Pennsylvania-based York International Corp bribes Iraqi officials

For illegally obtaining contracts from ousted leader Saddam Hussein's regime, Pennsylvania-based York International Corp. bribed Iraqi officials.

Photo: Pennsylvania-based York International Corp bribes Iraqi officials

According to paperwork filed Monday in federal court in Washington, the company has reached a settlement with the Justice Department under which the government agreed to defer prosecution of the company for three years.

The company acknowledged that employees of its subsidiaries, York Air Conditioning and Refrigeration and York Air Conditioning and Refrigeration FZE, paid $647,000 in kickbacks to Iraqi officials to get contracts to provide air conditioning and other services. It also paid kickbacks and bribes in connection with other government contract work in five other countries, the paperwork said.

York was purchased in 2005 by Milwaukee, Wisconsin-based Johnson Controls. Glen Ponczak, a spokesman for Johnson Controls, said the company had worked since then to resolve the situation by undertaking such efforts as firing some employees and is pleased to have reached an agreement with the government.

The U.N.'s oil-for-food program was one of the world's largest humanitarian aid operations. From 1996 to 2003, it allowed Iraq to sell oil provided most of the money went to buy food and humanitarian goods. It was launched to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam's 1990 invasion of Kuwait.

But Saddam, who could choose the buyers of Iraqi oil and the sellers of humanitarian goods, corrupted the program by awarding contracts to - and getting kickbacks from - favored buyers, mostly parties who supported his regime or opposed the sanctions.

York also reached a settlement with the Securities and Exchange Commission under which it agreed to pay $2 million in civil penalties and about $10 million in disgorgement of profits.