El Paso Corp. Agrees to $7.7 Million Oil-for-Food Settlement

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The nation's largest natural gas pipeline company agreed Wednesday to pay the federal government $7.7 million to settle corruption allegations related to the U.N. oil-for-food scandal over aid to Iraq.

El Paso Corp. will forfeit $5.48 million to the United States, which will seek to transfer the money to the Development Fund of Iraq to be paid as restitution for the benefit of the people of Iraq, according to the agreement announced by federal prosecutors and the FBI.

In a separate deal with the Securities and Exchange Commission, the Houston-based company will pay an additional $2.25 million.

U.S. Attorney Michael Garcia said in a statement that the $5.48 million represents the amount of illegal surcharges paid to Saddam Hussein's government by third parties from whom El Paso purchased Iraqi oil between mid-2000 and March 2003.

In return for the settlements, El Paso will not be prosecuted for any crimes except possibly criminal tax violations as long as it continues to continue cooperating fully with the federal government in its investigation into the scandal-ridden U.N. oil-for-food program, Garcia said.

David B. Anders, a lawyer for El Paso, did not immediately return calls Wednesday.

The United Nations used the oil-for-food program in the 1990s as way to avoid making the Iraqi people suffer while it punished Saddam's regime. Iraq was allowed to sell its crude oil, but the proceeds were to go toward food and other humanitarian aid for Iraqis.

Authorities said Saddam began demanding kickbacks, and investigators suspect his government collected $10.2 billion in payoffs and other illegal oil sales.

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