The federal investigation was triggered when Aluminum Bahrain BSC (“Alba”) filed a civil lawsuit three weeks ago in federal court in Pittsburgh accusing Alcoa of a 15-year conspiracy linked to overcharging, fraud and bribery. The suit alleges that more than $2 billion in Alba’s payments under supply contracts passed from Bahrain to tiny companies in Singapore, Switzerland and the Isle of Guernsey, and that some of the money was then used to bribe Bahraini officials involved in granting the contracts. See our prior posts here.
Federal prosecutors this week asked the U.S. District Court to stay Alba’s federal civil lawsuit because the U.S. has a “direct and substantial interest” in Alba’s allegations. A Wall Street Journal report (here) says the U.S. government’s court filing is a possible prelude to the empanelment of a federal grand jury, although for the moment prosecutors are working directly with Alcoa. “We will cooperate fully with the DOJ and believe this will help bring this matter to a speedy conclusion,” Alcoa communications director Kevin Lowery said.
The government’s filing says the Justice Department’s fraud section is looking into whether Alcoa, its executives and its agents “have engaged in conduct with respect to their commercial relationship with Alba in alleged violation of various criminal laws, including the FCPA, and the mail and wire fraud statutes. . . . The Alba complaint alleges numerous facts which, if true, could be relevant to the government’s criminal investigation and a potential criminal trial.”
Bahrain’s own investigation centers on Sheikh Isa bin Ali al-Khalifa, the country’s former minister of petroleum and chairman of Alba, and on Jordan-born Canadian businessman Victor Dahdaleh, who acted as Alcoa’s agent in Bahrain.
A report in Resource Investor (here) said the Justice Department approached Alcoa earlier this week with plans to stay the litigation with Alba in order to conduct its own investigation. Alcoa’s Kevin Lowery said the civil suit arose after Alba confronted Alcoa with a series of allegations and demanded compensation of $1 billion in two weeks time. Alcoa investigated the claims, he said, and found “no evidence of any wrongdoing.”
“We said we’d be happy to do a more extensive investigation with them – they said ‘we’ll see you in court,’” Lowery told Resource Investor.
The WSJ reported that Alba’s lawyer, Mark MacDougall of Akin Gump Straus Hauer & Feld LLP, won’t oppose the stay in the civil case. “Our clients certainly respect the important role that the Department of Justice may play in this case,” he said.