General Electric Co. (NYSE: GE) has agreed to pay a $23.4 million fine to settle a complaint from the Securities and Exchange Commission (SEC) which alleged that G.E. bribed Iraqi government officials to win contracts to supply medical and water-purification equipment under the U.N. oil-for-food program.
The SEC says that two subsidiaries of GE and two companies which the conglomerate later acquired paid more than $3.6 million in kickbacks to the Iraqi Health Ministry and Iraqi Oil Ministry for valuable contracts. The SEC said that the bribes, which came in the form of cash, computer equipment and medical supplies, were illegal under the Foreign Corrupt Practices Act
“Bribes and kickbacks are bad business, period,” said SEC Enforcement Director Robert Khuzami in a statement. “This case affirms that law enforcement is active across the globe — offshore does not mean off-limits.”
Originally, the oil-for-food program was designed to allow food, medical aid and other essential items to enter into Iraq despite economic sanctions during Saddam Hussein’s rule. According to the complaint, the bribes were made in 2002 and 2003. The SEC said that G.E. subsidiaries Marquette-Hellige and OEC-Medical Systems allegedly paid $2.04 million in kickbacks to the former Iraqi government. Ionics Italba and Nycomed Imaging, which were later acquired by G.E., paid $1.55 million in kickbacks, the SEC said.
Cheryl J. Scarboro, head of the unit, said Tuesday, “G.E. failed to maintain adequate internal controls to detect and prevent these illicit payments by its two subsidiaries to win oil-for-food contracts, and it failed to properly record the true nature of the payments in its accounting records.”
