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8/13/2019 U.S. v. Alcoa World Alumina (Agreed Motion to Waive Presentence Report)
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UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA
v.
A LCO A WORLD ALUM IN A LLC,
Defendant.
C R IMIN A L NO. ri
A G R E E D M O T I O N T O W A I V E T H E P R E S E N T E N C E R E P O R T
The United States o f America, by and through the Fraud Section o f the Criminal Division
of the United States Department of Justice and the United States Attorney's Office for the
Western District of Pennsylvania (the "Department"), and the defendant, Alcoa World Alumina
LLC (the "Defendant"), by and through its undersigned attorneys, respectfully submit this
Agreed Motion to Waive the Presentence Report ("Agreed Motion") for the Court's
consideration i n resolving the corporate plea of guilty in the case captioned above. For the
reasons set forth below, the Department and the Defendant respectfully request that the Court
accept the guilty plea of the Defendant pursuant to Federal Rule of Criminal Procedure
consolidate the entry of the plea of guilty and the sentencing into one proceeding;
waive the presentence inves tigation pursuant to Federal Rule o f Criminal Procedure
32(c)(l)(A)(i i) ; and sentence the Defendant in accordance with the terms o f the plea agreement
(the "Plea Agreement") filed simultaneously herewith. The parties submi t that the information
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contained i n the record o f this case is sufficient to enable the Court to exercise its sentencing
authority under Title United States Code, Section 3553, without the necessity of thepreparation of a presentence investiga tion report.
I . I N T R O D U C T I O N
Federal Rule of Criminal Procedure 32(c)(l)(A)(ii) permits the Court to impose a
sentence without the preparation of a presentence report i f the Court finds that the information in
the record is sufficient to enable it to exercise its sentencing authority meaningfully under Title
United States Code, Section 3553, and the Court explains this finding on the record. The
parties submit that the information contained in the Information, Plea Agreement, and Agreed to
Statement o f Facts, drafts o f which are being submitted to the Court in advance o f formal
proceedings, satisfy the Requirements o f Rule and provide a basis for the Court toexercise its sentencing authority meaningfully under Title 18, United States Code, Section 3553.
A. The Foreign Corrupt Practices Act
The Foreign Corrupt Practices A ct of 1977 ("FCPA"), as amended, 15 U.S.C. §78 dd-l ,
et seq., certain classes o f persons and entities from corruptly making payments toforeign government officials to assist i n obtaining or retaining business.
Pertinent to the charges herein, the FCPA prohibit ed U.S. companies such as the
Defendant from mak ing use of the mails or any means or instrumentality of interstate commerce
corruptly i n furtherance of an offer, payment, promise to pay, or authorization o f the payment of
money or anything of value to any person, while k nowing that al l or a portion o f such money or
thing of value would be or had been offered, given or promised, di rectly or indirectly, to a
foreign official for the purpose of obtaining or retaining business for, or directing business to,
any persons. U.S.C. §78dd-2(a).2
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B. The Defendant
The Defendant, Alcoa World Alumina LLC, was a Limited Liability Company formed
under Delaware law which maintained its principal place in Pittsburgh, Pennsylvania,in the Western District of Pennsylvania. In addition, the Defendant was an enterprise company
of Alcoa Wor ld Alumina and Chemicals an unincorporated g lobal bauxite miningand alumina refining enterprise formed in between Alcoa Inc. ("Alc oa") and AluminaLimited, the majority and minority owners of WAC, respectively. The Defendant owned andoperated (either directly or indirectly) bauxite mining and alumina refining assets i n North
America, Europe, South America, Africa and the Caribbean. The Defendant was a "domestic
concern" wi thin the meaning of the FCPA, Title United States Code, Section 78dd-2(a).Beginning i n or around 2000, executives at the Defendant's offices in Pittsburgh and
Knoxville, Tennessee, assumed primary responsibility for the relationship with a global alumina
customer, Aluminium Bahrain B.S.C. ("Alba"), a state-owned and state-controlled aluminium
smelter i n Bahra in.
C . The Charged Conduct
In the case presently before the Court, the Department has filed a criminal information
charging the Defendant with one count of violating the anti-bribery provisions of the FCPA, U.S.C. §78dd-2 and 18 U.S.C. §2. Subject to certain contingencies set forth in the Plea
Agreement, the Defendant has agreed to enter a plea of guilty to the Information, based upon
admissions in the Agreed to Statement of Facts, and to persist in that plea through sentencing.
The charge is based on the Defendant's role in 2004 in procuring a ten-year agreement to sell
approximately 1.7 million metric tons o f alumina to Alba from AWAC's Australian refineries.
The Defendant caused Alcoa o f Australia to enter into a purported distributorship with a shell
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company owned by Consultant A, an international middleman who had close contacts with
certain members of Bahra in's Royal Family, rather than contract direc tly with Alba. The
Defendant consciously disregarded that the mark-up imposed by Consultant A on sales of
alumina to Alba was facilitating corrupt payments to certain Bahraini government officials who
controlled Alba's tender process.
