Friday, February 22, 2008

Flowserve announces $10 million settlement with SEC, DOJ for kickbacks to Iraq

By Pegasus News wire

DALLAS — Flowserve Corporation announced today that it has reached final resolution with the U.S. Securities and Exchange Commission and the Department of Justice with regard to their investigations of the participation of a French and a Dutch subsidiary of the company in sales to Iraq under the U.N. "Oil-for-Food" program during 2001-2003.

Photo not provided by Flowserve, UN

The policy was far more successful than the UN's "Oil And Food" program

As part of the settlement with the Department of Justice, Flowserve has acknowledged responsibility for the actions of its subsidiary, Flowserve Pompes SAS, whose employees and agents paid kickbacks to the Iraqi government in order to obtain favorable contracts for the sale of large-scale water pumps in Iraqi oil refineries. The investigation charges that Flowserve Pompes engaged in a conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act.

The company confirmed that, under the terms of the applicable settlement agreements, Flowserve will pay a fine, profit disgorgement and related prejudgment interest to the SEC totaling $6,574,225 and a penalty to the DOJ of $4,000,000.

Flowserve noted that these amounts were in line with the announced accruals for this purpose already disclosed in connection with its issued third quarter 2007 financial statements.

"There is no higher priority at Flowserve than legal compliance, and we fully cooperated with the SEC and DOJ in their investigations of this matter,” said Lewis M. Kling, President and CEO of Flowserve. “We are pleased to now be able to put this matter behind us because it will allow us to focus even more intently on the very attractive business opportunities currently available to Flowserve around the globe."

The Oil for Food Program was established by the United Nations to allow Iraq to sell its oil for humanitarian purposes while still under US-led UN sanctions. The program mandated that the proceeds of oil sales be deposited in a U.N. bank account and that those proceeds be used by the Iraqi government only to purchase humanitarian goods and services approved by the United Nations, such as food and medicine.

Flowserve Corp. is one of the world’s leading providers of fluid motion and control products and services. Operating in more than 55 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services.

Source: Flowserve

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