Kathleen Hamann Quoted in Global Investigations Review: Lawyers Say Albemarle Resolution Proves Benefits of Compensation Clawbacks

Excerpted from the October 5, 2023 Global Investigations Review article by Gaspard Le Dem

In a recent non-prosecution deal with the Department of Justice, North Carolina-based chemical producer Albemarle agreed to pay more than $218 million to resolve parallel probes by the DOJ and SEC into a long-running scheme to bribe foreign officials in Vietnam, Indonesia, and India. 

According to DOJ, the non-prosecution agreement allowed Albemarle to avoid criminal charges and a compliance monitorship by, “voluntarily disclosing the corruption scheme, cooperating with the government, and engaging in extensive and timely remediation." As part of the remediation process, Albemarle withheld bonuses worth $763,453 from 16 employees who took part in the bribery scheme, which earned the company a discount of that same amount on its monetary fine.” 

By “clawing back” the bonuses from “corrupt employees,” Albemarle scored an even larger reward — a “45% reduction off the bottom range of the applicable fine range.” Sources note that this resolution shows that the DOJ is willing to implement its new pilot program, rolled out by the criminal division in March, that offers fine reductions to businesses that claw back compensation from corrupt executives.

Pierce Atwood litigation attorney Kathleen Hamann, an internationally recognized authority in the field of white-collar enforcement and compliance matters and former DOJ prosecutor, noted that, “Albemarle’s efforts to claw back money from 16 executives means the company was willing to punish individuals who were directly and indirectly involved in the corruption scheme. The DOJ’s pilot program directs prosecutors to consider fine reductions for companies that claw back compensation from employees who oversaw the misconduct and those who knew of or were willfully blind to it.”

“Normally what you’re looking at is two, three, or four individuals” who lose their bonuses, she said. 

Kate also said that Albemarle, “got more than a monetary benefit from its clawback efforts as withholding bonuses likely helped the company avoid an independent monitorship by making the case that it wouldn’t engage in corruption again.”

She said the DOJ’s new pilot program on compensation clawbacks, “aims to dismantle corporate environments that push individuals to engage in corrupt schemes to score big contracts and meet company benchmarks. DOJ is trying to improve individual accountability and deter individual misconduct, which involves changing corporate culture so that it isn’t rewarding profit at all costs.”

The complete article by Gaspard Le Dem can be found in the October 5, 2023 edition of Global Investigations Review.