Fiat, the Italian carmaker, has agreed to pay $17.8 million (£11.9 million) to settle claims it gave kickbacks to Saddam Hussein’s regime in Iraq under the United Nations' oil-for-food scheme.

According to a complaint filed with by America's Securities and Exchange Commission (SEC), three of Fiat's subsidiaries paid more than $4.3 million to Iraq between 2000 and 2003, disguised as “after sales service fees”.

Fiat acknowledged that three of its subsidiaries, Iveco, CNH Italia and CNH France, made “improper payments” to the Iraqi government to obtain contracts to provide Iraqi Ministries with industrial pumps, gears and other equipment.

The payment meant that money was diverted to Iraqi-controlled accounts rather than to a United Nations third-party account set up for the purchase of humanitarian goods.

A Fiat spokesman said: “The settlements close a regrettable incident which happened in the long-ago history of the Fiat Group.

“The Fiat Group has since put in place rigorous internal controls and compliance programmes to which the group and its subsidiaries strictly adhere.”

According to an SEC court filing, Fiat's gains from contracts in which "after sales service fees" and other illiciti payments amounted to $5.3 million.

Criminal complaints were filed on Monday against the three Fiat subsidiaries in a US district court.

They were each charged with one count of conspiracy to commit wire fraud and to violate the books and records provisions of the Foreign Corrupt Practices Act (FCPA).

The UN Security Council set up the oil-for-food programme in 1996 to enable Iraq to secure humanitarian goods while it was under international sanctions.

The Volcker Report into abuses of the found an alleged $1.8bn of illicit income from more than 2,000 companies. Daimler Chrysler and Volvo were also accused.

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