Ousama Naaman, Innospec’s agent who pleaded guilty in June to criminal FCPA and conspiracy charges, is scheduled to be sentenced in federal court in Washington, D.C. on December 19, 2010. He faces up to ten years in prison but hopes to serve his time in a Canadian jail.
Although Naaman is free on bail, the conditions of his release until sentencing are extreme. He’s in a high-intensity supervision program with electronic monitoring. Every day before 9 pm, he has to check in face-to-face with his third-party custodian. If he doesn’t, the custodian is required to contact pretrial services “immediately.”
Naaman, 61, was a fugitive following his indictment in August 2008. He was arrested in Frankfurt, Germany in July 2009 and extradited to the United States. In June this year, he pleaded guilty to a two-count superseding information. Count One charged him under 18 U.S.C. §371 with conspiracy to defraud the U.N. oil-for-food program and to violate both the antibribery and books and records provisions of the FCPA. In Count Two, he was charged under 15 U.S.C. §78dd-l with violating the FCPA and under 18 U.S.C. §2 as an aider and abettor.
After his extradition from Germany to the U.S., Naaman, who has duel Lebanese and Canadian citizenship, cooperated with U.S. enforcement agencies. As part of his plea deal, the DOJ agreed to help him secure a transfer to a Canadian jail to serve out his eventual prison sentence. The federal sentencing guidelines call for 120 months behind bars.
From 1995 to 2008, Naaman was an agent of U.S.-based Innospec in Iraq. In March this year, the specialty chemical-maker reached a $40 million global settlement of more than a dozen criminal charges in the U.S. and U.K., including FCPA and U.N. oil for food program offenses, and violations of the U.S. embargo against Cuba.
As part of his guilty plea, Naaman admitted paying or promising to pay more than $3 million to officials at Iraq’s Ministry of Oil and the Trade Bank of Iraq to win business for Innospec. The company makes and markets the anti-knock compound tetraethyl lead (TEL) used in leaded gasoline. Demand for TEL dropped in most Western countries after enactment of the U.S. Clean Air Act. But Innospec’s management encouraged bribery to boost sales in other markets, mainly in developing countries.
In August this year, Naaman and Innospec’s former business director, David Turner, 55, settled civil SEC charges. Naaman agreed to disgorge $810,076 plus prejudgment interest of $67,030, and pay a civil penalty of $438,038. The civil penalty will be offset by any criminal fine he pays.
Turner agreed to disgorge $40,000 to the SEC. He wasn’t required to pay any civil penalty. The SEC said he provided “extensive and ongoing cooperation in the investigation.”
In the criminal case, Naaman posted $500,000 in cash, along with two property bonds, to secure his release until the December sentencing.
He also deposited $2 million with the clerk of the federal district court. Of that money, $877,106 has been released to the SEC to pay for the disgorgement and interest. The court is holding the rest, which is likely to go toward any eventual criminal fines.
Everyone under high-intensity supervision has a curfew and compulsory group sessions. Naaman entered the program on June 30, starting out with a morning orientation session. Violating the terms of the program can lead to home confinement or jail.
Download a copy of the order for Community Supervision dated June 29, 2010 in U.S. v. Ousama Naaman here.
Download a copy of the June 24, 2010 superseding information in U.S. v. Ousama M. Naaman here.
Download a copy of Naaman’s June 25, 2010 plea agreement with the DOJ here.
View the SEC’s Litigation Release No. 21615 (August 5, 2010) in Securities & Exchange Commission v. David P. Turner and Ousama M. Naaman, Civil Action No. 1:10-CV-01309 (D.D.C.) (RMC) here.
Download the SEC civil complaint against Naaman and Turner here.
View the SEC’s litigation release No. 21454 / March 18, 2010 in Securities & Exchange Commission v. Innospec, Inc., Civil Action No. 1:10-cv-00448 (RMC) (D.D.C.) here.
Download a copy of the SEC’s civil complaint against Innospec here.
Download a copy of the March 17, 2010 criminal information in U.S. v. Innospec, Inc. here.
Download a copy of the government’s sentencing memorandum re Innospec here.
Download a copy of Innospec’s March 18, 2010 plea agreement here.
View the Serious Fraud Office’s March 18, 2010 release here.