United States v. Alliance One International AG (W.D. Va. 2010)
United States v. Alliance One Tobacco Osh, LLC (W.D. Va. 2010)
In re Alliance One International, Inc. (2010)

• Case Name
• United States v. Alliance One International AG (W.D. Va. 2010)
  United States v. Alliance One Tobacco Osh, LLC (W.D. Va. 2010)
  In re Alliance One International, Inc. (2010)

• Date Filed
• 08/06/2010

• Enforcement Agency
• DOJ

• Countries
• Kyrgyzstan, Thailand

• Foreign Official
•  Officials of the Thailand Tobacco Monopoly (“TTM”); Kyrgyz provincial government officials.

• Date of Conduct
• 2000 to 2004

• Nature of Business
• Alliance One International AG (“AOIAG”) is a wholly-owned Swiss subsidiary of Alliance One International, Inc. (“Alliance One”), a Virginia corporation that purchases, processes, and sells tobacco to manufacturers of consumer tobacco products worldwide.  It was formed in 2005 as the result of a merger of Dimon Incorporated (“Dimon”) and Standard Commercial Corporation (“Standard”).  AOIAG provided financial, accounting, and management services to other Alliance One foreign subsidiaries that sold tobacco to Alliance One’s customers.  Alliance One Tobacco Osh, LLC (“AOTOL”) is Alliance One’s Kyrgyz subsidiary that was formed in 2005 after Dimon merged with Standard.  Prior to the merger, Alliance One Tobacco Osh, LLC was known as “Dimon International Kyrgyzstan” (“DIK”). 

• Influence to be Obtained
• The criminal information alleges that from 2000 to at least 2004, Dimon and Standard subsidiaries – Dimon International AG (“DIAG”) and Standard Brazil (“SB”) – and Universal Leaf Tabacos, Ltda – a subsidiary of Universal Corporation (“Universal”), a competitor of Alliance One – retained sales agents in Thailand, and collaborated through those agents to control the sale of Brazilian tobacco to the TTM.  Accordingly, the subsidiaries coordinated their sales prices and paid kickbacks to officials of the TTM to ensure that each company would share in the Thai tobacco market.  The kickbacks referred to as “special expenses” were allegedly paid to certain TTM representatives based on the number of kilograms of tobacco sold to the TTM.  
   
  DIAG and SB, predecessor-subsidiaries of Alliance One, both falsely characterized the payments in their respective books and records as “commissions” paid to their sales agents.  DIAG and SB realized profits of $4.3 million and $2.7 million, respectively, as a result of the scheme.  
   
  Separately, on September 27, 1996, officers of DIK signed an agreement with the Kyrgyz Tamekisi, the agency that managed and controlled the government-owned shares of the tobacco processing facilities throughout Kyrgyzstan that detailed the manner in which DIK would be allowed to conduct business in Kyrgyzstan.  On October 22, 1996, the agreement was amended to issue a license to DIK to process that year’s crop and implemented a special arrangement where DIK agreed to pay the Tamekisi $.18 per kilogram and an additional $.05 per kilogram for “financial assistance.”  The financial assistance payments to the Kyrgyzstan officials were allegedly bribes that DIK used to influence acts or decisions of a Kyrgyz official in his official capacity to secure Dimon’s continued access to the tobacco processing facilities controlled by the Tamekisi.  DIK also allegedly paid “commissions” to at least 5 Akims—municipal, district, or provincial government heads—to obtain permission to purchase tobacco from the growers in each area.  In addition, the DOJ claims that from March 2000 to March 2003, DIK also made approximately nine cash payments to officers of the Kyrgyz Tax Inspection Police to influence their acts and decisions and allow for Dimon’s continued ability to conduct its business in Kyrgyzstan. 
   

• Enforcement
• On August 26, 2010, AOIAG pleaded guilty 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.  AOIAG also admitted the factual allegations contained in the information were true and correct.  The guilty plea related to conduct that was committed by employees and agents of foreign subsidiaries of both Dimon and Standard prior to their merger.
   
  AOTOL also pleaded guilty to a separate three-count criminal information charging it 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 government officials in Kyrgyzstan.
   
  On October 21, 2010, the court ordered AOIAG and AOTOL to pay fines of $5,251,200 and $4,200,000 respectively.  The DOJ and Alliance One entered into a non-prosecution agreement in which Alliance One agreed to cooperate with an ongoing investigation and to retain an independent compliance monitor for a minimum of three years.
   
  On August 26, 2010, Alliance One settled a related civil complaint filed by the SEC, charging Alliance One with violating the FCPA’s anti-bribery, internal controls, and books and records provisions.  Alliance One was required to disgorge approximately $10 million in profits to the SEC.
   
  Also in August 2010, Bobby Elkin and three other former senior executives of Dimon International Kyrgyzstan, a then Dimon subsidiary, the predecessor entity of AOTOL, pleaded guilty to and settled related charges brought by the DOJ and SEC.  In other related proceedings, Universal also settled related charges with the DOJ and SEC in August 2010.
   

• Amount of the Value
• Approximately $1,238,750.  

• Amount of Business Related to Payment
• Not Stated.

• Intermediary
• Tobacco Sales Agents.

• Total Sanction
• $ 9,450,000

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 19,450,000

• Related Enforcement Actions
• SEC v. Alliance One International, Inc. (D.D.C. 2010)
  United States v. Universal Leaf Tabacos Ltda. (E.D. Va. 2010)
  United States v. Bobby J. Elkin, Jr. (W.D. Va. 2010)
  SEC v. Bobby J. Elkin, Jr., Baxter J. Myers, Thomas G. Reynolds, and Tommy L. Williams (D.D.C. 2010)
  

Alliance One International AG

• Citation
• United States v. Alliance One Int’l AG, No. 4:10-cr-00017 (W.D. Va. 2010); 

• Date Filed
• 08/06/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Aiding and Abetting: Books-and-Records
  • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Territorial Jurisdiction, Conspiracy, Aiding and Abetting

• Defendant's Citizenship
• United States, Switzerland

Alliance One Tobacco Osh, LLC 

• Citation
• United States v. Alliance One Tobacco Osh, LLC, No. 4:10-cr-00016 

• Date Filed
• 08/06/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Aiding and Abetting: Books-and-Records
  • Anti-Bribery
  • Conspiracy: Anti-Bribery

• Other Statutory Provision
• None

• Disposition
• Plea Agreement

• Defendant Jurisdictional Basis
• Territorial Jurisdiction, Conspiracy, Aiding and Abetting

• Defendant's Citizenship
• Kyrgyzstan

Alliance One International, Inc.

• Citation
• In re Alliance One Int’l, Inc. (2010). 

• Date Filed
• 08/06/2010

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Anti-Bribery
  • Books-and-Records

• Other Statutory Provision
• None

• Disposition
• Non-Prosecution Agreement

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States