Boston, MA 01/29/2014 (wallstreetpr) – Alcoa Inc (NYSE:AA) could do without having to part with more than $384 million as payment for bribery claims filed against it. The claims state that Alcoa officials paid Bahraini officials working in a state funded and controlled aluminum smelter. The money it paid to settle this case was one of the highest ever paid in the United States. The claims do not center on Alcoa directly, but are related to the actions of two of its major subsidiaries. The claims were of both a criminal and civil nature and impute that the company’s officials bribed the Bahrainis for many years.
Boston, MA 01/29/2014 (wallstreetpr) – The bribery claims indicated that the Alcoa Inc (NYSE:AA)’s officials paid the Bahrainis so that they could supply raw materials used in Aluminium Bahrain, also known as Alba, which has close ties to the kingdom’s royal family. The decision to part with $384 million to have the criminal and civil cases stopped was made by AA’s top executives. They never wanted the cases to play out in the courts, and drag for months thus soiling the company’s reputation and making its stock to lose value, thus driving away of discouraging investors from coming on board with their finances.
Regulators believe that AA officials failed to notice $110 million, which they believe to have been improper payments made to Alba through a consultant, and which started from 1989 and continued until 2009. The Securities and Exchange Commission, using the power vested upon it by the Foreign Corrupt Practices Act, instituted the civil charges against Alcoa Inc. On the other hand, the Justice Department brought criminal charges against the company using the same Foreign Corrupt Practices Act.
Regulators have been carrying out a crackdown to identify the US companies that made improper payments in order to win contracts from foreign jurisdictions. The amount that Alcoa paid to stop this case, $384 million, is the fourth highest ever to be paid in the US, according to an announcement that Securities and Exchange Commission made. The company’s shares have dropped as a result of the ongoing criminal and civil cases. The largest settlement made to both the Justice Department and the S.E.C was $800 million, which Siemens of Germany paid.
Whether the money Alcoa Inc paid to settle this case is tied to the losses it projected, is unclear. As soon as it announced that it had paid $384 million to settle this matter, it posted its latest financial returns, in which AA said it had suffered losses to the tune of $1.7 billion. Sales also fell from a high of $5.90 billion it posted a year earlier, to a low of $5.59 billion that it announced during the same period twelve months ago. Alcoa has now agreed to settle the amount by making installments of $161 million for the next five years.
Alcoa Inc (NYSE:AA) has done what it could to retain its investors and not continue attracting negative publicity that could have cost it more than what it has spent. The company says that none of its officials knowingly gave out these bribes, although the subsidiary responsible for the crimes, Alcoa World Aluminia, is a joint venture in which Alcoa Inc (NYSE:AA) has 60% ownership.
