Swiss firm fined over oil-for-food kickbacks


November 21, 2007
Swiss Info
Original Source: http://www.swissinfo.org/eng/top_news/detail/Swiss_firm_fined_over_oil_for_food_kickbacks.html?siteSect=106&sid=8448484&cKey=1195656892000&ty=st
 

Swiss-based oil trader Vitol has been fined $17.5 million (SFr19.3 million) after pleading guilty in New York to paying kickbacks to Saddam Hussein's regime in Iraq.
Authorities in Switzerland are pursuing numerous Swiss companies in relation to corrupt payments under the United Nations (UN) oil-for-food programme.
 
At the beginning of this year, legal proceedings were underway against 33 Swiss firms, but the Swiss Prosecutor's Office did not wish to comment on the status of these cases on Wednesday. The charges include breaches of the Iraq embargo, money laundering and bribery of foreign officials.
 
Vitol, which had revenues of $114 billion in 2006, avoided sanctions against individual executives in the case before New York State's Supreme Court.
 
The oil-trading firm is one of 37 Swiss or Swiss-based companies named in a UN-backed report for allegedly making illicit payments to Iraq in the oil-for-food programme. The company categorically denied the allegations when the report was published.
 
An Independent Inquiry Committee (IIC) was set up by the UN to investigate the oil scheme and it published its fifth and final report in 2005.
 
The IIC said in its final report that the firms named would not necessarily have known about the bribes and surcharges. It also said that corruption would not have been so pervasive had there been better discipline by UN management.
 
Sanctions
 
The $60 billion oil programme was set up by the UN to ease the effect of six years of international sanctions on Iraq following the invasion in Kuwait. It allowed the government of Iraq to sell oil in exchange for food, medical supplies and other humanitarian needs.
 
New York prosecutors alleged that Vitol, through an associated entity or third parties, paid $13 million in kickbacks to Iraqi officials in connection with oil purchases from June 2001 to September 2002, but allowed false representations to be made to the UN that no kickbacks were paid.
 
Vitol's case is one of several before the US courts recently that are the result of a wide-ranging criminal probe into the oil-for-food programme.
 
Another Swiss firm, Lucerne-based Trafigura, pleaded guilty before a Texas court in May 2006 to making kickback payments and agreed to pay a fine of $20 million.
 
Before the IIC was established, Swiss authorities fined a Geneva-based oil trading firm SFr50,000 for making an illegal payment to Iraq.
 
Companies based in Switzerland played a prominent role in the oil trade with Iraq in the embargo years. Swiss-based oil-trading companies bought $3.5 billion worth of oil direct from Iraq.
 
According to IIC figures, roughly half of oil-trading as part of the oil-for-food programme was financed through banks based in Switzerland.
 
A Swiss Federal Banking Commission investigation into the role played by Swiss-based banks in the programme found that the banks did not breach their due diligence obligations when conducting this business.