The state-owned Indian Oil Corporation (IOC) has launched an investigation into allegations that a US-based specialty chemicals company bribed its officials to win contracts to supply catalysts 15 years ago.
Albemarle Corporation, a global supplier of specialty chemicals, is accused of paying approximately $1.14 million in kickbacks to an intermediary in India between 2009 and 2011, according to a company disclosure. According to an order of the US Securities and Exchange Commission dated September 28, its dealings with the IOC during that period, 2023.
Albemarle was implicated in bribery by US authorities in 2017, and it settled the case in September 2023 by paying more than $198 million in fines to avoid prosecution.
In its filing, the IOC insisted that it is not a party to, or charged in connection with, the US SEC proceedings. However, the company has initiated an internal review to fully understand the facts surrounding the allegations and determine the appropriate course of action.
The IOC reaffirmed its commitment to the highest standards of governance, transparency and regulatory compliance across all regions in which it operates. The company operates 10 of India's 22 oil refineries, refining crude oil into fuels such as petrol and diesel with a total capacity of 80.8 million tonnes per annum. IOC also controls about 40 percent of India's fuel market.
“We assure our stakeholders, partners and employees that we are a law-abiding company and fully comply with all laws,” the company said in the filing.
According to the SEC order, an Albemarle consultant and sales representative paid bribes to unnamed decision makers at the IOC between 2009 and 2011, as well as to a private sector client between 2009 and 2017. These bribes are said to have been paid to get catalytic orders, and sensitive ones. Non-public information for Albemarle.
The agent's intervention came after the IOC threatened to add Albemarle to a “holiday list,” a sanction that barred the company from future business in India for failing to meet a performance guarantee.
The agent reached out to Albemarle's Midwest people, who said the company could work around the holiday roster problem. Albemarle then hired the agent, despite knowing the high likelihood that the agent would use a portion of his compensation to bribe senior IOC officials, the SEC order states.
The representative, whose identity was not disclosed in the SEC filing, said two former senior officials of the IOC were part of its board of directors.
An Albemarle regional director warned the company's US-based sales executive about the possibility of bribery. He expressed concern that hiring the agent would violate the US Foreign Corrupt Practices Act (FCPA). Despite these warnings, the sales executive signed a back-end consulting agreement with the agent in August 2009, which stipulated a commission of 3 percent — more than three times the rate Albemarle paid the existing agent in India.
Shortly after the agent's engagement, the threat to add Albemarle to the holiday list was dropped.
Between 2009 and 2017, Albemarle also paid high commissions to the agent for taking catalyst orders from private customers in India. The SEC found that Albemarle's corrupt practices extended to obtaining contracts with the IOC and companies in Indonesia and Vietnam, resulting in more than $63.5 million in bribes.