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SEC v. Paul W. Jennings

 
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Innospec - Jennings, Paul W.
:
SEC Civil
:
January 24, 2011
:
SEC v. Paul W. Jennings
:
SEC v. Paul W. Jennings, No.1:11-cv-00144 (D.D.C. 2011)
:
Although other enforcement actions related to Innospec arose in the context of the UN Oil-for-Food program, the allegations against Jennings post-date the OFF program.
:
Chemicals
:
Indonesia, Iraq
:
2004; 2005; 2006; 2007; 2008
:
Iraqi government officials (Ministry of Oil) and Indonesian government officials and officials of state-owned oil and gas companies in Indonesia (BP Migas and Pertamina).
:
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.

According to the SEC complaint, from 2000 to 2008, Innospec Inc., a manufacturer and distributor of fuel additives and other specialty chemicals, routinely paid bribes to government officials to sell TEL, a fuel additive, to government-owned refineries and oil companies in Iraq and Indonesia. While some of these payments had ties to the Oil for Food program, the SEC's Complaint against Jennings notes that Jennings was not involved in that activity. Rather, Jennings allegedly approved bribe payments beginning in 2004 during his tenure as Chief Financial Officer ("CFO"), and continuing after he became Chief Executive Officer ("CEO") in 2005.

In Iraq, Jennings allegedly approved bribe payments to Iraqi Ministry of Oil officials, through Innospec's agent, Ousama M. Naaman. Through these payments, Innospec allegedly obtained additional TEL orders and favorable exchange rates, and facilitated TEL shipments. The SEC also alleges that Jennings was aware that payments were made to fund lavish trips for Iraqi government officials and that Innospec improperly booked various bribe payments as legitimate commission payments.

In Indonesia, Jennings allegedly approved bribe payments, described on the books by such terms as "the Indonesian Way," "the Lead Defense Fund," and "TEL Optimization," to Indonesian officials through Innospec's Indonesian agent, to generate more TEL sales.

The SEC also alleges that Jennings falsified documents as part of the bribery scheme, made false statements to accountants, and signed false personal certifications required by the Sarbanes-Oxley Act of 2002 that were attached to annual and quarterly Innospec public filings.

Jennings allegedly obtained $116,092 in bonuses from the TEL sales procured through bribery.
:
Aiding and abetting anti-bribery, Aiding and abetting books and records, Aiding and abetting internal controls, Anti-bribery (Issuer), Internal Controls (Individual)
:
Civil penalty, Civil Settlement, Disgorgement, Injunction/Cease and desist, Prejudgment Interest
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$116,092 (disgorgement), $12,945 (prejudgement interest) and $100,000 (civil penalty).
:
229,037
:
0
:
Officer of Issuer
:
CEO, CFO
:
U.S.
:
United States
:
Contract Procurement/Retention, Other Business Advantage
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17,337,754
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Cash, Travel
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Sales Agent/Consultant
:
2,244,781
:
Indonesia, Iraq
:
Singapore
:
No
:
No