Albemarle To Pay Over $218M To Resolve Foreign Corrupt Practices Act Investigation

Charlotte -- Press Release Western District of NC United States Attorney's Office September 29, 2023:

Albemarle Corporation (Albemarle), a publicly-traded specialty chemicals manufacturing company headquartered in Charlotte, North Carolina, has agreed to pay more than $218 million to resolve investigations by the U.S. Department of Justice and the Securities and Exchange Commission (SEC) into violations of the Foreign Corrupt Practices Act (FCPA) stemming from Albemarle’s participation in corrupt schemes to pay bribes to government officials in multiple foreign countries. 

According to the company’s admissions in connection with the Department’s resolution, between 2009 and 2017, Albemarle, through its third-party sales agents and subsidiary employees, conspired to pay bribes to government officials to obtain and retain chemical catalyst business with state-owned oil refineries in Vietnam, Indonesia, and India. Albemarle obtained profits of approximately $98.5 million as a result of the scheme.

“Albemarle earned nearly $100 million by participating in schemes to pay bribes to government officials in multiple countries,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “As today’s announcement makes clear, the Justice Department will work tirelessly with our partners in the ongoing fight against international corruption. Today’s resolution also demonstrates the real benefits that companies can receive if they self-disclose misconduct, substantially cooperate, and extensively remediate.”

“Corruption has no borders, but neither does justice. Companies are expected to adhere to the same ethical and legal standards whether they are doing business on U.S. soil or overseas. Albemarle’s eventual voluntary disclosure of fraud and subsequent efforts to remedy its business practices abroad are a step in the right direction for the company. Above all, today’s announcement underscores our commitment to fight corruption affecting the United States no matter where it occurs.”
From, Dena J. King, United States Attorney
In Vietnam, Albemarle corruptly obtained contracts at two state-owned oil refineries through an intermediary sales agent who requested increased commissions to pay bribes to Vietnam officials and to structure tender requirements to favor Albemarle. In Indonesia, Albemarle used a third-party intermediary to corruptly obtain catalyst business with Indonesia’s state-owned oil company, even after that third-party intermediary had informed Albemarle that it was necessary to pay bribes to Indonesian officials to obtain business. In India, Albemarle used a third-party intermediary to corruptly retain catalyst business with India’s state-owned oil company by avoiding Albemarle being blacklisted.

Albemarle entered into a three-year non-prosecution agreement (NPA) with the Department and agreed to pay a penalty of approximately $98.2 million and administrative forfeiture of approximately $98.5 million. The penalty reflects a reduction of $763,453 under Part II of the Criminal Division’s March 2023 Compensation Incentives and Clawbacks Pilot Program for bonuses that the company withheld from qualifying employees. In addition, Albemarle will pay approximately $103.6 million in disgorgement and prejudgment interest as part of the resolution of the SEC’s parallel investigation. The Department has agreed to credit approximately $81.9 million of the forfeiture to be paid to the Department against disgorgement Albemarle has agreed to pay to the SEC.

“The $218 million resolution announced today reflects IRS Criminal Investigation (IRS-CI) special agents’ commitment to working with our law enforcement partners to aggressively expose and disrupt organizations engaged in unscrupulous business practices,” said IRS-CI Chief Jim Lee. “Thanks to our domestic and international law enforcement partners, we’ve ensured Albemarle will be held accountable for their misdeeds.”

Pursuant to the NPA, Albemarle has agreed to continue to cooperate with the Department in any ongoing or future criminal investigations relating to this conduct. In addition, Albemarle agreed to continue to enhance its compliance program and provide reports to the Department regarding remediation and the implementation of compliance measures for the three-year term of the NPA.

The Department reached this resolution with Albemarle based on a number of factors, including, among others, the nature and seriousness of the offense. Albemarle voluntarily disclosed to the Department conduct that forms the basis for the resolution; however, the disclosure was not “reasonably prompt” as defined in the Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and the U.S. Sentencing Guidelines § 8C2.5(g)(1). Albemarle received credit under the CEP for its cooperation with the Department’s investigation, which included (i) voluntarily disclosing the conduct that forms the basis for this agreement before it came to the Department’s attention; (ii) promptly providing information obtained through its internal investigation, which allowed the government to preserve and obtain evidence as part of its own extensive independent investigation; (iii) making regular and detailed presentations to the Department; (iv) proactively identifying information previously unknown to the Department; (v) meeting the Department’s requests promptly; (vi) voluntarily making foreign-based employees available for interviews in the United States; (vii) collecting and producing voluminous relevant documents and translations to the Department, including documents located outside the United States; and (viii) producing documents to the Department from foreign countries in ways that did not implicate foreign data privacy laws. The company promptly engaged in extensive remedial measures including, among other things (i) commencing remedial measures based on its internal investigation of the misconduct prior to the commencement of the Department’s investigation; (ii) disciplining employees involved in the misconduct, including terminating 11 employees and withholding bonuses from 16 employees; (iii) strengthening its anti-corruption compliance program by investing in compliance resources, expanding its compliance function with experienced and qualified personnel, and taking steps to embed compliance and ethical values at all levels of its business organization; (iv) transforming its business model and risk management process to reduce corruption risk in its operation and to embed compliance in the business, including implementing a go-to-market strategy that resulted in eliminating the use of sales agents throughout the company, terminating hundreds of other third-party sales representatives, such as distributors and resellers, and shifting to a direct sales business model; (v) providing extensive training to its sales team and restructuring compensation and incentives so that compensation is no longer tied to sales amounts; (vi) using data analytics to monitor and measure its compliance program’s effectiveness; and (vii) engaging in continuous testing, monitoring, and improvement of all aspects of its compliance program beginning almost immediately following the identification of misconduct. In light of these considerations, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 45% reduction off the bottom of the applicable guidelines fine range.   

IRS-CI is investigating the case. 

Trial Attorney Katherine Raut of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel Ryan for the Western District of North Carolina are prosecuting the case.

The Justice Department’s Office of International Affairs and authorities in Indonesia and India provided substantial assistance in the matter.

The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Updated September 29, 2023