WASHINGTON - Farm equipment maker Agco Corp has agreed to pay $20 million to settle charges it made inappropriate payments to the former Iraqi government under the United Nation's Oil-for-Food Program, U.S. officials said on Wednesday.
The Georgia-based company agreed to pay $18.3 million to settle with the U.S. Securities and Exchange Commission, without admitting or denying the allegations.
Agco also agreed to pay an additional $1.6 million penalty as part of a deferred prosecution agreement with the Department of Justice. It also settled with Danish authorities and agreed to pay more than $600,000.
Agco paid kickbacks to win business illegally, and attempted to hide them by creating a fictional account on their books, said Cheryl Scarboro, associate director in the SEC's enforcement division.
The SEC said the Oil-for-Food Program required the Iraqi government to purchase humanitarian goods through a U.N. escrow account. It said Agco's kickbacks diverted funds out of the escrow account and into Iraqi-controlled accounts at banks in Jordan.
Agco paid a total of $5.9 million in kickbacks, worth about 10 percent of the value of its contract, the SEC said.
The kickbacks were described as after sales service fees even though no legitimate services were performed, the SEC said.
Agco said in a statement that it has fully reserved the amount of the settlements in prior periods.
Agco shares closed down 1 cent at $27.58 on the New York Stock Exchange.
So far this year, they are up about 17 percent, roughly in line with the Standard & Poor's 500 index .SPX. (Reporting by Karey Wutkowski, additional reporting by Scott Malone in Boston; Editing by Tim Dobbyn, Bernard Orr)