Agco Corp. (AGCO) will pay more than $20 million in fines stemming from an illegal kickback scheme on farm machinery purchased by the Iraqi government.

The sales took place between 2000 and 2003 under a United Nations-managed program that allowed Iraq to avoid international trade sanctions by using its oil proceeds to purchase food, medicine and related humanitarian goods, including farm machinery. The so-called oil-for-food purchases took place before the U.S.-led invasion of Iraq in 2003.

Separate investigations by the U.S. Justice Department, the U.S. Securities and Exchange Commission and Danish government prosecutors alleged that Georgia-based Agco and its subsidiaries paid about $6.4 million in kickbacks to Iraqi officials in exchange for the government's purchase of Agco machinery.

Investigators said some of the payments were embedded in inflated prices for Agco machinery. The U.S. Justice Department said Agco inflated the price of at least three contracts by 13% to 21% before submitting them to the U.N. for approval. Agco funneled the proceeds from the inflated contracts to the Iraqi Ministry of Agriculture, describing them as "after sales service fees."

The SEC said other kickbacks were passed through Agco agents in Jordan, who said the payments were for various business expenses, such as cars, sales commissions or after-sales expenses.

Agco, whose brands include Massey Ferguson, Challenger and Fendt, agreed to deferred prosecution with the Justice Department and will pay a $1.6 million fine. If the company abides by the terms of the deal for three years, the department will dismiss the criminal case against the company.

The company will pay more than $18.3 million to settle charges from the SEC and agreed to pay Danish officials about $630,000 to settle charges in Denmark.

Agco said it had already reserved money for a settlement and got its penalty lowered because of its cooperation with the investigation. It settled the matters without admitting or denying guilt.

The SEC added it has obtained more than $150 million from 12 cases related to the oil-for-food program. Agco is the world's third-largest farm-equipment maker by sales, with 2,800 dealers and distributors in more than 140 countries. Agco earlier this month slashed its 2009 expectations and projected third-quarter results below estimates, citing weaker-than-expected international performance. Agco shares closed up 6 cents at $27.63 on Wednesday. The stock is down 35% in the past year.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

(Kevin Kingsbury in New York contributed to this article.)