NEW YORK -- Aluminum giant Alcoa (IW 1000/193) will pay $384 million to settle charges it paid Bahrain officials huge bribes to secure business in the Gulf nation, the U.S. Justice Department announced Thursday.
Alcoa unit Alcoa World Alumina was accused of paying millions of dollars in bribes via a London middleman in an arrangement made "at the request of certain members of Bahrain's royal family," the Justice Department said.
Operating through a shell company, the London broker marked up the price of alumina sold to a Bahrain government-controlled company by $188 million from 2005 to 2009, the Justice Department said.
The consultant allegedly paid tens of millions in "corrupt kickbacks" to Bahrain government officials and royal family members, using bank accounts held under aliases in Switzerland and other countries.
Alcoa agreed to plead guilty to one count of violating the anti-bribery provisions of the US Foreign Corrupt Practices Act.
Alcoa "admits to 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 Mytheli Raman.
"The law does not permit companies to avoid responsibility for foreign corruption by outsourcing bribery to their agents."
The SEC said Alcoa failed to detect the payments, which were incorrectly recorded as legitimate commissions or sales. The company also did not determine if there was a "legitimate business purpose" for the middleman, the SEC said.
"The extractive industries have historically been exposed to a high risk of corruption, and those risks are as real today as when the FCPA was first enacted," said SEC enforcement chief Kara Brockmeyer.
Alcoa said it had cooperated with the investigation and "welcomes the resolution of this legacy legal matter with the US government."
"There is no allegation in the filings by the DOJ and there is no finding by the SEC that anyone at Alcoa knowingly engaged in the conduct at issue," the company said.
Alcoa in October 2012 reached a settlement in civil litigation with the Aluminium Bahrain BSC (Alba), which had alleged Alcoa entities and agents had engaged in a lengthy fraud against it.
Alcoa agreed to pay $85 million to Alba, but did not admit liability. The two companies also entered into a long-term alumina supply agreement, Alcoa said in a securities filing.
Alba said at the time that the settlement was worth a total of $447 million, including the long-term alumina sales agreement.
As regards Thursday's settlement deal and fines, Alcoa said it will pay the fines in installments over four years, and that it will record a charge of $288 million to accounts in the fourth quarter of 2013. It had already set aside $103 million in the second quarter.
Copyright Agence France-Presse, 2014
