Global aluminum producer Alcoa Inc. will pay $384 million to settle charges that its subsidiaries paid bribes to government officials in Bahrain to maintain a source of business, the U.S. Securities and Exchange Commission said Thursday.
Federal regulators charged Alcoa with violating the Foreign Corrupt Practices Act after an SEC investigation found that Alcoa paid more than $110 million to Bahraini government officials to help strike a deal with state-run Aluminium Bahrain B.S.C., one of the largest aluminum smelters in the world.
“As the beneficiary of a long-running bribery scheme perpetrated by a closely controlled subsidiary, Alcoa is liable and must be held responsible,” said George Canellos, co-director of the SEC's enforcement division. “It is critical that companies assess their supply chains and determine that their business relationships have legitimate purposes.”
According to regulators, Alcoa's Australian subsidiary hired a consultant with ties to Bahrain's royal family as a middle man to negotiate with government officials and arrange payments so Alcoa could be a supplier to the plant.
The SEC said Alcoa lacked sufficient internal oversight to prevent and detect the bribes.
Alcoa will pay $175 million in a settlement with the SEC and will also pay a criminal fine of $209 million for the bribery charges, the U.S. Justice Department said Thursday.
Alcoa World Alumina LLC, a joint venture of Alcoa Inc., has pleaded guilty to one count of violating the anti-bribery provisions of the Foreign Practices Corruption Act, the company said in a statement.
"Alcoa welcomes the resolution of this legacy legal matter with the U.S. government," the company said.
Alcoa shares were down $0.26, or 2.4%, Thursday to $10.57.