Aluminum Bahrain BSC (“Alba”) said last week it should be allowed to sue for damages in a U.S. court because it was victimized by alleged bribery and fraud that was ‘home-cooked . . . conceived, orchestrated, and directed in and from the United States.’
State-owned Alba filed its lawsuit in federal court in Pittsburgh nearly four years ago. The suit accused Pittsburgh-based Alcoa of a 20-year conspiracy linked to overcharging, fraud, and bribery. Alba said more than $2 billion in its payments to Alcoa under raw-material supply contracts passed through tiny companies in Singapore, Switzerland, and the Isle of Guernsey, and that some of the money was then used to bribe Bahraini officials and Alba executives.
Just weeks after Alba filed its suit, federal prosecutors asked the court to stay all civil proceedings. The DOJ said it wanted to investigate possible criminal violations of the FCPA and other laws by Alcoa and its executives and agent.
The stay was in place until November last year. Alcoa asked the court to re-open the suit so it could move for a dismissal. Alcoa said because the alleged behavior happened overseas, the court lacked jurisdiction.
But Alba argued last week that ‘[d]ismissal would simply reward the Alcoa Defendants for hiding behind offshore shell companies.’
It said the court shouldn’t ‘provide a roadmap for other domestic companies and executives seeking to insulate themselves from civil liability for defrauding foreign business partners.’
Meanwhile, U.K. authorities have made two arrests in the case.
Last month, the former CEO of Alba was charged in London with taking bribes. Bruce Allan Hall, 53, faces conspiracy, corruption, and money laundering charges. He was extradited from Australia at the request of the U.K.’s Serious Fraud Office.
In October last year, Alcoa’s former agent for sales to Bahrain was arrested in London. Victor Dahdaleh, 63, a dual citizen of Britain and Canada who lives in Belgravia, London, was alleged to have bribed officials at Alba. He was charged with conspiracy, corruption, and money laundering.
Hall and Dahdaleh are scheduled to appear in court in London on April 16 to enter their pleas.
Dahdaleh is a defendant in Alba’s U.S. civil suit. Also named are two Alcoa companies and an American executive, William Rice.
The DOJ said in November last year that it would ‘decide in six to eight months whether to file criminal charges under the Foreign Corrupt Practices Act,’ Reuters reported last week.
A prosecutor from the DOJ said its investigation has taken so long ‘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,’ according to Reuters.
Alba’s damage claim in the civil suit was based not on the FCPA but on common law fraud and RICO — the Racketeer Influenced & Corrupt Organizations Act found at 18 U.S.C. Chapter 96. Private parties have no right of action under the FCPA so only the DOJ and SEC can enforce it.