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St. Jude Receives Oil-Food Subpoena: Austrian Unit Accused of Paying Kickbacks

Posted on: Friday, 17 March 2006, 06:00 CST

By Jim Mccartney, Pioneer Press, St. Paul, Minn.

Mar. 17--St. Jude Medical was subpoenaed last month by federal securities regulators over its involvement in the United Nations' oil-for-food program in Iraq during Saddam Hussein's regime, the company said Thursday in a filing.

The oil-for-food program was designed to funnel money for food and medical supplies to the Iraqi people between 1996 and 2003, when Saddam's government was facing U.S. sanctions. Last October, an Independent Inquiry Committee at the U.N. accused St. Jude of making payments to Saddam's government in connection with product sales.

"The company is in the process of conducting a thorough investigation of the allegations," St. Jude spokeswoman Angela Craig said Thursday.

She said Little Canada-based St. Jude would file an update with the Securities and Exchange Commission once the investigation is complete. The SEC issued the subpoena.

More than 2,200 U.S. and international companies, including Minnetonka-based Cargill Inc., are accused in the U.N. report of helping the Iraqi government cheat the U.N. program out of $1.8 billion.

An Austrian arm of St. Jude is listed in the report as paying $643,000 in kickbacks to secure a business deal with the Iraqi government. As part of the U.N. program, the company had contracts for $9.6 million in heart valves and other medical equipment that it manufactures, according to the report. St. Jude officials said the company's sales in the region were made through an independent Jordanian business.

The U.N. report said Cargill paid $81,295 in the so-called service fees. Cargill operations in the U.S., France and Malaysia had nine contracts worth $48 million to supply Iraq with wheat, sugar and palm oil.

When the allegations became public in October, officials for St. Jude and Cargill said then that they did not find any evidence of kickbacks.

Cargill has not received a subpoena related to the U.N. report, said Lori Johnson, a spokeswoman for Cargill. She said her company has reviewed relevant records and "continues to believe that we did not make any illegal or improper payments associated with those transactions."

St. Jude shares fell 29 cents to close at $44.54 in trading Thursday.

Jim McCartney can be reached at jmccartney@pioneerpress.com or 651-228-5436.

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Copyright (c) 2006, Pioneer Press, St. Paul, Minn.

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NYSE:STJ, Unknown:CRG,

Source: Saint Paul Pioneer Press (St. Paul, Minn.)

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