Firm fined £3m for Saddam kickbacks

A British engineering company has been fined £3 million by a court for paying illegal kickbacks to Saddam Hussein’s regime to secure lucrative contracts.

Weir Group Plc admitted two charges of breaching United Nations sanctions imposed on Iraq before the 2003 invasion.

The money should have been used for humanitarian purposes to ease the suffering of the Iraqi people under the UN’s Oil For Food programme, but went to the dictatorship instead.

The Glasgow-based company had already agreed to hand over its £13.9 million profit from the business deals under a confiscation order.

At the High Court in Edinburgh, Judge Lord Carloway imposed a fine of £3 million on the company. He said a substantial financial penalty was “undoubtedly merited” and that the court had to consider the need to deter future offences.

Following the hearing, the company said what happened was wrong and it now operates a “zero tolerance” approach towards any behaviour in breach of its ethical policies.

Weir admitted making payments of £3.1 million to the regime through an agent to get contracts worth £35 million between September 2001 and April 2004. The middleman was also paid around £1.4 million for his services.

The contracts related to the supply of spare parts for pumps for Iraq’s drinking water and oil infrastructures during the Oil For Food programme, which was introduced by the UN to enable exports of Iraqi oil to take place, provided the cash was used for humanitarian purposes.

The court heard that in 2000 the Iraqi Revolutionary Command Council decreed that everyone supplying goods to Iraq had to pay a kickback to the Iraqi government to secure contracts. The kickbacks were to be 10% of the true value of the contract and were added to its price. The supplier was then to claim the inflated price from UN-controlled funds, keeping the true price of the contract and paying the 10% back to the Iraqi government.

The court heard the payment of the kickbacks by Weir and other companies meant that money allocated by the UN for humanitarian reasons went to Saddam Hussein’s regime instead.