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U N I T E D STATES DISTRICT COURT FOR T H E WESTERN DISTRICT OF P E N N S Y L V A N I A

U N I T E D STATES OF A M E R I C A v. CRIMINAL NO. ALCOA WORLD A L U M I N A LLC, Defendant. ri

AGREED MOTION TOWAIVE THE PRESENTENCE REPORT The United States o f America, by and through the Fraud Section o f the Criminal Division of the United States Department o f Justice and the United States Attorney's Office for the Western District o f Pennsylvania (the "Department"), and the defendant, Alcoa World Alumina L L C (the "Defendant"), by and through its undersigned attorneys, respectfully submit this Agreed M o t i o n to Waive the Presentence Report ("Agreed Motion") for the Court's consideration i n resolving the corporate plea o f guilty i n the case captioned above. For the reasons set forth below, the Department and the Defendant respectfully request that the Court accept the guilty plea o f the Defendant pursuant to Federal Rule o f Criminal Procedure consolidate the entry o f the plea o f guilty and the sentencing into one proceeding; waive the presentence investigation pursuant to Federal Rule o f Criminal Procedure 32(c)(l)(A)(ii); and sentence the Defendant i n accordance w i t h the terms o f the plea agreement (the "Plea Agreement") filed simultaneously herewith. The parties submit that the information

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 o f the

preparation o f a presentence investigation report. I. INTRODUCTION Federal Rule o f Criminal Procedure 32(c)(l)(A)(ii) permits the Court to impose a sentence without the preparation o f a presentence report i f the Court finds that the information i n 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 i n the Information, Plea Agreement, and Agreed to Statement o f Facts, drafts o f which are being submitted to the Court i n advance o f formal proceedings, satisfy the Requirements o f Rule and provide a basis for the Court to

exercise its sentencing authority meaningfully under Title 18, United States Code, Section 3553. A. The Foreign Corrupt Practices Act

The Foreign Corrupt Practices A c t o f 1977 ("FCPA"), as amended, 15 U.S.C. 78dd-l, et seq., certain classes o f persons and entities from corruptly making payments to

foreign government officials to assist i n obtaining or retaining business. Pertinent to the charges herein, the FCPA prohibited U.S. companies such as the Defendant from making use of the mails or any means or instrumentality o f interstate commerce corruptly i n furtherance o f an offer, payment, promise to pay, or authorization o f the payment of money or anything o f value to any person, while knowing that all or a portion o f such money or thing o f value would be or had been offered, given or promised, directly or indirectly, to a foreign official for the purpose o f obtaining or retaining business for, or directing business to, any persons. U.S.C. 78dd-2(a). 2

B.

The Defendant

The Defendant, Alcoa W o r l d Alumina L L C , was a Limited Liability Company formed under Delaware law which maintained its principal place i n Pittsburgh, Pennsylvania,

in the Western District o f Pennsylvania. I n addition, the Defendant was an enterprise company of Alcoa W o r l d Alumina and Chemicals and alumina refining enterprise formed i n Limited, the majority and minority owners o f an unincorporated global bauxite mining between Alcoa Inc. ("Alcoa") and Alumina W A C , respectively. The Defendant owned and

operated (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" w i t h i n the meaning o f the FCPA, Title United States Code, Section 78dd-2(a).

Beginning i n or around 2000, executives at the Defendant's offices i n Pittsburgh and Knoxville, Tennessee, assumed primary responsibility for the relationship with a global alumina customer, A l u m i n i u m Bahrain B.S.C. ("Alba"), a state-owned and state-controlled aluminium smelter i n Bahrain. C. The Charged Conduct

In the case presently before the Court, the Department has filed a criminal information charging the Defendant with one count o f violating the anti-bribery provisions o f the FCPA, U.S.C. 78dd-2 and 18 U.S.C. 2. Subject to certain contingencies set forth i n the Plea

Agreement, the Defendant has agreed to enter a plea o f guilty to the Information, based upon admissions i n the Agreed to Statement o f Facts, and to persist i n that plea through sentencing. The charge is based on the Defendant's role i n 2004 i n procuring a ten-year agreement to sell approximately 1.7 million metric tons o f alumina to Alba from A W A C ' s Australian refineries. The Defendant caused Alcoa o f Australia to enter into a purported distributorship w i t h a shell 3

company owned by Consultant A , an international middleman who had close contacts w i t h certain members o f Bahrain's Royal Family, rather than contract directly with Alba. The Defendant consciously disregarded that the mark-up imposed by Consultant A on sales o f 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 i n connection with the Plea Agreement is set forth i n the Agreed to Statement o f Facts, which is Exhibit 3 to the Plea Agreement that is being filed simultaneously w i t h this Agreed M o t i o n . 1 The Parties respectfully refer the Court to that Exhibit to the Plea Agreement. I n accordance w i t h Part below, the parties agree that the Court should look to the under the

gross profits earned on the 2004 transaction for purposes o f calculating the criminal the Sentencing Guidelines. See Part I I I . B below. With respect to the calculation o f the Government represents that at trial it would prove the following:

From 2005 to 2009, approximately $446 million i n gross profit was earned on the corruptly secured alumina supply agreement w i t h 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 i n excess o f $188 million on the mark-up o f alumina sales to Alba. I n 2005 and 2006, the Government was able to trace approximately $50 m i l l i o n 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 the extent it relates to its actions and the actions of its officers and employees, but the Defendant does not admit to the conduct of any other entity or person. Nothing in this Agreed Motion is intended to add to, or expand, the admissions contained in the Statement of Facts. 4

Bahraini government officials. A W A had no knowledge o f the particulars o f these payments, and some o f these payments were made from accounts containing commingled funds from some o f Consultant A ' s other transactions i n the region. II. T H E R E C O R D CONTAINS SUFFICIENT INFORMATION TO IMPOSE SENTENCE Under Federal Rule o f Criminal Procedure 32(c)(l)(A)(ii), the Court may proceed to sentencing without the benefit o f a presentence report i f "the court finds that the information i n the record enables it to meaningfully exercise its sentencing authority under Title United THE COURT

Sates Code, Section 3553, and the court explains its finding on the record." Fed. R. Crim. P. Courts imposing sentence on corporate defendants for violations o f the FCPA have combined the plea and sentencing hearings into one proceeding. See, e.g., United States v. Siemens Panalpina, Inc., et al., (D.D.C. Dec. 15, 2008); United States v. (S.D. Tex. Dec. 7, 2010).

