On August 5, 2010, Oussama Naaman, a former Innospec, Inc. agent, and David Turner, a former Business Director at Innospec, filed a settled enforcement action with the Securities and Exchange Commission (SEC). Naaman and Turner were charged with violating the Foreign Corrupt Practices Act (FCPA) for paying bribes to numerous government officials to obtain and retain business. Naaman and Turner consented to the entry of final judgments that permanently enjoin them from violating Exchange Act Sections 30A and 13(b)(5) and Rule 13b2-1, and from aiding and abetting Innospec's violations of Exchange Act Sections 30A, 13(b)(2)(A) and 13(b)(2)(B), and as to Turner, from violating Rule 13b2-2. In addition, Turner agreed to disgorge $40,000 to the SEC. Naaman agreed to disgorge $810,076, plus prejudgment interest of $67,030, and to pay a civil penalty of $438,038.
According to the SEC's complaint, Naaman and Turner engaged in widespread bribery of Iraqi government officials under the U.N. oil-for-food program to sell leaded gasoline additive Tetra Ethyl Lean (TEL), and continued the bribery after the oil-for-food program ended. The SEC alleged these payments totaled over $6.3 million. Among the various bribes, Turner directed Naaman to pay a bribe to Iraqi officials to ensure the failure of a field trial test of a competitor's product. Payments were also made to fund lavish trips for Iraqi officials, including the honeymoon of one official.
The SEC also alleged that Turner violated the FCPA by paying bribes to Indonesian officials to sell TEL to state-owned oil companies. In that case, the SEC alleged that Turner and other Innospec officials authorized payments of more than $2.8 million in bribes to be funneled through a local agent. Bribes included cash payments as well as the purchase of a Mercedes for one official.
Naaman also pleaded guilty to criminal charges in June of this year.
The SEC noted the assistance of the DOJ's Fraud Section, the Federal Bureau of Investigation, and the United Kingdom Serious Fraud Office.
For more information on this case and the Innospec case generally, see our previous posts here