PDF《EXCHANGE COMMISSION,》

36 contractswith third parties. The crudeoil purchased from Iraq was primarily Basrah light, which was well suited to the capabilitiesof Chevron'

s refineries and was usually considerablyless expensivethan other crudeoils availableon the market. 19. During the relevant period, Chevron'

s traders entered into oil transactions with third parties that included the payment of illegal surchargesto Iraq. Chevron knew or should have known that the illegal surchargepayments were passed back to Chevron r as part of the inflated premiums paid to third parties for the purchase of Iraqi oil. At least one trader responsible for a large portion of Chevron'

s purchases from Iraq factored the cost of the surchargepayments into the price negotiationswith third parties. 20. In January 2001, after learning of Iraq'

s surchargedemands, Chevron implemented a company-widepolicy prohibiting the payment of surchargesin connection with the purchase of Iraqi oil fi-omthird parties. Among other things, the policy required traders to obtain prior written approval for all proposed Iraqi oil purchases fi-om Chevron'

s Director of Global Crude Trading, and charged management with reviewing each proposed Iraqi oil deal to ensurethat there was no reason to believe that a surcharge had been or would be paid. 21. As part of the process for reviewing proposed Iraqi oil purchases, Chevron'

s management was to consider, among other things, the identity, experience and reputation of the third party, as well as whether the proposed pricing basis or margin deviated fi-omhistorical practice. If a proposed third party purchase was approved by Chevron, the new policy also required the third party to certify that no illegal payments had been or would be made in connection with its acquisitionof crude oil from Iraq. 22. Chevron'

s trader did not follow the company-widepolicy against surchargepayments to Iraq and Chevron'

s managementwas unsuccessful in ensuringits compliance. Despitebeing required to considerthe identity, experienceand reputation of a third party sellerprior to approvinga proposed Iraqi oil purchase, Chevron'

s m'

anagement relied in Iraqi oil deals on its trader'

s representations. 23. In one such instance, a credit check by Chevronof a proposed third party sellerrevealed that the seller,which was located in Switzerland, was a brass plate company. This meant that the companyhad no experiencein the oil business, no real business operations, and had no known assets. Despite concerns on the part of Chevron'

s management, Chevron entered into two transactions to purchase three million barrels of oil from the third party in January 2002, paying a premium of $0.415 cents per barrel. The decision to do business with a brass plate company was not given sufficientweight under Chevron'

s own internalpolicy on........