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In February, El Paso Corporation became the first major U.S. company to resolve Foreign Corrupt Practices Act allegations over its involvement in the infamous $1.8 billion oil-for-food scandal in Iraq. But it won’t be the last; several more corporations are still mired in government investigations. El Paso was accused of buying oil from Iraq through third parties, who the company knew or should have known were kicking back money to the government of Saddam Hussein. Under joint agreements with the U.S. attorney in Manhattan, the Office of Foreign Assets Control, and the Securities and Exchange Commission, El Paso agreed to pay $2.25 million to the SEC without admitting or denying the allegations. The Houston-based energy company also agreed to pay $5.48 million to the U.S. attorney’s office, which will transfer the money to the Development Fund of Iraq, to be used for the Iraqi people. Robert Baker, El Paso’s executive vice president and general counsel, declined to comment for this story. But El Paso was only a small part of the oil-for-food imbroglio. The United Nations began the program in 1996 to help ease the effect of economic sanctions on Iraqi civilians after Saddam invaded Kuwait. The program, which ran until 2003, allowed Saddam’s government to sell and export oil in return for food, medicine, and other humanitarian goods.However, oil-for-food also allowed Saddam to control the contracts-both for selling oil and for buying humanitarian goods. He manipulated the program by steering contracts to certain oil companies that paid “surcharges,” and by demanding kickbacks.In 2004 the U.N. appointed an independent inquiry committee, chaired by Paul Volcker, former chairman of the U.S. Federal Reserve, to investigate the bribery allegations. The committee’s final report last November found that 139 companies paid the Iraqi regime oil surcharges amounting to $229 million; and 2,253 companies paid kickbacks totaling $1.55 billion for humanitarian contracts. Committee staff members will continue working through 2008 to help law enforcement prosecute cases. So far, U.S. prosecutors have criminally charged 15 individuals-including in January the executive director of the U.N. program, who has denied the charges-and at least one U.S. company, Houston-based BayOil USA Inc. The company, six coindicted executives, and three coindicted foreign companies have all denied the charges. Their trial is to begin in September.Several other major U.S. companies have said publicly that they are under investigation while denying the allegations. They include oil giants Chevron Corporation of San Ramon, California; Exxon Mobil Corporation of Irving, Texas; and Valero Energy Corporation of San Antonio. Susan Ringler, who served as general counsel to the U.N. inquiry committee and is now senior counsel at ITT Corporation in White Plains, New York, says that a number of countries are still in the process of deciding how to proceed with enforcement. “The [U.N. committee] report brought to light corruption by a state on a grand scale” never before seen, Ringler says.

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