Alcoa Inc. ("Alcoa") is a global provider of primary or fabricated aluminum, and also smelter grade alumina, the raw material that is supplied to plants called smelters that produce aluminum. Alcoa refines alumina from bauxite that it extracts in its global mining operations. From 1989 to 2009, one of of the largest customers of Alcoa's global bauxite and alumina refining business was Aluminium Bahrain B.S.C. (“Alba”), an aluminum manufacturer owned primarily by the Kingdom of Bahrain. During the period of misconduct, Alcoa issued and maintained a class of publicly traded securities registered with the SEC, which were traded on the New York Stock Exchange.
Alcoa World Alumina and Chemicals ("AWAC") was an unincorporated global bauxite mining and alumina refining enterprise formed in 1995 between Alcoa and Alumina Limited ("Alumina"), the majority and minority owners of AWAC, respectively. AWAC conducted its operations by and through the coordinated activity of several affiliated enterprise companies, with each enterprise company being owned by Alcoa and Alumina in proportion to their respective ownership interests in the AWAC enterprise.
Alcoa World Alumina LLC ("AWA") was an AWAC enterprise company, which maintained its principal place of business in Pittsburgh, Pennsylvania. The company owned and operated (either directly or indirectly) bauxite mining and alumina refining assets in North America, Europe, South America, Africa and the Caribbean. Beginning in or around 2000, executives at AWA's offices in Pittsburgh and Knoxville, Tennessee, assumed primary responsibility for all of AWAC's relationships with global alumina customers, including Aluminium Bahrain B.S.C. ("Alba"), a state-owned and state-controlled aluminium smelter in Bahrain. Alcoa World Alumina personnel responsible for these functions reported indirectly to Alcoa personnel in New York.
Alcoa of Australia Limited ("AofA") was the AWAC enterprise company that owned and operated AWAC's bauxite mining and alumina refining assets in Australia.
Between 1989 and 2009, AofA and AWA (collectively, the “AWAC Subsidiaries”) retained a consultant to act as their middleman in connection with sales of alumina to Alba. The consultant was paid a commission on sales where he acted as an agent and received a markup on sales where he acted as a purported distributor. On sales where the consultant acted as a purported distributor, no legitimate services were provided to justify funds paid to the consultant. Instead, the consultant used these funds to enrich himself and pay bribes to senior government officials of Bahrain. From 2005 through 2009, AWA caused the consultant to receive in excess of $188 million on the markup of alumina sales to Alba. The consultant used the mark-up to pay tens of millions in corrupt kickbacks to Bahraini government officials, including senior members of Bahrain's Royal Family. To conceal the illicit payments, the consultant and the government officials used various offshore bank accounts, including accounts held under aliases, at several major financial institutions around the world.
On January 9, 2014, the DOJ filed a single count Information in the Western District of Pennsylvania against Alcoa World Alumina alleging violations of the anti-bribery provisions of the FCPA. On the same date, Alcoa World Alumina entered into a Plea Agreement with the DOJ. Under the terms of the agreement, Alcoa World Alumina pleaded guilty to the bribery charge and agreed to pay a monetary penalty of $209 million, forfeit $14 million the company acknowledged was involved in the transaction, and pay a mandatory assessment of $400. The company also agreed to implement enhanced anti-corruption compliance policies and procedures. Alcoa also agreed under the terms of the Plea Agreement to guarantee the payment of the fines and forfeiture by Alcoa World Alumina and to strengthen its anti-corruption compliance policies and procedures. The court further sentenced Alcoa World Alumina to four years of organizational probation.
In a separate but related action, on January 9, 2014, the SEC instituted cease and desist proceeding against Alcoa. Under the terms of the proceedings, the SEC ordered Alcoa to cease and desist violating the anti-bribery, books & records, and internal controls provisions of the FCPA and further ordered to pay disgorgement of $175 million. Of that amount, $14 million could be offset by the $14 million forfeiture judgment made against Alcoa and its subsidiary Alcoa World Alumina in this action.
The total sanctions imposed against Alcoa totaled approximately $384 million.
