Chemical company executive gets prison term in oil-for-food fraud

A former agent for Innospec Inc. was sentenced to 30 months in prison and ordered to pay a $250,000 fine for his participation in a conspiracy to defraud the United Nations Oil for Food Program (OFFP) and for bribing former Iraqi government officials in connection with the sale of a chemical additive used in the refining of leaded fuel.

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations' (HSI) Counter-Proliferation Investigations Unit and the Foreign Corrupt Practices Act (FCPA) squad at the Federal Bureau of Investigation's Washington Field Office investigated Ousama Naaman for defrauding the program. The Department of Justice's Criminal Division's Office of International Affairs and the U.S. Securities and Exchange Commission's (SEC) FCPA Unit also provided investigative assistance, said ICE.

Naaman, 61, of Abu Dhabi, United Arab Emirates, was originally indicted in August of 2008, in U.S. federal court in Washington D.C. Additional charges were filed in June, 2010, said ICE and Naaman was arrested in 2009, in Frankfurt, Germany, and extradited to the United States.  He pleaded guilty June, 2010, to one count of conspiracy to commit wire fraud, conspiracy to violate the FCPA and conspiracy to falsify the books and records of a U.S. issuer. He also pleaded guilty to one count of violating the FCPA.

According to ICE, Naaman and his companies were the Iraqi agents of Innospec Inc., a U.S. chemical company. Innospec pleaded guilty in March, 2010 to a 12 counts of wire fraud in for kickbacks to the Iraqi government under the OFFP. The company also pleaded guilty to FCPA violations in connection with bribe payments made to officials in the Iraqi Ministry of Oil. 

Between 2001 and 2003, acting for Innospec, ICE said Naaman paid 10 percent kickbacks to the then-Iraqi government in exchange for five contracts under the OFFP.  He negotiated the contracts, including a 10 percent increase in the price to cover the kickbacks, and routed the funds to Iraqi government accounts in the Middle East, said the agency.  He also admitted paying and promising to pay more than $6.8 million in bribes from 2004 to 2008 to officials in the Iraqi Ministry of Oil and the Trade Bank of Iraq to secure sales of tetraethyl lead in Iraq and more favorable exchange rates on the contracts, said ICE. Naaman earned $2.7 million in commissions on the contracts and would have earned an additional $5.3 million had the final contract not been halted as a result of the investigation.

In addition to bribes offered and paid to Iraqi officials, Naaman convinced Innospec to pay him $750,000 for additional bribes that Naaman never paid. Instead, he kept the money for himself, said ICE.  

Naaman settled separate civil charges in the summer of 2010, with the Securities and Exchange Commission for the same acts.  Naaman gave up $877,096 in profits and prejudgment interest in connection with the settlement, said ICE.  The SEC civil penalty of $438,038 will be satisfied in part by his criminal fine, it said.