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Chevron to Pay $30 Million to Settle Kickback Charges

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THE NEW YORK TIMES: Chevron to Pay $30 Million to Settle Kickback Charges


Published: November 15, 2007

WASHINGTON, Nov. 14 (AP) — Chevron has agreed to pay $30 million to settle charges that it had made illegal kickbacks to Iraq for oil purchased in 2001 and 2002 under the United Nations’ oil-for-food program.

The Securities and Exchange Commission said Wednesday that Chevron had agreed to the settlement under the Foreign Corrupt Practices Act without admitting or denying the charges. But the United States attorney for the Southern District of New York said Chevron could still be prosecuted for criminal tax violations.

Chevron, based in San Ramon, Calif., agreed to remit $25 million in profits and pay a $3 million civil penalty. The company will also pay $2 million to the Office of Foreign Asset Controls of the Treasury Department.

Of the $25 million, Chevron will forfeit $20 million under an agreement with the United States attorney’s office in New York and pay $5 million under an agreement with the district attorney’s office in Manhattan.

The S.E.C. said in its complaint that Chevron found out in 2001 that the Iraqi State Oil Marketing Organization was demanding surcharges and that the company adopted a policy prohibiting payment.

The company then purchased, through intermediaries, about 78 million barrels of crude oil from Iraq under 36 contracts from April 2001 to May 2002. But these traders failed to follow the company’s prohibition against kickbacks, and Chevron’s management did not ensure compliance, the S.E.C. said.

A company spokesman, Donald Campbell, said in a statement: “The U.S. government advises us that one former Chevron crude oil trader participated in transactions when he knew or should have known that surcharges were to be paid by the third-party merchants from which Chevron purchased the crude oil.

“There are no allegations that Chevron paid surcharges, and the trader is no longer affiliated with Chevron.”

The oil-for-food program, which ran from 1996 to 2003, was created to help Iraqis meet some basic needs under the United Nations sanctions imposed after Saddam Hussein’s 1990 invasion of Kuwait. The program let the Iraqi government sell oil primarily to buy humanitarian goods. It was later found that the program was often used as a means to funnel kickbacks.

Four other companies have agreed to settle S.E.C. corruption charges stemming from suspected kickbacks to the Hussein regime: the El Paso Corporation, Textron, Ingersoll-Rand and York International, which was purchased in 2005 by the auto supplier Johnson Controls. Chevron’s financial penalty is by far the largest of the five. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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