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U.S. v. Volvo Construction Equipment, AB

 
:
AB Volvo - Volvo Construction Equipment, AB
:
DOJ Criminal
:
March 20, 2008
:
U.S. v. Volvo Construction Equipment, AB
:
U.S. v. Volvo Construction Equipment, AB, No. 08-069, (D.D.C. 2008)
:
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.
:
Automotive
:
Iraq
:
2000; 2001; 2002; 2003
:
Iraqi government, including Iraqi Ministry of Housing & Construction; Iraqi Ministry of Transport & Communication General Establishment of Civil Aviation; and Iraqi Ministry of Irrigation.
:
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. The kickback payments were masked by inflating the contract price, usually by 10% of the contract value.

Volvo Construction Equipment (formerly Volvo Construction Equipment International, AB or "VCEI") is an international seller of heavy commercial construction equipment. Between December 2000 and January 2003, VCEI paid approximately $1.3 million in kickbacks to the Iraqi government. To do so, VCEI hired two companies, Company X and Company Y, to act as distributors and funnel kickbacks to the Iraqi government. VCEI, Company X, and Company Y included the cost of these kickbacks in various contract prices submitted to the U.N. for approval. As a result, the Iraqi government awarded VCEI and its distributors contracts worth approximately $13.8 million to supply construction vehicles to the Iraqi government. To conceal these kickbacks, VCEI labeled them as "commission" payments in its books and records. VCEI's books and records were incorporated into AB Volvo's books and records.

As in the majority of Oil-for-Food cases, the government did not allege any improper payments to any individual foreign officials.

In March 2008, AB Volvo and the DOJ agreed to a deferred-prosecution agreement. Pursuant to the agreement, AB Volvo agreed to pay a fine totaling $7 million for FCPA books and records and wire fraud violations committed by VCEI and another subsidiary, Renault Trucks SAS.

In March 2009, three unnamed executives at Volvo Construction Equipment were criminally charged by Swedish prosecutors for their involvment in the bribery scandal. They could face jail sentences if convicted.

In June 2011, the court granted the DOJ's motion to dismiss since AB Volvo had complied with the terms outlined in the DPA.
:
Conspiracy - Books & Records
:
Conspiracy - Wire Fraud
:
Subject to Deferred-prosecution Agreement
:
Not stated.
:
0
:
Foreign
:
Contract Procurement/Retention
:
13,800,000
:
Wire/check
:
Sales Agent/Consultant
:
1,300,000
:
Iraq
:
Iraq
:
No
:
Sweden