Alcoa World Alumina LLC, a joint venture owned by both Alcoa and Alumina Ltd., supplies the raw material that is smelted into aluminum. The firm pled guilty in a Pittsburgh federal court for violating the Foreign Corrupt Practices Act (FCPA). The Act forbids corporations and their agents from paying bribes to government officials to gain a business advantage.
The SEC said that this is the fourth largest FCPA case in history, reports Businessweek.
According to Businessweek, Alcoa hired a consultant in 1989 to manage its contract with the Bahraini
government officials who controlled the state-owned company Aluminum Bahrain BSC (Alba). Court filings say that the consultant marked up sales of Alcoa alumina to Alba by US $400 million, and bribed Bahraini officials with tens of millions of dollars in kickbacks.
Alba sued Alcoa in U.S. federal court in 2008 for bribery-related overcharges.
Prosecutors traced the money to shell companies and accounts, some of which were registered under aliases in Liechtenstein, Luxembourg, Switzerland, and Guernsey.
According to the Wall Street Journal, Alcoa “didn't admit any wrongdoing” and said that neither the Justice Department nor the SEC alleged that anyone at Alcoa "knowingly engaged in the conduct at issue."
The U.S. Justice Department nonetheless held Alcoa accountable.
Mythili Raman, the acting head of the Justice Department’s criminal division said, "The law does not permit companies to avoid responsibility for foreign corruption by outsourcing bribery to their agents,” reports the Wall Street Journal.
George Canellos, co-director of the SEC Enforcement Division, agreed. According to Businessweek, he said, “As the beneficiary of a long-running bribery scheme perpetrated by a closely controlled subsidiary, Alcoa is liable and must be held responsible.”
In a televised interview, Alcoa CEO Klaus-Kleinfeld said the company is ready to move past the case, reports the Wall Street Journal. "We can put this behind us,” he said.
