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Harry Cassin
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Alcoa partner talks about possible FCPA settlement

An Australian joint venture partner of Alcoa said this week that possible FCPA settlements with the DOJ and SEC for alleged bribes to officials of Bahrain’s Alba could amount to more than $300 million.

Alumina Limited’s only business is a joint venture with Alcoa.

The company trades on the NYSE under the symbol AWC.

Under their joint venture agreements, Alumina would have liability for 37.5% of the FCPA settlement costs.

The joint venture is called Alcoa World Alumina and Chemicals. It supplies raw materials from Australia for the production of aluminum.

The DOJ and SEC have been investigating corrupt payments to officials at state-owned Alba (Aluminium Bahrain B.S.C.) in exchange for raw material supply contracts.

In 2012, Alcoa and Alba reached a settlement to end a civil lawsuit that accused Alcoa of bribing Alba officials and overcharging for the supply of raw materials.

Alcoa said it didn’t admit liability but ‘agreed to make a cash payment to state-owned Alba of $85 million payable in two installments.’

Alba filed the suit in 2008 in federal court in Alcoa’s hometown, Pittsburgh. The suit accused Alcoa of a 15-year conspiracy of overcharging, fraud, and bribery. It alleged that more than $2 billion in Alba’s payments under raw-material supply contracts passed from Bahrain to tiny companies in Singapore, Switzerland, and the Isle of Guernsey, and that some of the money was then used to bribe Bahraini officials involved in granting the contracts.

In 2011, Victor Dahdaleh, who had acted as Alcoa’s agent in Bahrain, was arrested in London, where he lives. He was charged under U.K. law with bribing officials at Alba.

Last year, Bruce Allan Hall, an Australian who served as CEO of Alba, was charged in London with taking bribes. Hall was extradited from Australia after his arrest there in 2010.

During the second quarter of 2013, Alumina said in its most recent SEC filing, Alcoa proposed to settle the DOJ investigation by offering a cash payment of $103 million. But there is ‘the potential of an additional possible charge of up to approximately $200 million to settle the DOJ matter,’ Alumina said. It added that, ‘Settlement negotiations are continuing.’

Alcoa has also exchanged settlement offers with the SEC, according to Alumina. ‘However, the SEC staff has rejected Alcoa’s most recent offer of $60 million and no charge has been recorded. Alcoa expects that any resolution through settlement with the SEC would be material to results of operations for the relevant fiscal period,’ Alumina said.

Alumina Limited’s Form 6-K filed with the SEC on July 9, 2013 is here.

Editor’s Note: There were several typos in Alumina’s SEC filing, which we have interpreted for this post. For example, Alumina’s filing said, ‘There is currently the potential of an additional possible charge of up to approximately 9200 million (sic) to settle the DOJ matter. . . . Alcoa has also exchanged settlement offers with the SEC, (sic) However, the SEC staff has rejected Alcoa’s most recent offer of 960 million (sic) and no charge has been recorded.’

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