Aluminum giant Alcoa Inc. will pay $384 million to settle charges by the U.S. Department of Justice and U.S. Securities and Exchange Commission that the company violated the Foreign Corrupt Practices Act.
The government charged Alcoa subsidiary Alcoa World Alumina LLC with paying more than $110 million in bribes through an international middleman in London to officials of the Kingdom of Bahrain.
Represented by Dechert partners Jonathan Streeter and Robert Jossen and Cravath, Swaine & Moore partner Evan Chesler, Alcoa agreed to plead guilty in the Western District of Pennsylvania to one count of violating the anti-bribery provisions of the FCPA.
The New York-based company, which had sales in 2012 of $23.7 billion, will pay a criminal fine of $209 million plus $161 million in disgorgement of ill-gotten gains and will administratively forfeit $14 million. The government faulted Alcoa for lacking internal controls to prevent and detect bribes.
“Alcoa World Alumina today admits its involvement in a corrupt international underworld in which a middleman, secretly held offshore bank accounts, and shell companies were used to funnel bribes to government officials in order to secure business,” said Acting Assistant Attorney General Mythili Raman in a written statement. “The law does not permit companies to avoid responsibility for foreign corruption by outsourcing bribery to their agents.”
Alcoa said in a statement that “there is no allegation in the filings by the DOJ and there is no finding by the SEC that anyone at Alcoa Inc. knowingly engaged in the conduct at issue. … Alcoa welcomes the resolution of this legacy legal matter with the U.S. government.”
Prosecutors credited Alcoa with “extensive cooperation with the department, including conducting an extensive internal investigation, making proffers to the government, voluntarily making current and former employees available for interviews and providing relevant documents to the department.”
Streeter, a former assistant U.S. attorney in New York who served as lead trial counsel for the government in the Galleon case United States v. Rajaratnam, did not immediately respond to a request for comment.
According to the government, Alcoa hired a consultant to act as a middleman in connection with sales of alumina to Aluminium Bahrain BSC, or Alba, one of the largest aluminum smelters in the world. The consultant—described by an Alcoa manager as “well versed in the normal ways of Middle East business”—assisted in negotiations for long-term alumina supply agreements by bribing Bahraini officials and Alba executives.
“It is critical that companies assess their supply chains and determine that their business relationships have legitimate purposes,” said George Canellos, co-director of the SEC Enforcement Division, in a statement. “As the beneficiary of a long-running bribery scheme perpetrated by a closely controlled subsidiary, Alcoa is liable and must be held responsible.”
Jenna Greene is a reporter for The National Law Journal, a Legal affiliate based in New York. •