Alcoa (AA) subsidiary to plead guilty, pay $384M penalty for Bahrain bribery

Canadian Press, The Canadian Press
0 Comments| January 9, 2014


PITTSBURGH _ An Alcoa Inc.  (NYSE: AAStock Forum) subsidiary has agreed to plead guilty and the company will pay $384 million for paying bribes to the kingdom of Bahrain through a London-based middleman, the U.S. Department of Justice and the aluminum company announced Thursday.

Alcoa World Alumina LLC will plead guilty before a federal judge in Pittsburgh on Thursday to violating the anti-bribery provisions of the Foreign Corrupt Practices Act. Alcoa, the parent firm, is not being charged in the case and continues to co-operate with the investigation, it said in a statement.

The criminal charges are related to a lawsuit filed by Aluminum Bahrain BSC, a government-controlled aluminum manufacturer also known as Alba.

Alba's lawsuit claimed that Alcoa affiliates controlled by London billionaire Victor Dahdaleh paid $9.5 million in bribes to Bahrain officials and Alba executives, resulting in Alba overpaying $420 million for raw materials from 1997 to 2009.

Dahdaleh's attorney, David Kendall, told The Associated Press that last month Dahdaleh ``was found not guilty on all counts in London of allegations regarding payments in Bahrain.''

The U.S. Department of Justice hasn't charged Dahdaleh criminally, though federal prosecutors and Alcoa both said that the company are co-operating with the federal investigation of individuals and institutions involved in these matters.

Alcoa will pay $223 million to resolve the criminal charges, including a $209 million fine that it will pay in five installments over four years. The company is also paying a one-time administrative forfeiture of $14 million.

It also settled civil allegations filed by the Securities and Exchange Commission for $175 million. Alcoa will also pay that amount in five installments over four years, minus the $14 million DOJ forfeiture, which is being credited toward that legal debt, the company said.

``There is no allegation in the filing by the DOJ and there is no finding by the SEC that anyone at Alcoa Inc. knowingly engaged in the conduct at issue,'' Alcoa said in a statement.

U.S. Attorney David Hickton of Pittsburgh said in a statement the prosecution ``shows that multinational corporations cannot get away with using middlemen to structure sham business arrangements that funnel kickbacks to government officials.''

Alba's ongoing lawsuit contends Dahdaleh earned at least $13.5 million in illegal commissions for alumina deals he brokered. A dual citizen of Canada and Britain, Dahdaleh has denied wrongdoing since he was arrested in October by Britain's Serious Fraud Office on bribery charges related to some Australian alumina shipments between 2001 and 2005.

While the SEC didn't find Alcoa participated in the bribery, the company ``did not conduct due diligence or otherwise seek to determine whether there was a legitimate business purpose for the use of a middleman.''

The SEC determined there were more than $110 million in corrupt payments made to Bahraini officials who influenced contract negotiations between Alcoa and Alba's government operated aluminum plant.

``Alcoa lacked sufficient internal controls to prevent and detect the bribes, which were improperly recorded in Alcoa's books and records as legitimate commissions or sales to a distributor,'' the SEC found.

Tags: ALUMINUM

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