It’s the commercial enterprise at the center of two FCPA enforcement inquiries.
In the words of the late Gary Coleman – “whatcha talkin bout” (see here) – the Foreign Corrupt Practices Act concerns payments to “foreign officials.”
However, that is not how the enforcement agencies see it.
Well, actually it is, but under the enforcement agencies’ interpretation of the key “foreign official” element (an interpretation that has never received judicial approval), if a commercial enterprise seemingly has any hint of state involvement, it is an “instrumentality” of the foreign government and all employees of the commercial enterprise are deemed “foreign officials.”
Over 50% of recent FCPA enforcement actions center, in whole or in part, on this controversial interpretation of the “foreign official” element.
The commercial enterprise at the center of two FCPA enforcement inquiries is Aluminium Bahrain BSC (“Alba”).
First, a bit of background.
As evident from the DOJ’s recent stay motion in Alba v. Sojitz Corporation – embedded in this story by Lisa Brennan at Main Justice, the DOJ is currently investigating whether Sojitz Corporation, a Japanese company with its principal place of business in Tokyo, and Sojitz Corporation of America, a wholly owned subsidiary and agent/or alter ego of Sojitz Corporation, made corrupt payments to Alba officials in violation of the FCPA. It appears that DOJ will assert jurisdiction over the Japanese entity based on this statement: “Sojitz Corporation, and its controlled subsidiaries, make use of United States banks to distribute aluminum, and other products, and is a member of the Chicago Board of Trade.”
The DOJ filing also notes that since 2008 the DOJ has also been investigating a separate matter involving Alba, specifically, whether Aloca Inc. made corrupt payments to “public officials in Bahrain in connection with Alcoa’s sale of alumina to Alba.” (see page 3). (See page 11 of Alcoa’s recent 10-Q filing – here – for more).
So what is Alba, the entity at the middle of two separate DOJ FCPA enforcement inquiries?
According to its website (here), Alba is one of the largest aluminium smelters in the world. The company has three shareholders: the government of Bahrain, the Saudi Public Investment Fund, and Breton Investments.
The company exports to more than 25 countries. Approximately 50% of its output is for Bahrain’s downstream industries, about 20% for the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) and Middle East market, approximately 13% for the Far East market, with the rest for North Africa, South East Asia, India, Europe and the U.S.
The company has over 3,000 employees.
Alba’s CEO is Laurent Schmitt and its CFO is Tim Murray (see here). Prior to being appointed Alba’s CEO, Mr. Schmitt was previously President of Rhodia Polyamide a world wide global business of Rhodia Group based in France. (see here). On Alba’s board is David Meen (see here).
When Congress enacted the FCPA, did it envision that a company like Alba (a company with thousands of employees, a company conducting significant business outside of Bahrain, and company with non-”native” executive officers and board members) would be deemed a “instrumentality” of the Bahrain government by the enforcement agencies?