WASHINGTON – A former agent for Innospec Inc., a U.S. company, 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. The sentence resulted from an investigation by 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. 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.
Ousama Naaman, 61, of Abu Dhabi, United Arab Emirates, was indicted on Aug. 7, 2008, in U.S. District Court for the District of Columbia. Superseding charges were filed on June 24, 2010. Naaman was arrested on July 30, 2009, in Frankfurt, Germany, and extradited to the United States. He pleaded guilty on June 25, 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.
Naaman and his companies were the Iraqi agents of Innospec Inc. On March 18, 2010, Innospec pleaded guilty to a 12-count indictment charging wire fraud in connection with its payment of 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.
From 2001 to 2003, acting on behalf of Innospec, Naaman offered and paid 10 percent kickbacks to the then-Iraqi government in exchange for five contracts under the OFFP. Naaman 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.
In addition, Naaman admitted to 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. He did so to secure sales of tetraethyl lead in Iraq and more favorable exchange rates on the contracts. Naaman provided Innospec with false invoices to support the payments, and those invoices were incorporated into the books and records of Innospec. 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.
Naaman settled separate civil charges on Aug. 5, 2010, with the SEC for the same misconduct. Naaman disgorged $877,096 in profits and prejudgment interest in connection with the settlement. The SEC civil penalty of $438,038 will be satisfied in part by his criminal fine.
The case was prosecuted by Trial Attorney Kathleen M. Hamann and Assistant Chief Nathaniel B. Edmonds of the Department of Justice's Criminal Division's Fraud Section.