In December 2007, Akzo Nobel N.V. (a Dutch pharmaceutical company with American Depository Receipts traded on a U.S. exchange) agreed to pay approximately $3.7 million in combined fees and penalties to settle enforcement actions relating to improper payments made by two of its subsidiaries to the Iraqi government under the United Nations Oil-for-Food Program (OFFP). The conduct at issue involved approximately $280,000 in improper kickback payments made by two Akzo Nobel subsidiaries via agents in connection with the sale of humanitarian goods to Iraq under the OFFP. The kickbacks were made in the form of "after-sales-service fees" and funded through inflated contracts and inflated commission payments to the agents.
Pursuant to a DOJ non-prosecution agreement, Akzo Nobel acknowledged that its subsidiaries made the improper payments to the Iraqi government and a subsidiary is expected to pay a 381,000 (euro) criminal fine to Dutch authorities (in the event timely resolution with the Dutch authorities is not achieved, Akzo Nobel agreed to pay $800,000 to the U.S. treasury). The SEC also filed settled FCPA books and records and internal control charges against Akzo Nobel based on the same conduct. According to the SEC, the after-sales-service fees were not accurately reflected on the books and records of the subsidiaries and Akzo Nobel failed to devise and maintain an effective system of internal accounting controls sufficient to ensure that the company's OFFP transactions were executed in accordance with management's authorization and to maintain accountability of the company's assets. Without admitting or denying the SEC's allegations, Akzo Nobel agreed to pay approximately $2.9 million in combined fees and penalties (including disgorgement of approximately $1.6 million in profits on the tainted contracts and a $750,000 civil penalty).
In resolving the matter against Akzo Nobel, both the DOJ and SEC noted that the company voluntarily disclosed the payments at issue, conducted a thorough review, promptly implemented remedial actions, and cooperated in the investigation.