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• Judge gives tobacco exec probation, fine for bribery  

DANVILLE -- A federal judge on Thursday cited the CIA's routine bribing of Afghan warlords as a reason for leniency to a tobacco executive who illegally paid more than $3 million to central Asian officials.

Bobby Jay Elkin Jr., who pleaded guilty in August to violating the U.S. Foreign Corrupt Practices Act, drew three years' probation and a $5,000 fine for payments he made to officials in Kyrgyzstan during years he spent there as a manager for Danville-based Dimon Inc., which described itself as the world's second-largest independent leaf tobacco merchant.

The sentence was much less than the five-year minimum prison term recommended by federal sentencing guidelines or the 38 months suggested by the prosecutor.

U.S. District Court Judge Jackson Kiser said probation was appropriate because of the detailed help Elkin gave to investigators. The judge also noted that in making the bribes, Elkin faced a choice of "either you do this or lose your job."

Kiser compared Elkin's actions to those of the CIA in Afghanistan. The CIA payments do not violate federal law, Kiser said, but "it sort of goes to the morality of the situation."

Elkin's punishment is part of a U.S. bribery investigation into the company that now owns Dimon, Alliance One International Inc., a Morrisville, N.C., tobacco merchant with 2010 sales of $2.3 billion. Alliance One Osh, the company's Kyrgyzstan operation, and Alliance One International, were sentenced by Kiser on Thursday to $9.45 million in fines.

The penalties result from charges to which the corporations pleaded guilty in August. They stemmed from Elkin's bribery in Kyrgyzstan and from similar payments uncovered in Thailand.

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• Tobacco Company Penalties May Signal U.S. Crackdown on Industry Practices Overseas 

A flurry of federal enforcement action targeting payoffs by subsidiaries of two U.S. tobacco companies may signal a broader regulatory assault against the industry's business practices abroad, according to experts on the Foreign Corrupt Practices Act. . . .

"The tobacco industry is going to have to take a look at itself and the way it's been doing business," said Dick Cassin, a lawyer with 30 years worth of FCPA experience, and author of The FCPA Blog. "A lot of the law-on-the-ground practices are just going to have to stop."

This is the first time the federal government has taken action against tobacco companies for payoffs overseas, according to the FCPA Digest, which tracks actions under the act.

FCPA experts say these actions could be a broad warning to the tobacco industry that the enforcement agencies are paying close attention. It is not uncommon for the SEC and DOJ to conduct "industry sweeps," in which they use actions and fines as a show of force to industries, according to Mike Koehler, another veteran FCPA lawyer who teaches business law at Butler University in Indianapolis. The pharmaceutical industry, for example, is currently under this kind of FCPA scrutiny, according to an announcement by acting deputy Attorney General Gary G. Grindler.

The recent action on tobacco "starts to put the FCPA on the radar screen of tobacco companies and others in that industry," Koehler said.

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Alliance One International Resolves FCPA Matter with DOJ and the SEC  

Alliance One International, Inc. (NYSE: AOI) today announced that the Company has reached settlements with the Securities and Exchange Commission ("SEC") and the Department of Justice ("DOJ"), concluding investigations of the Company relating to alleged violations of the Foreign Corrupt Practices Act ("FCPA") that occurred prior to the merger that formed the Company in May, 2005. Although, the settlements with both the SEC and the DOJ remain contingent on court approval, the agreed settlement amounts, as previously disclosed, were fully accrued in the Company's fiscal year 2010.

Pursuant to the settlement negotiated with DOJ, two of the Company's foreign subsidiaries, Alliance One Tobacco Osh, LLC and Alliance One International AG (successors to DIMON International (Kyrgyzstan) and DIMON International AG, respectively), agreed to plead guilty to FCPA violations committed by DIMON International (Kyrgyzstan) and DIMON International AG prior to the merger creating AOI, and to pay fines totaling $9.45 million. On August 6, 2010 Alliance One Tobacco Osh, LLC and Alliance One International AG entered the agreed guilty pleas in the U.S. District Court for the Western District of Virginia in Danville, Virginia. A sentencing hearing is scheduled for October 21, 2010. Noting among other things the Company's self-disclosure and cooperation, DOJ has indicated, subject to the Company's compliance with the settlement, it does not intend to separately charge the Company with any criminal violations arising out of the pre-merger conduct of DIMON International (Kyrgyzstan) and DIMON International AG.

The settlement negotiated with the SEC includes the Company's agreement to disgorge profits in the amount of $10 million and to abide by an injunction against further FCPA violations. . . .

