidiaries' actions related to the U.N. Oil-for-Food Program and entered a three-year deferred-prosecution agreement ("DPA") with the DOJ.
Under the DPA, AGCO has agreed to pay a penalty of $1.6 million and cooperate with the DOJ in further related investigations. AGCO has also agreed to implement an anti-corruption law compliance program and review, and modify, if necessary, its internal controls procedures. If AGCO abides by the terms of the DPA, the government will dismiss the criminal information it filed against AGCO Ltd. at the end of the three-year agreement.

AGCO has also settled related civil charges with the SEC and other Oil-for-Food related charges brought by the Danish State Prosecutor for Serious Economic Crimes related to contracts executed by AGCO's Danish subsidiary, AGCO Danmark A/S.
:
Conspiracy - Books & Records
:
Conspiracy - Wire Fraud
:
Subject to Deferred-prosecution Agreement
:
Not stated.
:
0
:
Agent of Issuer
:
Foreign
:
Contract Procurement/Retention
:
Not stated.
:
Wire/check
:
Sales Agent/Consultant, Subsidiary Company
:
Not stated.
:
Iraq
:
France, United Kingdom, United States
:
No
:
Brazil, Denmark, France, United Kingdom