D. The Relevant Conduct
The relevant conduct admitted by the Defendant in connection with the Plea Agreement
is set forth in the Agreed to Statement of Facts, which is Exhibit 3 to the Plea Agreement that is
being filed simultaneously with this Agreed Motion. 1 The Parties respectfully refer the Court to
that Exhibit to the Plea Agreement.
In accordance wi th Part below, the parties agree that the Court should look to thegross profits earned on the 2004 transaction for purposes o f calculating the criminal underthe Sentencing Guidelines. See Part III.B below. With respect to the calculation of the the
Government represents that at trial i t would prove the following:
From 2005 to 2009, approximately $446 million in gross profit was earned on the
corruptly secured alumina supply agreement with Alba (after accounting for profits retained by
Alcoa o f Australia's minority owner, Alumina Ltd.).
As a result o f the Defendant's conduct from 2005 through 2009, Consultant A's shell
companies received in excess of $188 million on the mark-up of alumina sales to Alba. I n 2005
and 2006, the Government was able to trace approximately $50 mill ion i n corrupt payments to
As set forth in the Statement of Facts, the Defendant admits to the information in the Statement of Facts to theextent it relates to its actions and the actions of its officers and employees, but the Defendant does not admit to theconduct of any other entity or person. Nothing in this Agreed Motion is intended to add to, or expand, theadmissions contained in the Statement of Facts.
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Bahraini government officials. A W A had no knowledge of the particulars of these payments,
and some o f these payments were made from accounts containing commingled funds from some
of Consultant A ' s other transactions in the region.
I I . T H E R E C O R D C O N T A I N S S U F F I C I E N T I N F O R M A T I O N T H E C O U R TT O I M P O S E S E N T E N C E
Under Federal Rule of Criminal Procedure 32(c)(l)(A)(i i) , the Court may proceed to
sentencing wi thout the benefit o f a presentence report i f "the court finds that the information in
the record enables it to meaningfully exercise its sentencing authority under Title UnitedSates Code, Section 3553, and the court explains its finding on the record." Fed. R. Crim. P.
Courts imposing sentence on corporate defendants for violations of the FCPA
have combined the plea and sentencing hearings into one proceeding. See, e.g., United States v.
Siemens et al., (D.D.C. Dec. 15, 2008); United States v.Panalpina, Inc., (S.D. Tex. Dec. 7, 2010).
The parties respectfully submit that the record presently before the Court contains
sufficient information to al low the Court to impose sentence without additional presentence
investigation and a report. The facts described in the Informat ion , Statement o f Facts and the
Plea Agreement, detail not only the Defendant's violations of law, but also the Defendant's and
Alcoa's timely internal investigat ion o f the violations, their extensive cooperation with the
Department and the U.S. Securities and Exchange Commission ("SEC"), and their remedial
actions. This information satisfies the requirements of Rule 32(c)(l)(A)(ii) and permits the
Court to impose sentence under 18 U.S.C. §3553.
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I I I . S E N T E N C I N G G U I D E L I N E S C A L C U L A T I O N
In the Plea Agreement, the parties stipulate that the following Guidelines calculation,
using the edit ion of the Sentencing Guidelines Manua l, is the proper application o f theSentencing Guidelines to the criminal charge i n the Information. The Sentencing Guidelines
analysis in this case results in a Guidelines range o f $446,000,000 to $892,000,000.A. Calculation of the Offense Level
Based upon U.S.S.G. § the tota l offense level is 48, calculated as follows:
(a) (2) Base Offense Level (1) Multiple Bribes +2
Value o f benefit received
More than $400,000,000 +30
(b)(3) Offense involved a high-level decision-making +4
public official
T O T A L 48
B. Calculation of the Base Fine
The parties agree that the pecuniary gain which underlies the Defendant's anti-bribery
plea is $446,000,000. The parties further agree that the pecuniary gain from the offense is
greater than either the level from the Offense Level Fine Table or the total kno wn bribepayments the offense. The pecuniary ga in of $446,000,000, therefore, is the correct base
for the offense under the sentencing guidelines. See U.S.S.G. §8C2 .4( a)( l) and § 2Cl . l (d) .
C . Calculation Culpabi lity ScoreBased upon U.S.S.G. § the culpability score is 5, calculated as follows:
(a) Base Culpability Score 5
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(b)(4) the organization had 50 or more employees and
an individual within substantial author ity
personnel participated i n, condoned, or was
willfully ignorant o f the offense +2
(g)(1) The organization fully cooperated in the
investigation and clearly demonstrated recognition
and affirmative acceptance of responsibility for its
criminal conduct
- 2
T O T A L D. Calculation of the Fine Range
The range is calculated pursuant to U.S.S.G. §§8C2.6 and 8C2.7 as follows:
Base Fine $446,000,000
Multipliers (min)/2.0 (max)Fine Range $446,000,000 / $892,000,000
E . SentencePursuant to the Plea Agreement, and consistent with Fed. R. Crim. P. the
parties have agreed that the Defendant w i l l pay a criminal fine o f $209,000,000 in equalannual installments.
