By: Reid Whitten
On December 22, 2011, Ousama Naaman, a former agent for Innospec Inc., was sentenced to serve 30 months in prison and pay a fine of $250,000 following his guilty plea to charges of violating the FCPA and conspiracy to violate the FCPA, among others. Naaman, a Canadian citizen, was arrested in Germany in July 2009 and extradited to the United States to face prosecution.
Naaman worked for Innospec as an agent in Iraq, where he secured sales to the Government of Iraq under the United Nations Oil for Food Program (OFP). According to the U.S. Department of Justice (DOJ), between 2001 and 2003, Naaman negotiated sales contracts with Iraq that included prices inflated by 10 percent. That extra amount was promised to officials in the Iraqi Ministry of Oil, then paid as a kickback to those officials for awarding contracts to Innospec. Additionally, between 2004 and 2008, Naaman paid or promised to pay more than $6.8 million in bribes – cash, travel, and entertainment – to officials from the Ministry of Oil and the Trade Bank of Iraq, both to obtain sales for Innospec and to gain more favorable exchange rates for those sales. Apparently not one to miss an opportunity, Naaman even held back $750,000 that was intended to pay bribes for Innospec, and kept it for himself.
In March 2011, Innospec agreed to a global settlement to settle charges against the company in the United States and the U.K. Naaman’s prosecution and sentencing, however, may not be the final chapter in the story. In November 2011, the U.K. Serious Fraud Office brought individual corruption and proceeds-of-crimes charges against two former Innospec CEOs. Proceedings in the trials of these two individuals, who are both U.K. citizens, are to begin in January 2012.
The duration of Naaman’s 30-month sentence is hefty, but not groundbreaking among FCPA cases. As we reported, in October 2011, the president of Terra Telecommunications Corporation was sentenced by a federal judge in the Southern District of Florida to 15 years on FCPA-related charges. What is notable is that Naaman was merely an agent – albeit apparently a well-paid agent – of Innospec. While executives and other company managers have been prosecuted for FCPA violations, it has to date been rare for the U.S. government to pursue (and succeed in) enforcement action against agents. The prosecution of Naaman, including his extradition to the United States for prosecution, illustrates the seriousness with which the U.S. Department of Justice is pursuing all individuals responsible for FCPA violations.