Albemarle to pay $218M in FCPA settlements with DOJ, SEC

The settlement total, which closely matches the reserve disclosed by Albemarle in August, includes a $98.2 million criminal fine and forfeiture of $98.5 million ordered by the DOJ. The company agreed to disgorge more than $81.8 million and pay prejudgment interest of more than $21.7 million in settling with the SEC. The DOJ agreed to credit $81.9 million of the forfeiture against the disgorgement total for the final value of about $218.3 million.

The DOJ noted in its press release a penalty reduction of $763,453 for bonuses Albemarle withheld from qualifying employees under the agency’s new compensation clawback pilot program launched earlier this year.

The details: As part of a three-year non-prosecution agreement (NPA) with the DOJ, Albemarle admitted its third-party sales agents and subsidiary employees, between 2009 and 2017, conspired to pay bribes to government officials to obtain and retain chemical catalyst business with state-owned oil refineries in Vietnam, Indonesia, and India. The SEC, in its press release, added China and the United Arab Emirates as other regions where Albemarle’s system of internal accounting controls was unable to provide reasonable assurances payments were made for legitimate services.

The schemes were described by the DOJ as follows:

• In Vietnam, Albemarle 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 the company.
• In Indonesia, Albemarle used a third-party intermediary to obtain catalyst business with the country’s state-owned oil company, after the intermediary informed Albemarle it was necessary to pay bribes to Indonesian officials to obtain business.
• In India, Albemarle used a third-party intermediary to retain catalyst business with the country’s state-owned oil company by avoiding Albemarle being blacklisted.

The misconduct earned Albemarle approximately $98.5 million in profits, the DOJ said.

In its order, the SEC faulted Albemarle for books-and-records failures. The company “failed for many years to institute sufficient compliance systems and devise and maintain a sufficient system of internal accounting controls concerning the retention, payment, and oversight of these intermediaries,” the agency said.

The SEC acknowledged the company has since improved its controls.

Compliance considerations: Albemarle’s criminal penalty reflected a 45 percent reduction off the bottom of the applicable guidelines fine range because of the company’s self-disclosure, cooperation, and remediation, the DOJ said.

Albemarle voluntarily disclosed the misconduct to the agency, though its doing so was not deemed “reasonably prompt,” the DOJ said. The company provided the agency with detailed information from its internal investigation, produced documents, and made foreign-based employees available for interview.

Remedial efforts at Albemarle included:

• Disciplining employees involved in the misconduct, including 11 terminations and 16 withheld bonuses;
• Strengthening its anti-corruption compliance program, including through use of data analytics to measure effectiveness;
• Providing extensive training to sales agents and restructuring compensation and incentives to no longer be tied to sales amounts; and
• Engaging in continuous testing, monitoring, and improvement of all aspects of its compliance program.

Albemarle agreed to continue to cooperate with the DOJ in any ongoing or future related investigations and will report to the agency on its compliance enhancement measures for the term of the NPA.

Company response: “The actions taken by a limited number of former employees and third-party sales representatives happened years ago and do not represent the nearly 8,000 Albemarle employees who abide by our comprehensive code of conduct every day,” the company said in an emailed statement. “… Today, Albemarle’s ethics and compliance program is industry recognized. We maintain a robust internal controls environment designed to prevent and detect violation of anti-corruption laws.”