Fiat settles SEC case for over $10 million (Reuters)

Monday, December 22nd, 2008 | Finance News

WASHINGTON (Reuters) –
Italian automobile and truck maker Fiat SpA (FIA.MI) agreed to pay more than $10 million to settle allegations of kickbacks linked to the sale of goods to Iraq under the U.N. oil-for-food program, the U.S. Securities and Exchange Commission said on Monday.

Fiat and CNH Global NV (CNH.N), a majority-owned subsidiary of Fiat, made about $4.3 million in improper payments to Iraqi officials from 2000 through 2003 for the sale of vehicles, equipment and parts, the SEC said.

The payments were characterized as "after sales service fees" but no bona fide services were performed, the agency said.

As part of the settlement, Fiat and CNH did not admit or deny any wrongdoing.

"The settlements close a regrettable incident which happened in the long-ago history of the Fiat Group," a Fiat spokeswoman in Milan said. "The Fiat Group has since put in place rigorous internal controls and compliance programs to which the Group and its subsidiaries strictly adhere."

The SEC accused Fiat and CNH of failing to maintain adequate internal and accounting controls to detect and prevent illegal payments.

Under the settlement, Fiat will return $5.3 million in profits plus $1.9 million in prejudgment interest, and will pay a civil penalty of $3.6 million. The company will also pay a $7 million penalty as part of an agreement with the U.S. Justice Department, the SEC said.

The United Nations' oil-for-food program began delivering humanitarian goods in 1997 to Iraqis who faced severe hardship under international trade sanctions then in place. The program, which ended in late 2003, required the Iraqi government to buy the goods through a U.N. escrow account.

The SEC alleged that kickbacks paid by Fiat and CNH diverted money from the U.N. escrow account and into Iraqi-controlled accounts at banks in countries such as Jordan.

Details about the SEC settlement were posted on the agency's web site at: http:/www.sec.gov/litigation/litreleases/2008/lr20835.htm .

The civil case is SEC v. Fiat S.p.A. and CNH Global N.V., No. 08-02211, U.S. District Court, District of Columbia (Washington).

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