GE Settles With SEC for|$23.4M in Oil-For-Food Case

(CN) - General Electric Co. will pay $23.4 million to settle charges filed against it Tuesday by the SEC for its alleged involvement in a $3.6 million kickback scheme with Iraqi government agencies to win contracts to supply medical equipment and water purification equipment.

"[W]e believe that it is in the best interests of GE and its shareholders to resolve this matter now, without admitting or denying the allegations, and put the matter behind us," GE said in a statement, adding that it has received confirmation from the Department of Justice that the case is closed and no further actions are pending.

The SEC on Tuesday accused General Electric of violating the Foreign Corrupt Practices Act for making kickback payments in the form of cash, computer equipment, medical supplies and other services to the Iraqi Health Ministry or the Iraqi Oil Ministry to get the contracts under the United Nations' Oil for Food Program.

According to the complaint in U.S. District Court for the District of Columbia, the kickbacks occurred from approximately 2000 to 2003. GE subsidiaries Marquette-Hellige and OEC-Medical Systems (Europa) AG made $2.04 million in kickback payments to the Iraqi government under the Oil for Food Program.

Ionics Italba S.r.L., then a subsidiary of Ionics, and Nycomed Imaging AS, which was a part of Amersham, earned $1.55 million in cash kickback payments.

Amersham and Ionics are now known as GE Healthcare Ltd. and GE Ionics, Inc., after being acquired by GE.

Germany-based Marquette paid or agreed to pay illegal kickbacks in the form of computer equipment, medical supplies, and services on three contracts worth $8.8 million, the SEC said.

Marquette paid a third-party goods and services worth approximately $1.2 million to the Iraqi Health Ministry to win two contracts, the SEC claimed.

Switzerland-based OEC-Medical made a kickback payment of $870,000 on one contract worth $2.1 million through the same third-party agent, the SEC said.

OEC-Medical and the agent then entered into a bogus "services provider agreement" to create phony services to justify his commission and hide the scheme from U.N. inspectors, the SEC said.

Norway-based Nycomed entered into nine contracts with Iraqi ministries involving the payment of approximately $750,000 in cash kickbacks between 2000 and 2002, according to the complaint.

Nycomed earned approximately $5 million in wrongful profits on the contracts as a result of the kickbacks, the SEC claimed.

GE acquired Nycomed's parent company - Amersham - in 2004. GE acquired Italy-based Ionics Italba in 2005.

Between 2000 and 2002, Ionics Italba paid $795,000 in kickbacks and earned $2.3 million in wrongful profits on five contracts to sell water treatment equipment to the Iraqi Oil Ministry, the SEC said. GE acquired its parent company, Ionics Inc., in 2005.

GE and its subsidiaries consented to the agreement without admitting or denying the SEC's allegations.

"Bribes and kickbacks are bad business, period," said the SEC's director of the Division of Enforcement. "This case affirms that law enforcement is active across the globe - offshore does not mean off-limits."

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