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Alcoa loses $400 million in settlement with U.S. to resolve Alba matter

CAGLIARI, ITALY - JANUARY 22: Alcoa workers' protest during the Serie A match between Cagliari Calcio and ACF Fiorentina at Stadio Sant'Elia on January 22, 2012 in Cagliari, Italy.
CAGLIARI, ITALY - JANUARY 22: Alcoa workers' protest during the Serie A match between Cagliari Calcio and ACF Fiorentina at Stadio Sant'Elia on January 22, 2012 in Cagliari, Italy.
Photo by Enrico Locci/Getty Images

Today Alcoa announced settling with the U.S. government regarding legacy contracts with Aluminium Bahrain B.S.C. (Alba) resulting in a total of $223 to the Department of Justice (DOJ) and $175 million to the Securities and Exchange Commission (SEC). Each of the settlements has the first installment paid in the first quarter of 2014 and subsequent payments to be paid in the first quarters of 2015-2018. Certain credits were given for previous payments, and stockholders were informed in second quarter of 2013 as these were reported on the books.

The payment in the DOJ case resulted from violating anti-bribery laws under the Foreign Corrupt Practices Act (FCPA) with no case being brought against Alcoa. The SEC settlement resulted from civil charges in the provisions of FCPA for administration relating to the anti-bribery. The DOJ and SEC reported that Alcoa fully cooperated with the investigation. The DOJ and SEC expressed no allegations or findings that anyone at Alcoa knowingly engaged in the conduct at issue. The SEC acknowledged their compliance with Alcoa’s reviews of policies, procedures and internal controls.

According to Bloomberg, “Alcoa World Alumina today admits to its involvement in a corrupt international underworld in which a middleman secretly held offshore bank accounts and shell companies were used to funnel bribes to government officials in order to secure business,” Acting Assistant Attorney General Mythili Raman said in the statement.

In an earlier press release, Alcoa announced an $85 million civil settlement to be paid to Alba in October 2012 after the case had been pending since 2008 with no admission of liability. Alcoa and Alba resumed a commercial relationship. They entered into a long term supply contract with alumina price index based pricing.

Alcoa Inc (NYSE:AA) averaged a closing price of 8.59 for last year. The average closing price in the first through fourth quarter was 8.79, 8.33, 8.05 and 9.22. The averaging closing price yesterday was 10.83.

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