R. E. Harrison, the Company's Chairman and Chief Executive Officer, stated:

Our Company is committed to the highest standards of conduct in all transactions in all jurisdictions where we do business throughout the world. In these cases, although occurring prior to our merger in May, 2005, the conduct by those predecessor companies did not meet our standards and we believe it to be in the best interest of the Company, our shareholders and our other stakeholders to put these issues behind us by means of these negotiated agreements.

As indicated in our agreement with the DOJ, we have cooperated fully throughout the course of this investigation and believe that since our merger we have demonstrated our complete commitment to conducting our business in accordance with the highest standards of legal and ethical conduct.

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Tobacco Companies Plead Guilty to Bribing Kyrgyz, Thai Officials  

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.

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• Alliance One International Inc. and Universal Corporation Resolve Related FCPA Matters Involving Bribes Paid to Foreign Government Officials Companies Agree to Pay $13.85 Million . . .  

Two foreign subsidiaries of Alliance One International Inc., a global tobacco leaf merchant headquartered in Morrisville, N.C., pleaded guilty today to violating various provisions of the Foreign Corrupt Practices Act (FCPA). In a related matter, the Department of Justice filed FCPA charges today against Universal Leaf Tabacos Ltda. (Universal Brazil), a subsidiary of Universal Corporation, which is a Virginia corporation. The resolutions were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

Alliance One International AG (AOIAG), a Swiss corporation, pleaded guilty in U.S. District Court for the Western District of Virginia in Danville, Va., to a three-count criminal information charging it with conspiring to violate the FCPA, violations of the anti-bribery provisions of the FCPA and violations of the books and records provisions of the FCPA. The charges relate to bribes paid to Thai government officials to secure contracts with the Thailand Tobacco Monopoly, a Thai government agency, for the sale of tobacco leaf. Alliance One Tobacco Osh LLC (AOI-Kyrgyzstan), a Kyrgyzstan corporation, also pleaded guilty today to a separate three-count criminal information charging the corporation with conspiracy to violate the FCPA, violations of the anti-bribery provisions of the FCPA and violations of the books and records provisions of the FCPA relating to bribes paid to Kyrgyzstan government officials in connection with its purchase of Kyrgyz tobacco. . . .

According to court documents, from 2000 to 2004, Dimon, Standard and Universal Brazil sold Brazilian-grown tobacco to the Thailand Tobacco Monopoly. Each of the three companies retained sales agents in Thailand, and collaborated through those agents to apportion tobacco sales to the Thailand Tobacco Monopoly among themselves, coordinate their sales prices, and pay kickbacks to officials of the Thailand Tobacco Monopoly . . .

In related matters, Alliance One today settled a civil complaint filed by the U.S. Securities and Exchange Commission (SEC), charging Alliance One with violating the FCPA's anti-bribery, internal controls, and books and records provisions in connection with the misconduct described in court documents. Alliance One will disgorge approximately $10 million in profits to the SEC. Also today, Universal Corporation settled a civil complaint filed by the SEC, charging Universal Leaf with violating the FCPA's anti-bribery, internal controls, and books and records provisions in connection with the misconduct described in the court documents. Universal Leaf will disgorge approximately $4.5 million in profits to resolve the civil matter. . . .

The Department of Justice and the SEC worked together to reach these global settlements.

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• UPDATE 1-Alliance One units plead guilty in US bribery case  

Two units of tobacco leaf company Alliance One International Inc (AOI.N) pleaded guilty to violating U.S. anti-corruption laws by paying bribes to win contracts in Thailand and to buy tobacco in Kyrgyzstan.

The U.S. Justice Department said the two units pleaded guilty to three counts each of paying bribes to government officials in those two countries, conspiracy to violate U.S. anti-bribery laws, and violations of books and records provisions of those laws.

Alliance One's Swiss unit was accused of paying bribes to Thai government officials to win contracts with the Thailand Tobacco Monopoly, a government agency. Its Kyrgyz unit was accused of paying bribes to buy local tobacco.

The company agreed to pay $9.45 million in fines. In a related settlement with the U.S. Securities and Exchange Commission, it agreed to disgorge about $10 million in profits.

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Tobacco companies settle bribery charges 

Two American tobacco companies are paying nearly $30 million to settle charges that they bribed foreign officials to get lucrative overseas tobacco sales contracts.

The companies, Universal Corp. of Richmond, Va., and Alliance One International of Morrisville, N.C., faced civil and criminal charges from the Securities and Exchange Commission and Justice Department, the government said Friday.

Universal was accused of bribing officials in Thailand, Malawi and Mozambique. Alliance One is accused of bribing officials in Thailand, China, Greece, Indonesia, and Kyrgyzstan.

To settle the charges, Alliance One has agreed to pay a criminal fine of $9.45 million and return $10 million in profits. Universal has agreed to pay a criminal fine of $4.4 million and return $4.5 million in profits.

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Tobacco Employee Pleads Guilty in Kyrgyz Bribery Scheme  

An former manager at tobacco merchant Dimon Inc. pleaded guilty Tuesday to conspiring to bribe public officials in Kyrgyzstan, the Justice Department said.

Bobby Jay Elkin Jr., 50, of Washington, N.C., was charged with funneling about $3.1 million in bribes to Kyrgyz officials, in violation of the Foreign Corrupt Practices Act, while he was stationed in Dimon's subsidiary in Kyrgyzstan. The conspiracy conviction carries a punishment of up to five years in prison and a $250,000 fine.

The criminal information filed in U.S. District Court for the Western District of Virginia provides a window into doing business in the Central Asian republic, which ranked among the 20 most corrupt countries in the world in Transparency International's 2009 Corruption Perceptions Index.

From 1996 to 2004, Elkin and unnamed co-conspirators delivered $2.7 million in cash to the head of the Kyrgyz agency that manages state-owned shares of tobacco processing facilities . . .

The criminal information is embedded below.

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North Carolina Businessman Pleads Guilty to Role in Foreign Bribery Scheme 

A former Kyrgyzstan country manager for a U.S. tobacco company has pleaded guilty for his role in a conspiracy to pay bribes to officials of the Republic of Kyrgyzstan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, and Shawn Henry, Assistant Director in Charge of the FBI's Washington Field Office.

Bobby Jay Elkin Jr., 50, of Washington, D.C., pleaded guilty yesterday to a one-count criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) before Senior U.S. District Judge Jackson L. Kiser for the Western District of Virginia in Danville, Virginia. At sentencing, Elkin faces a maximum penalty of five years in prison and a $250,000 fine. A sentencing date has not been scheduled. . . .

The case was investigated by the FBI's Washington Field Office.

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• Guilt admitted in tobacco bribes  

A former executive at Danville-based tobacco company Dimon, now part of Alliance One International, pleaded guilty Tuesday to paying more than $3 million in bribes to officials in Kyrgyzstan to help secure tobacco from that country.

Bobby Jay Elkin Jr., who was Dimon's manager in Kyrgyzstan during an eight-year period starting in 1996, appeared in U.S. District Court in Danville to plead guilty to violating the U.S. Foreign Corrupt Practices Act. . . .

U.S. Securities and Exchange Commission announced in April that it was filing a civil action against Elkin and three other former Dimon executives over bribes in Kyrgyzstan and Thailand.

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A life for snuff 

Wayne McLaren, The Marlboro man in a tobacco advertising, afterwards he became crusader against smoking. He died at 51 of lung cancer. This history comes back to memory because on May 31st all countries in the world celebrate No Tobacco Day, announced by the world-wide organization of health care in 1988. Global aim – to ruin tobacco addiction to XXI century. The century has come. But the fight continues.

According to the President of non-governmental organization “Lung health” Tatiyana Mergenbayeva, Kyrgyzstan enters trio countries considered pioneers in fight against tobacco smokers. “We have medication that help people refused smoking, but we fall short of specialist-narcologists”, she said.

What about laws?

According to survey on tobacco addiction, 20 percent of scholars in Kyrgyzstan aged 13 to 15 have already tried smoking, and around half of them became regular users of tobacco products.

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KYRGYZSTAN'S TOBACCO PRODUCT EXPORTS MAKES 5 PER CENT  

Export of tobacco products does not exceed five per cent in Kyrgyzstan, Nurlan Koichubakov member of the parliament said Wednesday at the Ak Zhol fraction session.

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Tobacco advertisements could be banned in Kyrgyzstan 

The Kyrgyz parliamentary committee on social policy has approved the government's proposal to fully ban tobacco advertisements in the mass media, the parliament press service told Interfax. Kyrgyz Health Minister Marat Mambetov told the committee that "a full ban on all forms of advertising in the mass media reduces the social attractiveness of smoking and reduces the consumption of tobacco products, especially among young people."

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KYRGYZSTAN'S EXCISE TAX RATES INCREASED  

Kyrgyz parliament this week announced an increase in the excise tax rate on tobacco products. . . .

According to the amendments, one pack of low quality cigarettes will be liable for 0.36 som tax.

Cigarettes of the higher quality will be liable to 1.37 som tax.

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Ban on alcohol and tobacco advertising 

Galina Kulikova, the Vice Chief of the parliamentary committee for education, science, culture and information policy intends to initiate the draft law according to which alcohol and tobacco advertising on television, radio and billboards will be banned, informs AKIpress.

She believes that it is crucial to ban alcohol and tobacco advertising. Teachers and parents are also worried about the consequences of such advertising:

Whenever one turns on television, alcohol and tobacco are advertised there.

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