The SEC has recently disclosed that Albemarle Corporation, a prominent global specialty chemicals company headquartered in Charlotte, has agreed to a substantial settlement of over $103.6 million. This settlement is in response to the SEC’s charges that Albemarle violated several key provisions of the Foreign Corrupt Practices Act (FCPA), specifically related to anti-bribery, recordkeeping, and internal accounting controls.
A Closer Look at the SEC’s Findings
The SEC’s Order highlights some deeply concerning issues in Albemarle’s business practices. Despite the presence of conspicuous red flags, Albemarle engaged agents between 2009 and 2017 who paid bribes to secure sales of refinery catalysts. These sales were primarily aimed at public-sector oil refineries in Vietnam, India, and Indonesia, along with private-sector oil refineries in India.
Moreover, the Order reveals that Albemarle not only violated the FCPA’s recordkeeping requirements but also failed to establish and maintain an adequate system of internal accounting controls. These controls are crucial in ensuring that payments to agents in various countries, including Vietnam, Indonesia, India, China, and the United Arab Emirates, were genuinely for legitimate services.
Consequences of the Violations
The ramifications of these violations are substantial. As a result of this settlement, Albemarle Corporation is now bound by the SEC’s Order, acknowledging its transgressions against the anti-bribery, recordkeeping, and internal accounting controls provisions of the Securities Exchange Act of 1934.
To rectify these wrongdoings, Albemarle has agreed to take the following actions:
1. Cease and Desist
Albemarle Corporation has consented to a cease and desist order, signifying its commitment to abstain from any future violations of the aforementioned provisions. This is a crucial step towards ensuring that the company adheres to ethical business practices moving forward.
2. Disgorgement and Prejudgment Interest
In response to the settlement, Albemarle will disburse a total of more than $103.6 million. This amount includes disgorgement of over $81.8 million, which is the repayment of ill-gotten gains, and prejudgment interest of more than $21.7 million. By doing so, Albemarle aims to rectify the financial impact of its misconduct.
Parallel Action by the U.S. Department of Justice
Simultaneously, the U.S. Department of Justice has taken parallel action regarding this matter. It has entered into a non-prosecution agreement with Albemarle Corporation, obliging the company to pay a substantial $99 million criminal fine. Additionally, Albemarle will be subject to forfeiture, amounting to approximately $98 million. Notably, $81.8 million of this forfeiture aligns with the disgorgement payment outlined in the SEC Order.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
