October 25, 2011 at 4:09 pm #2079
<Although this is mainly about Aluminum Companies Alcoa & Alba and bauxite raw materials – both companies are large consumer of Anode Petcoke & Pitch for smelting process and therefore connected to Refinery coking operations – CER Comments>
Kickback Probe at Alcoa Heats Up
Oct 25, 2011 Wallstreet Journal
By DIONNE SEARCEY
Two key figures in a bribery investigation of aluminum maker Alcoa Inc.’s activities in Bahrain have been arrested abroad, three years after law-enforcement officials began looking at millions of dollars allegedly paid to gain aluminum contracts.
The arrests, one in the U.K. and one in Australia, suggest that an international investigation tied to the Pittsburgh-based company is picking up steam. Prosecutors in the U.K., U.S. and Switzerland have been focusing on Alcoa’s relationship with Aluminum Bahrain BSC, a Bahrain government-owned manufacturing company also known as Alba. Alba, which has one of the world’s largest aluminum smelters, bought raw materials from Alcoa.
Alcoa has been in the sights of the global law-enforcement community since 2008 when an unusual lawsuit was filed in federal court in Pennsylvania by Alba. The suit accuses Alcoa and its agentCanadian businessman Victor Dahdalehof conspiring to overcharge Alba by hundreds of millions of dollars for the purchase of thousands of tons of alumina, which is used to make aluminum. In exchange for the overpayments, Alcoa and Mr. Dahdaleh allegedly paid kickbacks to at least one senior official at Alba, according to the suit.
Both Alcoa and Mr. Dahdaleh have denied the lawsuit’s allegations.
On Monday, Britain’s Serious Fraud Office arrested Mr. Dahdaleh, who was born in Jordan and lives in the U.K., on corruption charges for allegedly paying bribes between 2001-2005 to Alba on behalf of Alcoa in exchange for contracts, according to a news release from the SFO.
The contracts were for supplies of alumina shipped to Bahrain from Australia, according to the SFO release, which said other payments were made in connection to supply goods and services to Alba. Mr. Dahdaleh was released on bail and asked to appear Oct. 31 at the City of Westminster Magistrates’ Court. Michael Feldberg, an attorney for Mr. Dahdaleh, said his client “believes the charges lack merit and plans to contest them.”
Late last week Bruce Hall, the former chief executive of Aluminum Bahrain, was arrested in Sydney, according to two people familiar with the situation. Australian authorities arrested him on corruption charges in conjunction with the British SFO’s probe, one of the people said. A spokesman for the SFO didn’t return requests for comment about Mr. Hall’s arrest. Mr. Hall was CEO from July 2001 through mid-2005.
Mark MacDougall, a Washington, D.C., partner at Akin Gump Strauss Hauer & Feld LLP who represents Alba in the lawsuit, called the arrests “a critical turning point in the anticorruption cases initiated by the Crown Prince and the leadership of Alba nearly five years ago.”
Britain’s SFO said Monday it has been investigating the matter since July 2009 with assistance from the City of London Police Overseas Anti-Corruption Unit, as well as with Swiss authorities.
Alcoa has been under investigation from the U.S. Justice Department since 2008 for alleged violations of the Foreign Corrupt Practices Act concerning its Bahrain operations, according to court filings from the Justice Department. The 1970s-era FCPA prohibits U.S. companies from paying bribes to foreign government officials to gain a business advantage. A Justice Department spokeswoman declined to comment.
The federal suit filed by Alba against Alcoa has been stayed pending the outcome of the Justice Department probe.
Alcoa, through a spokesman, said it hadn’t been contacted by any law-enforcement officials in the U.K. and said it was cooperating with U.S. officials in the matter. “Alcoa has a strong commitment to compliance within the laws of the jurisdictions in which we operate and does not tolerate improper conduct with any of our employees or the parties in which we contract,” said the spokesman, Mike Belwood.
U.S. and U.K. authorities have been cracking down on alleged overseas corporate corruption. A new antibribery law went into effect in Britain over the summer, and the U.S. for several years has stepped up FCPA fines and prosecutions.
Mr. Dahdaleh was a longtime agent of Alcoa who also has helped negotiate contracts with other companies in the Middle East and elsewhere. He has ties to former President Bill Clinton’s philanthropic foundation, having donated between $1 million and $5 million to the organization, and has ties to U.K. Labour Party officials, according to public records. A spokesperson for the foundation didn’t return a request for comment.
On his website, the 68-year-old Mr. Dahdaleh posted a statement from his law firm saying he interrupted his scheduled business commitments and voluntarily showed up at a police station in Bishopsgate, London. In 2009, U.K. authorities searched Mr. Dahdaleh’s London home in connection with the probe.
Mr. Dahdaleh set up a company that acted as an intermediary for Alcoa, a move that officials at the metals company supported, according to several emails and faxes viewed by The Wall Street Journal. Mr. Dahdaleh’s company used Alcoa’s logo on its letterhead in its communications with Alba, according to the civil suit Alba filed.
The intermediary firm was buying alumina from Alcoa and then selling it to Alba at a mark-up, a person familiar with the matter said. In the past, Alcoa had sold materials directly to Alba, the person said.
An Alcoa spokesman declined to comment on the intermediary company’s dealings.
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