SEC v. David P. Turner and Ousama M. Naaman, No. 1:10-cv-01309-RMC (D.D.C. 2010).
Turner, David P.; Innospec, Inc.; Jennings, Paul W.
Officials of Iraq Ministry of Oil; unspecified Iraqi officials
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.
Acording to the SEC, Ousama Naaman -- an agent for Innospec Inc. (“Innospec”), a manufacturer of fuel additives and other specialty chemicals -- promised or paid kickback payments of over $3.7 million to Iraqi government officials in exchange for contracts with the Ministry of Oil to purchase a gasoline additive from Innospec.
Between 2001 and 2003, Naaman negotiated five agreements under the U.N. Oil-for-Food Program, including a 10 percent increase in the price of each to cover the kickback. Officials at Innospec devised a scheme to pay inflated commissions to Naaman that Namaam would use to funnel kickbacks to Iraq. Naaman allegedly made improper payments of approximately $1,853,754 and offered additional kickbacks of $1,985,897 to the Iraqi government. Innospec earned revenues of approximately $45,804,915 and profits of $23,125,820 under these agreements.
From 2004 to 2008, Naaman, on behalf of Innospec, allegedly paid $1,369,269 in bribes to Iraqi officials under a long-term purchase agreement that Innospec entered into with the Iraqi Ministry of Oil worth $99,340,489. Naaman also paid an official in the Trade Bank of Iraq in exchange for a favorable exchange rate on letters of credit for purchases under the agreement.
In 2008, Naaman and the Ministry of Oil entered into a second long-term purchase agreement under which Innospec would have paid $850,000 in bribes to Iraqi ministry officials. In addition, Turner allegedly directed Naaman to pay $155,000 in bribes to Ministry of Oil officials to ensure Innospec’s competitors’ product would fail field trial tests.
All of these payments were improperly booked as legitimate commissions to Naaman based on Naaman's falsified invoices. From 2002 to 2008, Naaman, also allegedly arranged or paid approximately $120,538 in travel, gifts, and entertainment expenses for Iraqi senior officials.
Aiding and abetting anti-bribery, Aiding and abetting books and records, Aiding and abetting internal controls, Books and records (Individual), Internal Controls (Individual)