On September 29, 2023, Albemarle Corporation (“Albemarle”), a global chemical manufacturer, reached an agreement with the U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) to resolve investigations into violations of the U.S. Foreign Corrupt Practices Act (“FCPA”). This settlement is the culmination of a five-year investigation stemming from bribe payments made by Albemarle’s third-party sales representatives and employees of a subsidiary to government officials in Vietnam, Indonesia, and India to obtain government contracts in the chemical catalyst business between 2009 and 2017.
Enacted in 1977, the FCPA prohibits U.S. citizens and entities from making payments to foreign government officials to obtain business or an improper business advantage. The FCPA also includes accounting provisions requiring all public companies with securities listed in the U.S. to keep accurate books and records and maintain adequate systems of internal accounting controls.
Under the FCPA, a company can be required to pay criminal fines (which can be up to $2 million per violation) as well as civil monetary penalties and disgorgement of profits attributed to violations. Individuals are also subject to criminal prosecution and fines.
The DOJ and SEC credited Albemarle for voluntarily self-disclosing the illegal activity and cooperating with the government. Upon learning of the allegations regarding potential FCPA misconduct, Albermarle promptly retained outside counsel and forensic accountants to investigate. Albemarle presented its initial findings to both the DOJ and the SEC. The company cooperated with the agencies’ investigations and implemented remedial measures.
These quick actions saved the company millions of dollars in penalties and prevented complex criminal prosecutions in multiple jurisdictions. Although the DOJ found that Albemarle’s voluntary disclosure was not “reasonably prompt”[1] as defined in its recent 2023 Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (“VSD Policy”) and the U.S. Sentencing Guidelines § 8C2.5(g)(1), the DOJ still credited the company under the VSD Policy for its diligent cooperation with the DOJ, robust internal investigation, immediate remedial action against bad actors within the company, and efforts to strengthen its anti-corruption compliance. These good faith actions by Albemarle contributed to the DOJ reducing the imposed fines by 45% from the lowest applicable guidelines range. The company also avoided the imposition of a monitor, a common feature of FCPA settlements.
Albemarle entered into a three-year non-prosecution agreement with the DOJ and an administrative settlement with the SEC. It will pay approximately $218.5 million in fines, disgorgement, and prejudgment interest related to these settlements. This amount also reflects a $763,453 reduction for bonuses that the company withheld from certain employees implicated in the alleged wrongdoings under the DOJ’s Criminal Division’s new Compensation Incentives and Clawbacks Pilot Program implemented in March this year.
The U.S. authorities continue to take FCPA violations seriously. The Albemarle settlement demonstrates the tremendous benefit a proactive response and cooperation can provide to a company grappling with potential FCPA violations.
FOOTNOTES
[1] The DOJ concluded that Albemarle had not promptly disclosed misconduct in Vietnam, but instead took remedial actions and continued to investigate the other potential bribery issues before disclosing to the U.S. authorities.