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Textron, Inc.

Oil For Food Program Kickbacks - SEC Investigation

Date: 08/23/2007 (Date of Announcement)

Misconduct Type: Ethics

Enforcement Agency: SEC

Contracting Party: International

Court Type: Civil

Amount: $3,535,041

Disposition: Settlement

Synopsis: Textron settled charges that employees of its French subsidiaries paid kickbacks to Saddam Hussein's government during the United Nations' Oil-For-Food program. The employees were alleged to have paid roughly $600,000 in kickbacks by inflating the price of contracts to provide industrial pumps, gears, and other equipment by 10 percent before submitting them for U.N. approval and concealing from the U.N. the fact that the price contained the cost of the illicit payments. In settling the Securities and Exchange Commission civil injunctive action, Textron was ordered to disgorge $2,284,579 in profits plus $450,461.68 in pre-judgment interest, and to pay a civil penalty of $800,000. The Oil-For-Food program, which ran from 1996 to 2003, was established to help Iraqis cope with U.N. sanctions imposed after Hussein's invasion of Kuwait in 1990. Under the program, money from Iraqi oil sales was to have been used for humanitarian goods such as food and medicine. However, there were accusations of widespread corruption and abuse, with hundreds of foreign companies alleged to have colluded with Hussein’s regime to bilk the program of billions of dollars. See related Textron misconduct instance, "Oil For Food Program Kickbacks - Criminal Investigation."