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York pays $22m to settle 'Oil for Food' bribery charges

YORK International has agreed to pay $22m to settle a number of civil and criminal bribery charges relating to its involvement in the United Nations’ Oil for Food Programme in Iraq.
Without admitting or denying the allegations, York agreed to disgorge
$8,949,132 in profits, plus $1,083,748 in pre-judgment interest, and to pay a civil penalty of $2m.

The company also agreed to pay a $10m fine under a deferred prosecution agreement with the US Department of Justice.

Between November 2000 and March 2003, York International is said to have paid about $647,000 in kickbacks to the Iraqi government on behalf of its subsidiary, York Air Conditioning and Refrigeration FZE.

During the Oil-for-Food programme, Iraq levied illicit contract commissions and bribes from its suppliers, including York International, ranging from $1.5bn to about $3.5bn. Under the programme, the UN allowed Iraq to sell oil on the condition that the proceeds were used to buy humanitarian goods.

Dubai-based York FZE started to participate in the United Nations'
Oil-for-Food programme in March 1999. By the middle of 2000, the Iraqi government had begun demanding kickbacks from its suppliers, according to the US Securities and Exchange Commission (SEC). Before that, York FZE had secured three Oil-for-Food contracts without the demand for kickbacks.

When York FZE won a $1m contract for air conditioning compressors in
September 2000, the Iraqi Ministry of Trade requested that York FZE increase its bid by 10%, as a 'performance bond'.

York FZE was advised by a Jordan-based consulting firm that failure to pay the kickback could jeopardise future contracts under the Oil-for-Food programme.
In total, York FZE paid kickbacks on five contracts under the Oil-for-Food programme.

Additionally, according to the SEC, York subsidiaries devised elaborate schemes to conceal kickback payments of more than $7.5m to secure orders on commercial and government projects in the Middle East, India, China, Nigeria, and Europe.

York became part of Johnson Controls in 2005.

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