On Wednesday, the SEC charged Chevron for its alleged part in the oil-for-food kickback scandal. The agency said the San Ramon oil company paid about $20 million to third parties that used the money to bribe officials in Saddam Hussein’s government to get oil contracts.
Magically, the SEC announced on the same day that Chevron had agreed to pay $30 million to settle the charges.
Well, Legal Pad doesn’t know which is worse — paying off Iraqi officials, or paying off American officials. At least the company got some oil out of the Iraqi government. Plus, it was cheaper than paying the U.S. government just for the privilege of being able to say that you neither deny nor admit guilt.
The SEC charged Chevron under the Foreign Corrupt Practices Act — a law that defense lawyers say we should keep tucked in our pockets because we’ll be seeing a lot of it in the near future.
For those who don’t remember, here’s a quick recap on how everyone got around the oil for food program that the UN put in place to “help” Iraq feed its people while it was under sanctions. The idea was that Iraq could sell oil, but the money had to be used to pay for sustenance for the Iraqi people. But Iraqi government officials in charge of doling out oil contracts apparently demanded that anyone who wanted to play had to pay a “surcharge” on each barrel of oil. That money ended up in an out-of-country bank account.
According the SEC complaint, Chevron didn’t directly put money in the hands of Saddam’s henchmen, but it knew, or should have known, that the super-sketchy third parties selling the company oil at a premium were using those premiums for bribery. Chevron paid “surcharges” on about 78 million barrels of crude in 2001 and 2002.
Chevron agreed to disgorge $25 million in profits with an additional $3 million in civil penalties and another $2 million going to Office of Foreign Asset Controls of the U.S. Dept. of Treasury.
The moral of the story: If you want to strike it rich with oil, forget about the private sector — the government is the place to be.
— Zusha Elinson