Risk Management

York Settles Bribery Case with Iraq Connection

The company will pay $22 million over an alleged global pay-for-business scheme.
Stephen TaubOctober 1, 2007

York International has agreed to pay $22 million to settle a number of civil and criminal bribery charges, including allegations related to the United Nations’ Oil for Food Program for citizens of Iraq.

In its deal with the Securities and Exchange Commission, the heating, ventilation, air conditioning, and refrigeration provider also agreed to retain an Independent Compliance Monitor.

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 $2 million. The company also agreed to pay a $10 million fine under a deferred prosecution agreement with the U.S. Department of Justice.

The SEC’s complaint alleges that York’s Delaware subsidiary, York Air Conditioning and Refrigeration, paid about $522,500 to an intermediary while knowing that most of the money was intended to bribe United Arab Emirates officials in order to secure business.

The complaint also said York International’s Dubai subsidiary authorized and made about $647,110 in kickback payments under the U.N. Oil for Food Program. Additionally, according to the SEC, York subsidiaries devised elaborate schemes to conceal kickback payments of more than $7.5 million to secure orders on commercial and government projects in the Middle East, India, China, Nigeria, and Europe.

York, which was acquired by Johnson Controls in 2005, also allegedly failed to devise and maintain an effective system of internal controls to prevent or detect numerous violations.

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