Under The Table

Even back in 2000, the Iraqi regime was tagged with the mark of Cain, labeled as aggressors and thugs and whatever other derogatory term might fit. The U.N. was in agreement, slapping on rules and regulations that were meant to pressurize Saddam Hussein to rein in his murderous tendencies.

Yes, but the U.N. would not wish to inflict pain and suffering on the Iraqi people, so the oil for food program was born. Contracts for goods and services had to be vetted through the U.N., which perused the invoices and approved payments. Shocking to learn that the oil for food program was as corrupt as the government they were seeking to regulate.

Ingersoll-Rand would never trade with America's enemy. Neither would they engage in such under the table transactions as bribes to secure business with the old Iraqi regime. Surely the American firm was shocked, shocked as could be, shocked beyond all measure, to discover that their left hand didn't know what the right hand was doing. Shocking.

Thermo-King Europe is an Irish subsidiary of Ingersoll-Rand. Thermo-King Europe paid bribes of $963,000 between 2000 and 2003 so that they could sell parts for refrigerated trucks to Iraq. Technically, Ingersoll-Rand wasn't doing the bribing, it was their Irish branch slipping wads of cash under the table and then hiding the pay-outs as "after-sales service" fees. Thanks for paying the bill, U.N., and what sort of service was performed, you ask? Don't ask, don't tell, right?

The Securities and Exchange Commission dug up the dirt on Ingersoll-Rand's Irish arm and laid out its case before the Justice Department. Those after-sales service fees were bribes, no services were performed after sales, and Ingersoll-Rand was engaging in corrupt business practices. Let them say they didn't know what those dumb micks were about, offering the cash in clear violation of the law. The head must know what both the left and right hands are doing because it's guiding the whole body, and Ingersoll-Rand showed no evidence of severe brain damage.

One hopes that the business proved highly lucrative for Ingersoll-Rand, because they have been levied some substantial fines for breaking the law. The bill comes to $6.7 million in settlements, $2.5 million in fines to the Justice Department as a plea deal, and another $4.2 million for civil claims.

Stockholders might want to pay closer attention to the annual reports from here on in. And when it's time to vote for the board members? If they don't know what's happening in their foreign subsidiaries, are they competent enough to run the whole company?