Foreign Corrupt Practices Act

According to Jaeger (2014) on January 9, 2014 aluminum producer Alcoa Inc. agreed to pay a total of $384 million to the Securities and Exchange Commission and the Department of Justice to settle civil and criminal charges over violations of the Foreign Corrupt Practices Act. Alcoa is a global innovation leader in lightweight metals, products and solutions. Alcoa is also a world leading producer of primary aluminum, as well as the world’s largest miner of bauxite and refiner of alumina. As of 2014, Alcoa employs approximately 60,000 people in 30 countries around the world (“Alcoa Corporate Overview,” 2014). Alcoa World Alumina pleaded guilty in the Western District of Pennsylvania and agreed to pay a criminal fine of $209 million and administratively forfeit $14 million. As part of the plea agreement, Alcoa agreed to maintain and implement an enhanced global anti-corruption compliance program. In a parallel action, Alcoa also agreed to pay $161 million in disgorgement to the SEC, bringing the total amount of criminal and regulatory penalties to be paid by Alcoa and Alcoa World Alumina to $384 million. (Jaeger, 2014).

According to court papers, Alcoa of Australia, another Alcoa controlled entity, secured a long term alumina supply agreement with Aluminum Bahrain B.S.C. (Alba), government operated aluminum plant. Alcoa's subsidiaries used a London based consultant with connections to Bahrain's royal family as an intermediary to negotiate with government officials and funnel the bribery payments to retain Alcoa's business as a supplier to the plant. Over time, Alcoa of Australia expanded the relationship with the middleman to begin invoicing increasingly larger volumes of alumina sales through his shell companies, which allowed him to make larger bribe payments to certain government officials. According to the Securities and Exchange Commission, Alcoa lacked sufficient internal controls to prevent and detect the bribes, which were improperly recorded in...