The parties respectfully submit that the record presently before the Court contains sufficient information to allow the Court to impose sentence without additional presentence investigation and a report. The facts described i n the Information, Statement o f Facts and the Plea Agreement, detail not only the Defendant's violations o f law, but also the Defendant's and Alcoa's timely internal investigation 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 o f Rule 32(c)(l)(A)(ii) and permits the Court to impose sentence under 18 U.S.C. 3553.

III.

SENTENCING GUIDELINES CALCULATION

I n the Plea Agreement, the parties stipulate that the following Guidelines calculation, using the edition o f the Sentencing Guidelines Manual, is the proper application o f the

Sentencing Guidelines to the criminal charge i n the Information. The Sentencing Guidelines analysis i n this case results i n a Guidelines A. range o f $446,000,000 to $892,000,000.

Calculation of the Offense Level Based upon U.S.S.G. the total offense level is 48, calculated as follows:

(a) (2)

Base Offense Level +2

(1) Multiple Bribes Value o f benefit received More than $400,000,000 (b)(3) Offense involved a high-level decision-making public official TOTAL B. Calculation of the Base Fine

+30 +4

48

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 payments level from the Offense Level Fine Table or the total known bribe

the offense. The pecuniary gain o f $446,000,000, therefore, is the correct base 2Cl.l(d).

for the offense under the sentencing guidelines. See U.S.S.G. 8C2.4(a)(l) and C. Calculation Based upon U.S.S.G. (a) Culpability Score

the culpability score is 5, calculated as follows: 5

Base Culpability Score 6

(b)(4) the organization had 50 or more employees and an individual within substantial authority personnel participated in, condoned, or was willfully ignorant o f the offense (g)(1) The organization fully cooperated i n the investigation and clearly demonstrated recognition and affirmative acceptance o f responsibility for its criminal conduct

+2

-2 TOTAL D. The Calculation of the Fine Range range is calculated pursuant to U.S.S.G. 8C2.6 and 8C2.7 as follows:

Base Fine Multipliers Fine Range E. Sentence

$446,000,000 (min)/2.0 (max) $446,000,000 / $892,000,000

Pursuant to the Plea Agreement, and consistent with Fed. R. Crim. P. parties have agreed that the Defendant w i l l pay a criminal fine o f $209,000,000 i n annual installments. IV. T H E AGREED-UPON FINE IS T H E APPROPRIATE DISPOSTION The parties submit that the imposition o f a criminal penalty o f $209,000,000 is the

the equal

appropriate disposition o f this case, based upon the following, as set forth i n the Agreed to Statement o f Facts and Paragraph 35(a) o f the Plea Agreement:

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 i n corrupt payments to Bahraini government officials who controlled Alba'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 i n 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 Internal Revenue Service $14,000,000, which is at least the amount involved i n 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. I n addition, i n 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 i n this matter.

C.

Alcoa's Cooperation appropriate is the level o f

I n addition, another factor i n the assessment

cooperation received from the Defendant and Alcoa. After the allegations arose, Alcoa cooperated fully w i t h the Department's investigation. When Alcoa'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 o f the allegations, who provided the government w i t h factual proffers o f conduct related to the allegations. Alcoa's counsel also provided the Department w i t h 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 appropriate fine level is the series o f

A n additional factor i n the assessment

remedial 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 implementation o f enhanced due diligence reviews for the retention o f third-party agents and consultants, and Alcoa's implementation o f an enhanced anti-corruption 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 Criminal Fine "would pose an undue burden on" the

Because the immediate payment o f the entire

Defendant and its majority shareholder, Alcoa, see U.S.S.G. 8C3.2(b), the United States and 9

the Defendant agree that the entire

shall be paid i n

equal annual installments o f business day after

w i t h the first payment due i n full on or before the tenth the date o f entry o f the

o f conviction. Thereafter, the second, third, fourth and fifth

payments shall each be due i n full on the first, second, third and fourth-year anniversaries o f the date o f the entry o f judgment o f conviction ("the recommended sentence"). ///

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V.

CONCLUSION For the foregoing reasons, the Department and the Defendant respectfully recommend

that the Court accept the Plea Agreement o f Alcoa World Alumina L L C pursuant to Federal Rule of Criminal Procedure waive the presentence investigation pursuant to Federal Rule

of Criminal Procedure 32(c)(l)(A)(ii), approve the disposition o f this matter, and impose sentence according to the terms o f the Plea Agreement.

T H E D E P A R T M E N T OF JUSTICE:

JEFFREY H . K N O X Chief, Fraud Section Criminal Division Department of Justice/]

By: Deputy Chief, Fraud Section N Y I D No. 2657567

V J. H I C K T O N United States Attorney N o . 34524

FOR A L C O A W O R L D A L U M I N A L L C :

By: Robert J. Jossen N o . 1393719 Jonathan Streeter N o . 5034186 Counsel for Alcoa World Alumina L L C

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