State-owned Indian Oil Corporation (IOC) has launched an investigation into allegations that a US-based 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 kickbacks to a middleman in India between 2009 and 2011. In return, the ‘company reportedly earned about $11.14 million in profits from its dealings with the IOC during that period, according to a US SEC order dated September 28 2023.

Albemarle was implicated in bribery by US authorities in 2017 and settled 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 is not a party to, or a defendant in, the US SEC proceedings. However, the company has initiated an internal review to fully understand the facts surrounding the allegations and determine the necessary actions to take.

The IOC reaffirmed its commitment to the highest standards of governance, transparency and regulatory compliance in all regions where 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 such as petrol 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’s 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. Allegedly, these bribes were paid to secure catalyst orders and obtain sensitive, non-public information from Albemarle.

The agent’s involvement came after the IOC threatened to add Albemarle to a “holiday list,” a sanction that would have barred the company from future business in India for failing to meet a performance guarantee.

The agent contacted Albemarle staff in the Middle East, claiming he could help the company avoid the holiday listing problem. Albemarle then hired the agent, despite knowing the high likelihood that the agent would use some of his compensation to bribe senior IOC officials, as stated in the SEC order.

The agent, whose identity was not disclosed in the SEC filing, claimed that two former senior IOC officials were on its board of directors.

An Albemarle regional manager alerted the company’s US sales executive to the potential bribe. He expressed concern that hiring the agent would violate the US Foreign Corrupt Practices Act (FCPA). Despite these warnings, the sales executive signed an antiquated consulting agreement with the agent in August 2009, which stipulated a 3 percent commission, three times the rate Albemarle was paying its existing agent in the india

Shortly after the agent’s commitment, the threat to add Albemarle to the vacation list was dropped.

Between 2009 and 2017, Albemarle also paid excessive commissions to the agent to secure orders for catalysts from private customers in India. The SEC found that Albemarle’s corrupt practices extended to securing contracts with IOCs and companies in Indonesia and Vietnam, resulting in more than $63.5 million in bribes.