Alcoa Inc., the largest U.S. aluminum producer, agreed to pay $384 million to settle U.S. allegations that one of its units bribed members of Bahrain’s royal family and officials at a state-owned company to win business.

Alcoa World Alumina LLC, a majority-owned unit that supplies the raw material used by smelters to make aluminum, will plead guilty to one count of violating the anti-bribery provisions of the Foreign Corrupt Practices Act in a 2004 transaction, the Department of Justice said in a statement today.

As admitted in the charging documents, in 2004, Alcoa World Alumina corruptly secured a long-term alumina supply agreement with Alba by agreeing to purportedly sell over 1.5 million metric tons of alumina to Alba through offshore shell companies owned by Consultant A. The sham distributorship permitted Consultant A to mark up the price of alumina by approximately $188 million from 2005 to 2009, the duration of the corrupt supply agreement. Court filings allege that Consultant A used the mark-up to pay tens of millions in corrupt kickbacks to Bahraini government officials, including senior members of Bahrain’s Royal Family. To conceal the illicit payments, Consultant A and the government officials used various offshore bank accounts, including accounts held under aliases, at several major financial institutions around the world, including in Guernsey, Luxembourg, Liechtenstein and Switzerland.

“As the beneficiary of a long-running bribery scheme perpetrated by a closely controlled subsidiary, Alcoa is liable and must be held responsible,” George Canellos, co-director of the SEC Enforcement Division, said in the agency’s statement.

The company took a $62 million charge in the second quarter of 2013 on a proposed settlement with the Justice Department over the matter. It said at the time that the SEC had rejected a proposed settlement for the allegations.

Alcoa World Alumina is a unit of a joint venture that is 60 percent owned by Alcoa and 40 percent owned by Alumina Ltd. The venture was formed in 1994, according to Alumina.
Alcoa Pays $384m To Settle Alba Bribery Charges
SEC Alcoa PressRelease
Alcoa Cease and Desist Order
US Alcoa PressRelease

The world’s richest countries are failing to deliver on their pledges to crack down on money laundering and tax evasion, which drains billions of dollars from poor countries, an OECD report sais…
More about in corruption reports

Crime, corruption and tax evasion drained USD 946.7 billion from the developing world in 2011, up more than 13.7 percent from 2010, when illicit financial outflows totalled USD 832.4 billion – a dramatic increase from 2002, when illicit outflows totaled just USD 270.3 billion.

Cumulative illicit financial outflows from developing countries added up to € 5.9 trillion between 2002 and 2011.

“As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving… siphoning more and more money from developing countries each year,” GFI said.

Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth.

The report said six of the top 15 exporters of illicit capital are in Asia (China, Malaysia, India, Indonesia, Thailand and the Philippines), two are in Africa (Nigeria and South Africa), four in Europe (Russia, Belarus, Poland and Serbia), two are in the Western Hemisphere (Mexico and Brazil) and one is in the MENA region (Iraq). In the last 10 years, China topped the list with USD 1.08 trillion in black money outflow, followed by Russia (USD 880.96 billion), Mexico (USD 461.86 billion) and Malaysia (USD 370.38 billion). “It’s extremely troubling to note just how fast illicit flows are growing,” said GFI Chief Economist Dev Kar.

Over the past decade, illicit outflows from developing countries increased by 10.2 per cent each year in real terms-significantly outpacing GDP growth. This underscores the urgency with which policymakers should address illicit financial flows.
“While global momentum has been building over the past year to curtail this problem, more must be done. This study should serve as a wake-up call to world leaders: the time to act is now,” GFI said.

Disputing the GFI figures, critics say the estimates of illicit outflow was overstated as the estimates in the report of trade mispricing had not been taken into consideration. The GFI estimates were essentially unrecorded financial flows, which were not necessarily synonymous with illicit financial outflows.

GFI chief economist Dev Kar said they had taken all data into consideration and made the necessary adjustments before calculating the estimated illicit outflows.
“The estimates provided by our methodology are still very conservative. They do not include trade ‘misinvoicing’ in services, same invoice trade ‘misinvoicing’, ‘hawala’ transactions or bulk cash transactions.

“This means that much of the proceeds from drug trafficking, human smuggling and other criminal activities, which are often settled in cash, are not included in these estimates.”
Press Release – Illicit Financial Flows from Developing Countries
GFI IFF Developing Countries

Social unrest in 2014
Protesting predictions

UKRAINE, Bulgaria, Brazil, Argentina, Mexico, Tunisia, Egypt and Turkey are all countries in which protests have erupted in the past twelve months. Even places traditionally more muted, such as Japan and Singapore, have seen demonstrators in the streets. Social inequalities and political discontent have spurred citizens to gather. Resistance can be co-ordinated with greater ease than ever in the age of the smartphone.
Social unrest in 2014

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