SEC fines energy firm for Iraq kickbacks

A Houston-based gas provider was hit with a $2.25 million fine for paying illegal surcharges to Iraq in connection with its purchase of crude oil from third parties under the United Nations Oil for Food Program.
El Paso Corp., NYSE-listed Texas energy company, purchased about 21.4 million barrels of Iraqi crude oil from third parties participating in the program, the SEC said.
The Securities and Exchange Commission alleged that 25 to 30 cents for each barrel purchased by El Paso was illegally kicked back to Iraq in the form of secret oil surcharges.
In addition to the penalty, El Paso will pay $5.5 million in disgorgement of profits according to a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of New York.
The company settled with the Securities and Exchange Commission without admitting or denying the charges.
The Oil for Food Program was created as a humanitarian effort to provide relief for the Iraqi population facing hardship under international trade sanctions.
Beginning in August 2000, officials with Iraq’s State Oil Marketing Organization started demanding illegal kickbacks through surcharges on barrels sold through the program.