Foreign Corrupt Practices Act (FCPA) enforcement may have been down by two-thirds in 2013, but the SEC and DOJ are already getting off to a hot start in 2014.
The SEC and DOJ announced on Jan. 9 that they have brought civil and criminal charges against aluminum producers Alcoa Inc., claiming that Alcoa paid more than $110 million to Bahraini officials in order to secure a key aluminum contract in the country.
According to the SEC order (PDF), the allegations come from Alcoa’s dealings with Aluminum Bahrain B.S.C. (Alba), to whom it has been selling aluminum since 1989. 77 percent of Alba is owned by the Bahrain royal family.
The SEC claims that Alcoa retained a consultant for its dealings with Alba who the company claimed was “well versed in the normal ways of Middle East business.” However, the government says that Alcoa “knew or consciously disregarded the fact that the relationship with the consultant was designed to generate funds that facilitated corrupt payments to Bahraini officials.” Through the consultant, Alcoa was able to supply Alba with aluminum between 1989 and 2009.
Alcoa has already agreed to settle the SEC and DOJ actions through a $384 million fine. That total falls just short of oil and gas company Total S.A.’s $398 million FCPA fine from 2013, which helped contribute to a record $3.4 billion in sanctions that the SEC collected that year.
Strangely enough, this enforcement action isn’t the first time that Alcoa has had to face allegations of Alba bribery in court. Alba itself filed racketeering charges against Alcoa in 2012, claiming bribes to government officials that netted Alcoa $400 million in illegal profits. In that case, Alcoa agreed to pay Alba $85 million to settle out of court.
For more on the government’s FCPA enforcement, check out these InsideCounsel stories: