Bahrain’s state-owned aluminum producer asked a court to let it proceed with racketeering claims that it overpaid for raw materials because of bribes directed by Alcoa Inc., the largest U.S. aluminum producer.
Aluminium Bahrain BSC, known as Alba, claims that New York-based Alcoa bribed senior officials in Bahrain and caused Alba to pay almost $500 million more than it should have for alumina, the principal raw material in aluminum. Alcoa has asked a judge to dismiss the case, arguing that the alleged conduct took place outside the U.S. and shouldn’t be litigated in federal court.
Alba countered that Alcoa and other defendants used offshore shell companies to “perpetrate and conceal a massive, home-cooked bribery scheme conceived, orchestrated, and directed in and from the United States,” according to its filing yesterday in federal court in Pittsburgh.
Claims of domestic leadership of the fraudulent scheme are “amply supported by Alba’s detailed, specific, and documented allegations of actions in furtherance of the scheme by senior domestic executives,” according to the filing.
Alcoa argued in court papers on Jan. 27 that U.S. District Judge Donetta Ambrose should dismiss the complaint because federal law doesn’t apply to “allegations of essentially foreign enterprises and foreign acts of bribery.”
Ambrose had administratively closed the case in March 2008, a month after Alba filed it, when the U.S. Justice Department said it was investigating whether Alcoa made corrupt payments in Bahrain. The judge agreed in November to Alcoa’s request to reopen the case so that the company could file a dismissal motion asserting that racketeering law “does not apply to the extraterritorial conduct” claimed by Alba.
Lori Lecker, an Alcoa spokeswoman, said in an e-mail yesterday that “Alba’s allegations remain unsupported by law or by fact.”
The new filing was Alba’s “third opportunity to articulate its claims since we moved to reopen this case, yet Alba’s brief does nothing more than repackage legally insufficient allegations in an attempt to survive the motion to dismiss.”
At a hearing before Ambrose on Nov. 2, Justice Department attorney Adam Safwat said prosecutors would decide in six to eight months whether to file criminal charges under the Foreign Corrupt Practices Act, according to a transcript of the hearing.
The probe has taken so long, Safwat said, “because the conduct that we are investigating in this international corruption scheme spans the globe from the United States to Australia, to the Channel Islands in Europe and to Bahrain.”
‘Layers Upon Layers’
Seeking witness statements and documents from different countries has slowed the process, and bank records are critical “because the scheme usually involves routing money through layers upon layers of bank records, and we have to go from one layer to the next,” Safwat said.
In the Alba civil case, one defendant is British investor Victor Dahdaleh, who was charged Oct. 24 in the U.K. with six counts of making corrupt payments, two counts of money laundering and one charge of conspiracy to corrupt. He is accused of paying bribes to Alba officials to win contracts for Alcoa.
A former Alba executive, Bruce Allan Hall, was charged Feb. 15 by U.K. prosecutors with corruption and money laundering. Hall was extradited to London from Australia to face the charges by the U.K.’s Serious Fraud Office. He is accused of accepting bribes during an eight-year period while he worked at Alba.
Dahdaleh and Hall must enter a plea in the case on April 16, Judge Alistair McCreath said at a hearing in London today.
The case is Aluminium Bahrain BSC v. Alcoa Inc., 08-cv-00299, U.S. District Court, Western District of Pennsylvania (Pittsburgh).