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United States v. Alliance One Tobacco Osh, LLC

On August 6, 2010, two subsidiaries of Alliance One International Inc., Alliance One International AG and Alliance One Tobacco Osh LLC, pled guilty to two separate, three-count criminal information charges, totaling nearly $14 million in fines.

Formed in 2005 as the result of a merger between Dimon Incorporated and Standard Commercial Corporation, Alliance One is an independent tobacco merchant based in Morrisville, North Carolina that purchases, processes and sells tobacco to manufacturers of consumer tobacco products around the world.

The company’s subsidiaries were charged with the following:

  • Conspiring to commit non-compliance of the Foreign Corrupt Practices Act.
  • Violations of the anti-bribery provisions of the FCPA.
  • Violations of the books and records provisions of the FCPA.

In regards to the Switzerland-based AOIAG, the charges relate to several bribes paid to Thai government officials in an effort to retain business with the Thailand Tobacco Monopoly, a clear violation of the anti-bribery provisions of the FCPA.

Alliance One now must face these guilty pleas that trace back to conduct committed by employees and agents of foreign subsidiaries of both Dimon and Standard that occurred prior to the merger.  From 2000 to 2004, Dimon, Standard and Universal Brazil sold Brazilian-grown tobacco to the government Tobacco Monopoly of Thailand. Retaining sales agents from the TTM, each company collaborated with those agents to coordinate prices and pay kickbacks equal to $100,000 or more to the officials from TTM as a way to maintain ties to the Thai tobacco market. In addition to those three companies, AOI-Kyrgyzstan admitted that employees of Dimon’s Kyrgyz subsidiary doled out a total of around $3 million in bribes from 1996 to 2004 to various officials in the Republic of Kyrgyzstan. These included officials of the Kyrgyz Tamekisi, a government entity that controlled and regulated the tobacco industry in Kyrgyzst.

  • Employees of AOI-Kyrgyzstan also paid bribes totaling $254,262 to five local government officials to obtain permission to purchase tobacco from local growers and another $82,000 to officers of the Kyrgyz Tax Police to avoid penalties and tax investigations.
  • AOI Inc. has agreed to pay a total of $9.45 million in fines and Universal Brazil has agreed to pay a $4.4 million in fines.

Additionally, both parties are have been subjected to a mandatory minimum  three years to maintain an independent compliance monitor to oversee the implementation of an anti-bribery and anti-corruption compliance program, and periodically report to the Department of Justice (DOJ).