STOCKHOLM, Sweden (AP) -- AB Volvo will pay back the profits that two of its subsidiaries made under the oil-for-food program in Iraq - plus a fine of $19.6 million - to avoid prosecution, the Swedish truck maker said Thursday.
The company said it has entered agreements with the U.S. Securities and Exchange Commission and the U.S. Department of Justice, resolving issues related to the oil-for-food program.
The oil-for-food program, which ran from 1996 to 2003, was aimed at easing Iraqi suffering under U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait. By 2000, however, Hussein's regime began insisting that kickbacks be paid to secure oil contracts.
If Volvo adheres to the conditions of the pacts, all accusations against Volvo's two subsidiaries in Iraq will be expunged in three years.
The company did not describe the conditions but said the agreements "provide for improved internal compliance programs that Volvo and its subsidiaries will implement."
Volvo said the agreements would have a negative effect on operating income in the first quarter of about $10 million.
An investigation into the oil-for-food program led by former U.S. Federal Reserve chairman Paul Volcker concluded in October 2005 that 2,200 companies from about 40 countries had colluded with Hussein's regime to bilk the program of $1.8 billion.
The report said Volvo's Brussels-based unit for construction equipment paid $317,000 in extra fees to Iraq on a $6.4 million contract.
Volvo spokesman Marten Wikforss previously told The Associated Press that company officials dealing with Iraq had been under the impression that "some kind of extra fee" was required and commonly accepted to do business there.
"The incident is, of course, regrettable, but we do note with some satisfaction that the authorities spoke favorably of the cooperation by Volvo, as well as Volvo's own investigation and measures," Volvo CEO Leif Johansson said Thursday.
"It is important that we all now learn from what occurred," he added.