SEC Settles Enforcement Action with Former Innospec Officer

27 January 2011 Publication

On January 24, 2011, the Securities and Exchange Commission (SEC) filed a settled enforcement action charging Paul W. Jennings, a former officer at Innospec, Inc., with violating the Foreign Corrupt Practices Act (FCPA) by approving bribes to government officials to obtain and retain business. The SEC's complaint alleged that Innospec engaged in widespread bribery of foreign officials, some of which was approved by Jennings during his tenure as Chief Financial Officer ("CFO"), beginning in mid- to late 2004, and after he became Chief Executive Officer ("CEO") in 2005. 

From 2000 to 2008, Innospec, a manufacturer and distributor of fuel additives and other specialty chemicals, routinely paid bribes to government officials in order to sell TEL, a fuel additive, to government-owned refineries and oil companies in Iraq and Indonesia. Innospec's known bribery activities in Iraq began with its participation in the United Nations Oil-for-Food Program in 2001, and extended until at least 2008. Innospec also paid bribes to government officials in Indonesia beginning as early as 2000, and continued until 2005, when Indonesia's need for TEL ended. Beginning in mid to late 2004, Jennings, who held various senior roles at Innospec, actively participated in the bribery schemes in Iraq and Indonesia. In all, between 2000 and 2008, Innospec made illicit payments of approximately $6.3 million and promised an additional $2.8 million in illicit payments to Iraqi ministries and government officials as well as to Indonesian government officials in exchange for contracts worth approximately $176 million.

Without admitting or denying the SEC's allegations, Jennings consented to the entry of a final judgment permanently enjoining him from violating Sections 30A and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 13a-14, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting Innospec's violations of Exchange Act Sections 30A, 13(b)(2)(A) and13(b)(2)(B). Jennings agreed to disgorge $116,092 plus prejudgment interest of $12,945, and pay a civil penalty of $100,000 that takes into consideration Jennings' cooperation in this matter.

The SEC noted the assistance of the U.S. Department of Justice, the Federal Bureau of Investigation, and the United Kingdom Serious Fraud Office in the matter.

See also related enforcement actions on this site: