Three years ago, Ireland-based heavy equipment maker Ingersoll-Rand resolved fraud and FCPA charges with the DOJ and SEC, caused by illegal payments under the U.N. oil for food program.
The company paid $6.7 million in penalties, interest, and disgorgement, and entered into a three-year deferred prosecution agreement with the DOJ that would have expired this Halloween.
Instead, Ingersoll-Rand said yesterday it disclosed new compliance problems to the DOJ and SEC.
According to an earlier release for the prior quarter, the problem may involve China. No other details were given. But the company said the SEC is now interested enough in the potential new violations to ask for more documents.
In the 2007 enforcement action, Irish and Italian subsidiaries and their agents arranged and paid kickbacks to the Iraqi government to sell road construction equipment, air compressors and parts, and refrigerated trucks. Between 2000 and 2003, the payments amounted to about $600,000.
The size of the potentially illegal payments in China hasn’t been disclosed.
Download Ingersoll-Rand’s October 31, 2007 deferred prosection agreement with the DOJ here.
The full FCPA disclosure from the company’s latest quarterly report for the period ending October 31, 2010 reads:
As previously reported, on November 10, 2004, the Securities and Exchange Commission (SEC) issued an Order directing that a number of public companies, including the Company, provide information relating to their participation in transactions under the United Nations’ Oil for Food Program. Upon receipt of the Order, we undertook a thorough review of our participation in the Oil for Food Program, provided the SEC with information responsive to the Order and provided additional information requested by the SEC. During a March 27, 2007 meeting with the SEC, at which a representative of the Department of Justice (DOJ) was also present, we began discussions concerning the resolution of this matter with both the SEC and DOJ. On October 31, 2007, we announced we had reached settlements with the SEC and DOJ relating to this
matter. Under the terms of the settlements, we paid a total of $6.7 million in penalties, interest and disgorgement of profits. We have consented to the entry of a civil injunction in the SEC action and have entered into a three-year deferred prosecution agreement (DPA) with the DOJ. The DPA expired on October 31, 2010. However, the DOJ could take the position that it may nonetheless proceed against us on matters covered by the DPA were it to conclude in the future that we breached our obligations under the DPA. The initiation of further enforcement actions concerning the matters covered by the DPA therefore remains a possibility. Under both settlements, we have implemented and will continue to implement improvements to our compliance program that are consistent with our longstanding policy against improper payments. In the settlement documents, the Government noted that we thoroughly cooperated with the investigation, that we had conducted our own complete investigation of the conduct at issue, promptly and thoroughly reported our findings to them, and took prompt remedial measures.
Additionally, we have reported to the DOJ and SEC certain matters which raise potential issues under the FCPA and other applicable anticorruption laws, including matters which were reported during the past quarter. We have conducted, and continue to conduct, investigations and have had preliminary discussions with respect to these matters with the SEC and DOJ, which are ongoing. The SEC has indicated that it will seek additional information and documents regarding these matters. These matters (and others which may arise or of which we become aware in the future) may be deemed to violate the FCPA and other applicable anti-corruption laws. Such determinations could subject us to, among other things, civil and criminal penalties (if, for example, the DOJ deems us to have violated the DPA), material fines, equitable remedies (including profit disgorgement and injunctions on future conduct), securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects, financial position, or the market value of our stock.