State-owned Indian Oil Corporation (IOC) has launched an investigation into allegations that a US specialty chemicals company bribed its officials 15 years ago to secure contracts to supply catalysts.
According to a company disclosure, Albemarle Corporation, a global supplier of specialty chemicals, is accused of paying approximately $1.14 million in commission to a middleman in India between 2009 and 2011. In exchange, the company allegedly earned approximately $11.14 million in profits from its dealings with IOC during this period, according to a US SEC order dated September 28, 2023.
Albemarle was implicated in corruption cases by US authorities in 2017 and resolved the case in September 2023 by paying a hefty fine of more than $198 million to avoid prosecution.
In its filing, IOC emphasized that it was neither a party to nor a defendant in the US SEC proceedings. However, the company has launched an internal review to fully understand the facts surrounding the allegations and determine the necessary actions to take.
IOC has reaffirmed its commitment to the highest standards of governance, transparency and regulatory compliance in all regions in which it operates. The company operates 10 of India’s 22 oil refineries, with a total capacity of 80.8 million tonnes per year, refining crude oil into fuels like gasoline and diesel. IOC also controls about 40 percent of the fuel market in India.
“We assure our stakeholders, partners and employees that we are a law-abiding company, fully compliant with all laws,” the company said in the filing.
According to the SEC order, an Albemarle consultant and sales agent bribed unnamed IOC decision-makers between 2009 and 2011, as well as a private sector client between 2009 and 2017. These bribes were allegedly paid to obtain catalyst orders and obtain sensitive, non-public information about Albemarle.
The agent’s involvement came after IOC threatened to add Albemarle to a “vacation list”, a sanction that would have prevented the company from continuing its operations in India due to failure to comply with a performance guarantee.
The agent contacted Albemarle staff in the Middle East, saying it could help the company avoid the holiday listing issue. Albemarle then hired the agent, knowing that it was highly likely that the agent would use a portion of his compensation to bribe senior IOC officials, as detailed in the SEC order.
The agent, whose identity is not revealed in the SEC filing, reportedly claimed that two former senior IOC officials were on its board of directors.
An Albemarle regional manager alerted the company’s U.S.-based sales manager to possible corruption. He expressed concern that hiring the agent would violate the U.S. Foreign Corrupt Practices Act (FCPA). Despite these warnings, the sales manager signed a backdated consultancy agreement with the agent in August 2009, which stipulated a 3 percent commission, three times higher than the rate paid by Albemarle to its existing agent in India.
Shortly after the agent’s engagement, the threat to add Albemarle to the vacation list was removed.
Between 2009 and 2017, Albemarle also paid excessive commissions to the agent to obtain orders for catalysts from private customers in India. The SEC found that Albemarle’s corrupt practices extended to obtaining contracts with IOC and companies in Indonesia and Vietnam, resulting in more than $63.5 million in bribes.
