Volvo to pay $7M fine for paying kickbacks

WASHINGTON, March 20 (UPI) -- Volvo will pay $7 million for kickback payments to the Iraqi government under a United Nations humanitarian program, the U.S. Justice Department said Thursday.

AB Volvo acknowledged responsibility for actions of its subsidiaries that paid kickbacks to the Iraqi government in exchange for trucks and construction equipment contracts, the department said in a release.

The agreement requires Volvo to cooperate with investigations into the U.N. Oil for Food program, established to allow Iraq to sell oil for humanitarian purposes when economic sanctions were in effect.

The Justice Department also filed charges against subsidiaries Renault Trucks SAS and Volvo Construction Equipment AB in U.S. District Court for the District of Columbia, charging they separately conspired to commit wire fraud and violate the Foreign Corrupt Practices Act.

The documents allege Renault Trucks paid about $5 million in kickbacks to the Iraqi government for about $94 million worth of contracts. To pay the kickbacks, Renault Trucks inflated contract prices before submitting them for U.N. approval.

In a related matter, AB Volvo settled with the Securities and Exchange Commission, agreeing to pay a $4 million fine and $8.6 million in disgorgement of profits in connection with kickback contracts.