WASHINGTON – Textron Inc. (NYSE: TXT) has agreed to pay a fine of $1.15 million and cooperate fully with the U.S. Department of Justice’s ongoing probe of the United Nations food-for-oil scandal, the Justice Department said today.
The company also agreed to pay about $3.5 million in disgorgement and civil penalties, in a related action filed today by the U.S. Securities and Exchange Commission, the Justice Department said.
In exchange, the Justice Department has agreed not to file criminal charges against the company, according to Assistant Attorney General Alice F. Fischer.
Fisher, of the department’s Criminal Division, said in a statement that Textron “has acknowledged responsibility for the actions of several of its French subsidiaries, whose employees and agents made improper payments to the Iraqi government in order to obtain contracts with Iraqi ministries to provide industrial pumps, gears, and other equipment.”
The agreement states that, between 2000 and 2003, “three of Textron’s David Brown French subsidiaries in its Fluid and Power Business Unit paid a total of approximately $600,000 to the Iraqi government by inflating the price of contracts by 10 percent before submitting the contracts to the United Nations for approval. The subsidiaries concealed from the United Nations the fact that the price contained a kickback to the Iraqi government.”
The agreements recognize “Textron’s early discovery and reporting of the improper payments; [its] thorough review of those payments as well as its discovery and review of improper payments made in other countries, including India, Egypt, and the United Arab Emirates; and the company’s implementation of enhanced compliance policies and procedures,” the Justice Department said.
The department’s Fraud Section and the Federal Bureau of Investigation, with the assistance of the SEC, are investigating Textron and other suppliers of humanitarian goods who were involved with the U.N. Oil for Food Program.
The U.N. program was intended to alleviate suffering associated with international sanctions against Iraq. It gave Iraq limited permission to sell its oil, mandating that all proceeds to directly to a U.N. bank account to be used by the Iraqi government only to purchase humanitarian goods and services.
Beginning in 2000, the Iraqi government began requiring a kickback from companies seeking to win humanitarian goods contracts. The fee, usually 10 percent, was often characterized as an after-sales service fee. But such payments were not permitted under the U.N. rules.
Providence-based Textron Inc. (NYSE: TXT) is a Delaware corporation with about 37,000 employees in 33 countries. Its brands include Bell Helicopter, Cessna Aircraft, Jacobsen, Kautex, Lycoming, E-Z-GO and Greenlee. To learn more, visit www.textron.com.
