Fiat pays $10.6m in Iraq settlement

Fiat, Italy’s car and truck maker, on Monday admitted to “regrettable incidents" in its trade with the former Iraqi regime under the United Nations’ oil-for-food program and agreed to pay $10.6m to settle accusations of kickbacks investigated by the US Securities and Exchange Commission.

The SEC said in a statement that Fiat and CNH Global, a subsidiary, paid more than $4.3m to Iraqi officials in the Saddam Hussein regime from 2000 to 2003 for the sale of “humanitarian goods", including vehicles, equipment and parts. The kickbacks were disguised as “after sales service fees".

As part of the settlement, Fiat and CNH did not admit or deny any wrongdoing. Germany’s Siemens last week agreed to pay fines to settle bribery allegations, in part involving Iraq.

“The settlements close a regrettable incident which happened in the long-ago history of the Fiat Group," a Fiat spokeswoman in Milan told Reuters news agency.

The SEC alleged that money was diverted from the UN escrow account and “into Iraqi-controlled accounts at banks in countries such as Jordan". A Dubai-based firm, which was not named, acted as a front company for Iraq.

Fiat’s Iveco truck subsidiary arranged the kickbacks from its Egypt office, the SEC said. Agents’ fees of 15 per cent to 25 per cent of the total UN contract price were funneled back to Iraq as kickbacks, the SEC said. A line item on Iveco documents was identified as “pay-back", it added.

Case France, a subsidiary of Fiat’s CNH Global, also engaged in kickbacks after armed Iraqi officials entered its Baghdad offices demanding payments, the SEC said. A second CNH Global subsidiary, New Holland, also paid kickbacks on the sale of tractors, it said.

As well as paying two penalties totaling $10.6m, Fiat was ordered to return $5.3m in profits and $1.9m in prejudgment interest. In making the settlement, the SEC said it took into consideration “remedial acts promptly undertaken" by Fiat and CNH Global.

Fiat’s kickbacks were paltry compared to the billions that were funneled illegally to the Iraqi regime under the oil-for-food scheme which was riddled with corruption, involving officials of various governments. Much of Iraq’s oil was sold to the US, which was one of several countries in charge of supervising sanctions against Iraq before the invasion in 2003. FT.com