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COMPANIES

• Universal Corp.
• Dimon Inc.
• Alliance One International Inc.

Two foreign subsidiaries of Virginia-based Alliance One International Inc. pleaded guilty on Friday to bribing officials in Thailand and Kyrgyzstan to secure contracts and purchase tobacco leaf, the Justice Department said.

Alliance One International AG, a Swiss corporation, was charged with conspiracy to violate the Foreign Corrupt Practice Act and violations of the anti-bribery and the books and records provisions of the statute. The Justice Department said the company paid bribes to Thai government officials to land contracts with the Thailand Tobacco Monopoly, which controls cigarette production in the country.

Alliance One Tobacco Osh LLC, in Kyrgyzstan, pleaded guilty to similar violations. The company admitted to paying bribes to Kyrgyz officials in connection with its purchase of tobacco in that country.

The subsidiaries agreed to pay a combined $9.5 million in fines. Alliance One also entered into a non-prosecution agreement with the department under which it is required to retain an independent monitor for at least three years to oversee the company’s anti-corruption and anti-bribery compliance program.

According to the non-prosecution agreement, the Justice Department agreed to the settlement because Alliance discovered the corrupt conduct through an internal company hotline, completely disclosed the violations to the department, cooperated quickly and fully with the DOJ investigation, and independently initiated a number remedial actions.

Alliance One also agreed to disgorge about $10 million in profits to the Securities and Exchange Commission in a civil settlement.

The guilty pleas, filed in U.S. District Court for the Western District of Virginia, come less than a week after a former manager at tobacco merchant Dimon Inc., a precursor company to Alliance One,  pleaded guilty to conspiracy to bribe the head of the Kyrgyz tobacco authority, local Kyrgyz officials and Kyrgyz tax inspectors.

In a related case, a Brazilian subsidiary of Va.-based Universal Corp., another tobacco company, pleaded guilty on Friday to violations of the Foreign Corrupt Practice Act. Prosecutors said Universal Leaf Tabacos Ltda collaborated with Dimon Inc. and Standard Commercial Corp. — which merged in 2005 to form Alliance One — to claim shares in the Thai tobacco market.

Dimon and Standard paid a combined $1.2 million in bribes to Thai officials, the department said. Universal admitted to paying $697,000 in kickbacks to Thailand Tobacco Monopoly officials. The plea agreement was filed in U.S. District Court for the Eastern District of Virginia.

Universal Leaf Tabacos agreed to pay a $4.4 million criminal fine and will disgorge another $4.5 million under a settlement with the SEC. The parent company entered into a non-prosecution agreement with the Justice Department stipulating that Universal hire an independent monitor to oversee the implementation of an anti-corruption and anti-bribery compliance program.

Prosecutors established jurisdiction because a number of the overt acts took place in the U.S. According to the criminal information, the money used for kickbacks was transferred from Virginia-based Latco, a wholly owned subsidiary of Universal, to a Universal Leaf sales agent who paid the illicit payments.

John Michelich, a senior trial attorney in the Criminal Division’s Fraud Section, is handling the Alliance One case.  The Universal Case is being prosecuted by Senior Trial Attorney Stacey Luck, also of the Fraud Section, with assistance from Assistant U.S. Attorney Michael S. Dry of the U.S. Attorney’s Office for the Eastern District of Virginia.

The SEC’s investigation was conducted by attorneys Amybeth Garcia-Bokor, Paul Gumagay, Michael Hoess, Uta Von Eckartsberg and Christine Neal.

Additional reporting by Christopher M. Matthews and Aruna Viswanatha.