I V . T H E A G R E E D - U P O N F I N E I S T H E A P P R O P R I A T E D I S P O S T I O N
The parties submit that the imposition o f a criminal penalty o f $209,000,000 is the
appropriate disposition of this case, based upon the following, as set forth in the Agreed to
Statement of Facts and Paragraph 35(a) of the Plea Agreement:
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A. Nature of the Conduct
The Defendant consciously disregarded the fact that the mark-up imposed by Consultant
A on his companies' sales o f alumina to Alba was facilitating millions o f dollars in corrupt
payments to Bahrain i government officials who controlled A lba 's tender process. The
Government submits that this conduct merits the significant penalty recommended to the Court,
but, at the same time, that other factors mitigate against a penalty within the guideline range.
B. Alcoa's Financial Condition
Alcoa has agreed to guarantee, secure and ensure delivery by the Defendant o f all
payments due from the Defendant under the Plea Agreement. The significant discount from the
guidelines range is warranted because o f the impact that a penalty within the guidelines range
would have on Alcoa's financial condition and its potential to "substantially jeopardiz[e]" the
company's ability to compete, see U.S.S.G. §8C3.3(b), including, but not limited to, its ability to
fund its sustaining and improving capital expenditures, its ability to invest in research and
development, its ability to fund its pension obligations, and its ability to maintain necessary cash
reserves to fund its operations and meet its liabilities. The Defendant has also agreed to
administratively forfeit to the Inte rnal Revenue Service $14,000,000, which is at least the amount
involved in transactions described i n the Agreed to Statement o f Facts. Thus, total fines and
penalties i n this matter amount to $223,000,000. In addition, in the event that a settlement is
reached and approved by the SEC, the Department is cognizant that such settlement would
impose a significant disgorgement order on Alcoa as a civil remedy for Alcoa's conduct in this
matter.
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C . Alcoa's Cooperation
In addition, another factor in the assessment appropriate is the level o fcooperation received from the Defendant and Alcoa. After the allegations arose, Alcoa
cooperated fully with the Department's investigation.
When Al coa 's Board learned o f the allegations, the Board appointed a Special Committee
to investigate the allegations. The Special Committee retained independent counsel to conduct
an extensive internal investigation of the allegations, who provided the government with factual
proffers o f conduct related to the allegations. Alcoa's counsel also provided the Department
with numerous documents and materials from its U.S. offices and abroad, searched for relevant
documents, including very old documents, and helped to collect, analyze and organize
voluminous evidence and information. Alcoa also voluntarily made its employees available for
interviews.
D . Alcoa's Remediation
A n additional factor i n the assessment appropriate fine level is the series o fremedial compliance measures that Alcoa has taken, which affect both Alcoa and the Defendant.
These remedial measures include the hiring o f new senior legal and ethics and compliance
officers, the implementat ion o f enhanced due diligence reviews for the retention of third-party
agents and consultants, and Alco a' s implementation o f an enhanced anti-corrupt ion compliance
procedure and a commitment to continue to ensure that its compliance program satisfies the
criteria set forth i n Exhibit 4 to the Plea Agreement.
E . Annual Installment Payments of the Cr imina l Fine
Because the immediate payment of the entire "would pose an undue burden on" theDefendant and its majority shareholder, Alcoa, see U.S.S.G. §8C3.2(b), the United States and
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the Defendant agree that the entire shall be paid i n equal annual installments ofwith the first payment due in ful l on or before the tenth business day after
the date o f entry o f the of conviction. Thereafter, the second, third, fourth and fifthpayments shall each be due in ful l on the first, second, third and fourth-year anniversaries of the
date o f the entry o f judgment of conviction ("the recommended sentence").
/ / /
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V . C O N C L U S I O N
For the foregoing reasons, the Department and the Defendant respectfully recommend
that the Court accept the Plea Agreement of Alcoa World Alumina L L C pursuant to Federal Rule
of Criminal Procedure waive the presentence investigation pursuant to Federal Ruleof Criminal Procedure 32(c)(l)(A)(i i) , approve the disposition of this matter, and impose
sentence according to the terms of the Plea Agreement.
THE DEPARTMENT OF JUSTI CE:
JEFFREY H. KNOX
Chief, Fraud Section
Criminal Division
Department of Justice/]
By:
J. HICKTON
United States Attorney
No. 34524
V
Deputy Chief, Fraud Section
N Y ID No. 2657567
FOR A L C O A WORLD ALUMI NA LLC:
By: Robert J. Jossen
No. 1393719
Jonathan Streeter
No. 5034186
Counsel for
Alcoa World Alumina LLC
4 ,2014
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