WASHINGTON – Two foreign subsidiaries of Alliance One International Inc., a global tobacco leaf merchant headquartered in Morrisville, N.C., pleaded guilty today to violating various provisions of the Foreign Corrupt Practices Act (FCPA). In a related matter, the Department of Justice filed FCPA charges today against Universal Leaf Tabacos Ltda. (Universal Brazil), a subsidiary of Universal Corporation, which is a Virginia corporation. The resolutions were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Alliance One International AG (AOIAG), a Swiss corporation, pleaded guilty in U.S. District Court for the Western District of Virginia in Danville, Va., to a three-count criminal information charging it with conspiring to violate the FCPA, violations of the anti-bribery provisions of the FCPA and violations of the books and records provisions of the FCPA. The charges relate to bribes paid to Thai government officials to secure contracts with the Thailand Tobacco Monopoly, a Thai government agency, for the sale of tobacco leaf. Alliance One Tobacco Osh LLC (AOI-Kyrgyzstan), a Kyrgyzstan corporation, also pleaded guilty today to a separate three-count criminal information charging the corporation with conspiracy to violate the FCPA, violations of the anti-bribery provisions of the FCPA and violations of the books and records provisions of the FCPA relating to bribes paid to Kyrgyzstan government officials in connection with its purchase of Kyrgyz tobacco.
According to court documents, Alliance One is an independent leaf tobacco merchant that purchases, processes and sells tobacco to manufacturers of consumer tobacco products worldwide. Alliance One was formed in 2005 as the result of a merger of Dimon Incorporated and Standard Commercial Corporation, both of which were wholesale leaf tobacco merchants. The guilty pleas today relate to conduct that was committed by employees and agents of foreign subsidiaries of both Dimon and Standard prior to the merger.
As part of the plea agreements, AOIAG agreed to pay a fine of $5,250,000 and AOI-Kyrgyzstan agreed to pay a fine of $4,200,000, for a total of $9.45 million in fines. Sentencing of both AOI subsidiaries has been scheduled for Oct. 21, 2010, before Senior U.S. District Court Judge Jackson L. Kiser in the Western District of Virginia. In addition, the Department of Justice and Alliance One entered into a non-prosecution agreement in which Alliance One agreed to cooperate with the ongoing investigation and to retain an independent compliance monitor for a minimum of three years to oversee the implementation of an anti-bribery and anti-corruption compliance program and to report periodically to the department.
In addition, the Department of Justice filed a two-count information in the Eastern District of Virginia charging Universal Brazil with conspiring to violate the anti-bribery provisions and books and records provisions of the FCPA, and with violating the anti-bribery provisions of the FCPA relating to bribes paid to Thailand Tobacco Monopoly employees for the sale of Brazilian tobacco. The Department of Justice also filed a plea agreement signed by Universal Brazil whereby the company admitted to the conduct contained in the charging document. In addition, Universal and the Department have entered into a separate, non-prosecution agreement. According to the plea agreement and the non-prosecution agreement, Universal Brazil has agreed to pay a $4.4 million criminal fine, and Universal and Universal Brazil have agreed to retain an independent compliance monitor for a minimum of three years to oversee the implementation of an anti-bribery and anti-corruption compliance program and to report periodically to the Department.
According to court documents, from 2000 to 2004, Dimon, Standard and Universal Brazil sold Brazilian-grown tobacco to the Thailand Tobacco Monopoly. Each of the three companies retained sales agents in Thailand, and collaborated through those agents to apportion tobacco sales to the Thailand Tobacco Monopoly among themselves, coordinate their sales prices, and pay kickbacks to officials of the Thailand Tobacco Monopoly in order to ensure that each company would share in the Thai tobacco market. Each of the companies made annual sales to the Thailand Tobacco Monopoly. To secure the sales contracts, each company admitted it paid kickbacks to certain Thailand Tobacco Monopoly representatives based on the number of kilograms of tobacco sold to the Thailand Tobacco Monopoly. To obtain these contracts, Dimon paid bribes totaling $542,590 and Standard paid bribes totaling $696,160, for a total of $1,238,750 in bribes paid to the Thailand Tobacco Monopoly officials during the course of four years. Universal Brazil admitted that the company paid approximately $697,000 in kickbacks to the Thailand Tobacco Monopoly officials. Court documents detail how the companies conspired to set the price of the tobacco sales, pay the kickbacks to the officials, and then falsely characterized the payments on each of the companies’ respective books and records as "commissions" paid to their sales agents.
In addition, according to court documents, AOI-Kyrgyzstan admitted that employees of Dimon’s Kyrgyz subsidiary paid a total of approximately $3 million in bribes from 1996 to 2004 to various officials in the Republic of Kyrgyzstan, including officials of the Kyrgyz Tamekisi, a government entity that controlled and regulated the tobacco industry in Kyrgyzstan . Also, according to court documents, the employees paid bribes totaling $254,262 to five local provincial government officials, known as "Akims," to obtain permission to purchase tobacco from local growers during the same period. In addition, the employees paid approximately $82,000 in bribes to officers of the Kyrgyz Tax Police in order to avoid penalties and lengthy tax investigations.
In related matters, Alliance One today settled a civil complaint filed by the U.S. Securities and Exchange Commission (SEC), charging Alliance One with violating the FCPA’s anti-bribery, internal controls, and books and records provisions in connection with the misconduct described in court documents. Alliance One will disgorge approximately $10 million in profits to the SEC. Also today, Universal Corporation settled a civil complaint filed by the SEC, charging Universal Leaf with violating the FCPA’s anti-bribery, internal controls, and books and records provisions in connection with the misconduct described in the court documents. Universal Leaf will disgorge approximately $4.5 million in profits to resolve the civil matter.
The Alliance One case is being prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section. The U.S. Attorney’s Office for the Western District of Virginia also provided assistance in the Alliance One case. The Universal Case is being prosecuted by Senior Trial Attorney Stacey Luck from the Criminal Division’s Fraud Section, with assistance from Assistant U.S. Attorney Michael S. Dry for the Eastern District of Virginia. Investigative assistance for the Universal matter was provided by the FBI’s Richmond office.
The Department of Justice and the SEC worked together to reach these global settlements. The department acknowledges and expresses its appreciation for the significant assistance provided by the staff of the SEC’s Division of Enforcement during the course of this investigation.