UPDATE: Agco To Pay $20 Million In Settlement On Kickbacks To Iraq
01 Ottobre 2009 - 1:51AM
Dow Jones News
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.)