The settlement with the DOJ was reached with Alcoa World Alumina LLC (AWA). AWA is a company within Alcoa World Alumina and Chemicals (AWAC), the unincorporated bauxite mining and alumina refining venture between Alcoa Inc. and Alumina Limited.
As part of the DOJ resolution, subject to final court approval, AWA will pay a total of $223 million, including a fine of $209 million payable in five equal instalments over four years. The first instalment of $41.8 million, plus a one-time administrative forfeiture of $14 million, will be paid in the first quarter of 2014, and the remaining instalments of $41.8 million each will be paid in the first quarters of 2015-2018. The $223 million amount is within the range previously disclosed by Alcoa Inc. During the second quarter of 2013, Alcoa recorded a $103 million charge ($62 million after non-controlling interest) for the DOJ investigation.
Under the terms of the DOJ resolution, AWA is pleading guilty to one count of violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). The DOJ is bringing no case against Alcoa Inc.
Alcoa also settled civil charges filed by the SEC in an administrative proceeding relating to the anti-bribery, internal controls, and books and records provisions of the FCPA. Under the terms of the settlement with the SEC, Alcoa Inc. agreed to a settlement amount of $175 million, but will be given credit for the $14 million one-time forfeiture payment, which is part of the DOJ resolution, resulting in a total cash payment to the SEC of $161 million payable in five equal instalments over four years. The first instalment of $32.2 million will be paid to the SEC in the first quarter of 2014, and the remaining instalments of $32.2 million each will be paid in the first quarters of 2015-2018.
There is no allegation in the filings by the DOJ and there is no finding by the SEC that anyone at Alcoa Inc. knowingly engaged in the conduct at issue.
The DOJ credited Alcoa for “the substantial cooperation provided to the Department” throughout the investigation. The DOJ also credited Alcoa with launching an independent investigation overseen by a special committee of the Board of Directors and implementing enhanced due diligence reviews of third party agents and consultants.
Similarly, the SEC has agreed that Alcoa “fully cooperated with the staff of the Commission.” The SEC has also acknowledged Alcoa’s extensive compliance efforts, including its comprehensive compliance reviews of anti-corruption policies and procedures and enhancements made to internal controls.
Alcoa welcomes the resolution of this legacy legal matter with the US Government.
As previously disclosed, under an agreement between Alcoa Inc. and Alumina Limited, the costs (including all associated legal fees) of the settlements with the DOJ and SEC, as well as the $85 million civil settlement with Alba reached in October 2012, will be allocated between Alcoa Inc. and Alumina Limited on an 85% and 15% basis, respectively. As a result of the settlements with the DOJ and the SEC, including the impact of the allocation agreement between Alcoa and Alumina Limited, Alcoa will record a charge of $288 million ($243 million after-tax and non-controlling interest) in the fourth quarter of 2013. Taking into account this fourth-quarter charge, Alcoa will have recognised all costs associated with the resolution of the Alba civil suit and related government investigations.