Archive for the ‘Bahrain’ Category

Alcoa Agent Charged in the U.K.

Tuesday, October 25th, 2011

As detailed in Alcoa Inc’s most recent quarterly SEC filing (here):

In 2008, Aluminium Bahrain BSC (“Alba”) (see here) filed a civil lawsuit against Alcoa Inc. and others in U.S. District Court for the Western District of Pennsylvania.  The complaint alleged that certain Alcoa entities and their agents, including Victor Phillip Dahdaleh, engaged in a conspiracy over a period of 15 years to defraud Alba. The complaint further alleged that Alcoa and its employees or agents (1) illegally bribed officials of the government of Bahrain and (or) officers of Alba in order to force Alba to purchase alumina at excessively high prices, (2) illegally bribed officials of the government of Bahrain and (or) officers of Alba and issued threats in order to pressure Alba to enter into an agreement by which Alcoa would purchase an equity interest in Alba, and (3) assigned portions of existing supply contracts between Alcoa and Alba for the sole purpose of facilitating alleged bribes and unlawful commissions. The complaint alleged that Alcoa and others violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and committed fraud.

Soon thereafter in 2008, Alcoa advised the DOJ and SEC that it became aware of these claims, had already begun an internal investigation, and that it intended to cooperate in any DOJ and SEC investigation.  In March 2008, the DOJ notified Alcoa that it had opened a formal investigation, the DOJ intervened in the civil lawsuit, and a court ordered the Alba lawsuit stayed so that the DOJ could fully conduct its investigation without the interference and distraction of the civil litigation.

In a related development yesterday on the other side of Atlantic,  the U.K. Serious Fraud Office (“SFO”) announced (here) that Dahdaleh (a British and Canadian national) has been arrested and charged “with corruption offences relating to contracts for the supply of aluminium to Bahrain.”  According to the SFO release, Dahdaleh is alleged to have made bribe payments to Alba.

Dahdaleh was charged under the U.K.’s “old” bribery statutes, not the new U.K. Bribery Act.

For more on Alba, see this prior post.

What is Alba?

Tuesday, June 8th, 2010

It’s the commercial enterprise at the center of two FCPA enforcement inquiries.
Commercial enterprise?

In the words of the late Gary Coleman – “whatcha talkin bout” (see here) – the Foreign Corrupt Practices Act concerns payments to “foreign officials.”

However, that is not how the enforcement agencies see it.

Well, actually it is, but under the enforcement agencies’ interpretation of the key “foreign official” element (an interpretation that has never received judicial approval), if a commercial enterprise seemingly has any hint of state involvement, it is an “instrumentality” of the foreign government and all employees of the commercial enterprise are deemed “foreign officials.”

Over 50% of recent FCPA enforcement actions center, in whole or in part, on this controversial interpretation of the “foreign official” element.

The commercial enterprise at the center of two FCPA enforcement inquiries is Aluminium Bahrain BSC (“Alba”).

First, a bit of background.

As evident from the DOJ’s recent stay motion in Alba v. Sojitz Corporation – embedded in this story by Lisa Brennan at Main Justice, the DOJ is currently investigating whether Sojitz Corporation, a Japanese company with its principal place of business in Tokyo, and Sojitz Corporation of America, a wholly owned subsidiary and agent/or alter ego of Sojitz Corporation, made corrupt payments to Alba officials in violation of the FCPA. It appears that DOJ will assert jurisdiction over the Japanese entity based on this statement: “Sojitz Corporation, and its controlled subsidiaries, make use of United States banks to distribute aluminum, and other products, and is a member of the Chicago Board of Trade.”

The DOJ filing also notes that since 2008 the DOJ has also been investigating a separate matter involving Alba, specifically, whether Aloca Inc. made corrupt payments to “public officials in Bahrain in connection with Alcoa’s sale of alumina to Alba.” (see page 3). (See page 11 of Alcoa’s recent 10-Q filing – here – for more).

So what is Alba, the entity at the middle of two separate DOJ FCPA enforcement inquiries?

According to its website (here), Alba is one of the largest aluminium smelters in the world. The company has three shareholders: the government of Bahrain, the Saudi Public Investment Fund, and Breton Investments.

The company exports to more than 25 countries. Approximately 50% of its output is for Bahrain’s downstream industries, about 20% for the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) and Middle East market, approximately 13% for the Far East market, with the rest for North Africa, South East Asia, India, Europe and the U.S.

The company has over 3,000 employees.

Alba’s CEO is Laurent Schmitt and its CFO is Tim Murray (see here). Prior to being appointed Alba’s CEO, Mr. Schmitt was previously President of Rhodia Polyamide a world wide global business of Rhodia Group based in France. (see here). On Alba’s board is David Meen (see here).

When Congress enacted the FCPA, did it envision that a company like Alba (a company with thousands of employees, a company conducting significant business outside of Bahrain, and company with non-”native” executive officers and board members) would be deemed a “instrumentality” of the Bahrain government by the enforcement agencies?