March 30, 2009

Volume 87, Number 13

p. 9

Innospec CEO Resigns

Tainted by UN oil-for-food program scandal

Marc S. Reisch

THE TAINT OF SCANDAL has led to the resignation of a CEO for the second time in four years at fuel additives and specialty chemicals firm Innospec. Paul W. Jennings suddenly resigned from the post on March 20.

In a statement from Innospec, Jennings says an ongoing investigation by U.S. and British authorities into the firm's involvement in the United Nations' Oil for Food Program (OFFP) between 2001 and 2003 "has made it increasingly difficult for me to move the business forward as I would like."

OFFP allowed Iraq to sell oil for food and other humanitarian supplies after the 1990 Gulf War. But the program quickly devolved into a graft-generating nightmare in which government officials and others around the globe have been implicated. It's not clear how Innospec, the world's only manufacturer of the gasoline additive tetraethyllead, is involved.

Jennings joined the firm as chief financial officer in 2002 and became CEO in 2005 after then-CEO Dennis J. Kerrison resigned for violating company ethics policies. Chairman Robert E. Bew has taken over while Innospec searches for Jennings' replacement.

According to filings with the Securities & Exchange Commission, Innospec accrued about $20 million in legal and other expenses during the past two years while responding to government OFFP investigations. "We expect that we will be required to disgorge profits and pay fines and penalties" for involvement in OFFP, according to the firm.

Although Innospec may pay a fine, stock analyst Jonathan Lichter of equity research firm Sidoti & Co. says, "The government won't kill the golden goose." In 2008, Innospec earned $45 million on sales of $641 million.

Chemical & Engineering News

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