Bahraini company revises $420 million bribery lawsuit against Alcoa
During negotiations in 2004 on a contact extension for the purchase of raw material alumina between Aluminum Bahrain BSC and Alcoa Inc., the Bahrain aluminum company asked Alcoa’s William Rice for assurance that it was dealing with subsidiary Alcoa of Australia, federal court records filed late Monday show.
In a reply, Rice, vice president of mining for Alcoa World Alumina, sent a fax dated Oct. 26, 2004, from Pittsburgh stating, “[f]or the avoidance of doubt and any confusion,” AA Alumina and Chemicals was “an associate company and distributor” of Alcoa of Australia and was “fully and solely authorized to negotiate the present alumina supply agreement.”
In a revised bribery lawsuit against Alcoa, Rice and other defendants, attorneys for Aluminum Bahrain detailed Rice’s actions and said such “false representations” were part an international bribery scheme that defrauded the Bahraini aluminum company out of nearly $420 million in overcharges between 1997 and 2009.
Aluminum Bahrain, also known as Alba, a government-controlled company that is one of the world’s largest aluminum smelters, bought raw material alumina from Alcoa to make aluminum.
“Alba has provided its amended complaint to the media, but it hasn’t provided Alcoa with a copy. Therefore, we can’t comment beyond saying that we do not believe the facts in this case support Alba’s claims,” said Lori Lecker, a spokeswoman for Alcoa. “Alcoa has a strong commitment to compliance with the laws of the jurisdictions in which we operate, and we do not tolerate improper conduct by any of our employees or the parties with which we contract.”
AA Alumina and Chemicals, or AAAC, the lawsuit contends, was one of a number of overseas shell companies owned or operated by another defendant, Victor Dahdaleh, that were used to funnel payments from Alba, which in turn were used to paid bribes to senior officials of Alba and $13 million in commissions to Dahdaleh.
Part of the proceeds from the overpayment — estimated at tens of millions of dollars — were funneled to Alba senior executives and officials of the Bahrain government to permit the overpayment scheme directed from Pittsburgh. The 46-page revised complaint alleges a pattern of bribery and criminal conduct in violation of the federal Racketeer Influenced and Corrupt Organizations Act.
On Nov. 8, U.S. District Judge Donetta Ambrose in Pittsburgh agreed with Alcoa’s request to reopen Aluminum Bahrain’s 2008 lawsuit against Alcoa and other defendants. Ambrose ordered Aluminum Bahrain to file a revised complaint against Alcoa by midnight Monday. Alcoa asked that the case be reopened to force Alba to lay out its bribery allegations so it can defend itself.
Alba is seeking damages that exceed $1 billion from Alcoa, its subsidiary, Alcoa World Alumina LLC; Rice and Dahdaleh, according to the amended complaint filed in U.S. District Court in Pittsburgh.
Attorney Victoria Bechtold Kush of Buchanan Ingersoll & Rooney PC, which represents Aluminum Bahrain, declined to comment on the revised complaint.
Dahdaleh, a Canadian national who is friends with former President Bill Clinton, was arrested in Britain last month by Britain’s Serious Fraud Office on the bribery allegations in connection with the case. He has maintained his innocence and was granted $16 million bail after a hearing.
Attorneys for Alba have said they uncovered events that “happened on Isabella Street in the city,” Alcoa’s operations center on the North Shore, related to the case. The revised lawsuit stated:
â¢ On Oct. 29, 2004, Rice threatened to sell alumina supplies that previously had been sold to Alba to “other long term customers.” The allegation came after the defendants, through Rice, rejected Alba’s efforts to further negotiate a proposed supply contract extension. The threat was sent in a “facsimile from Pittsburgh, Pennsylvania to Alba’s CEO Bruce Hall.”
Rice stated, “… should Alba decide not to accept this offer, it is understandable that you will need to find alternatives in order to supply Alba’s long term alumina requirements. I hope you can also appreciate this will dictate that we will direct the alumina, which we anticipate continuing to supply Alba, to other long term customers.”
â¢ In 2001, during talks between Alba and Alcoa on an earlier supply contract extension through 2003, Rice sent a letter on April 21, 2001, on Alcoa World Alumina stationery sent from Pittsburgh, referring to a 1990 contract as “our present purchase agreement” and seeks “to continue the relationship we have had for 30 years.”
â¢ In 1996, the 1990 contract was amended to provide that Alcoa provide alumina to Alba from 1997 through 2000. “Peter Burgess, Sales and Marketing Manager of Alcoa World Alumina in Pittsburgh, signed the 1996 Amendment on behalf of Alcoa of Australia …. (and) acted at the direction of Alcoa and Alcoa World Alumina.”
â¢ In or about April 2004, Alcoa CEO Alain Belda traveled from the United States to Bahrain for a site visit in connection with the proposed sale of Alba stock to Alcoa. He was accompanied by Rice and Dahdaleh on that trip and in meetings that took place in Bahrain during that visit. During April, May, and June, Alcoa employees located in Pittsburgh “corresponded extensively via electronic mail with Alba employees and third party consultants, often copying Dahdaleh, to plan a due diligence review of Alba’s operations in preparation for the sale of Alba’s shares.”
The revised lawsuit contends that the bribery was so pervasive that Alcoa had attempted to buy a 26 percent interest in 2004 for $600 million, when the true value was close to $1 billion.