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Alcoa moves to dismiss billion-dollar bribery lawsuit
Friday, January 27, 2012

Alcoa moved today to dismiss a billion-dollar lawsuit accusing the metals giant of involvement in a long-running bribery scheme, saying its executives had no role and the law cited by its accuser doesn't apply to overseas dealings.

The motion to dismiss comes nearly four years into the civil case filed by Aluminium Bahrain BSC, called Alba. That Middle Eastern firm that claimed it had been victimized by some $11.6 million in bribes that led its officials into bad contracts costing it around $400 million.

The lawsuit spurred a Department of Justice probe. Two foreign businessmen face charges in Britain.

But no Alcoa officials have been charged, and the company maintains it is cooperating with federal fraud investigators.

Alcoa argued in its motion today that even if all of the facts claimed by Alba are true, they still don't amount to a crime by any Alcoa employee.

"We have moved to dismiss this case in its entirety because Alba's claims are not supported by law or by fact," an Alcoa spokeswoman said in a statement. "As we have said in the past, Alba mischaracterizes any number of normal business transactions through overdrawn inferences and innuendo, and those mischaracterizations fail to meet the legal threshold for Alba's claims."

Alba detailed its claims in a Dec. 28 court filing. In the filing, the company said Alcoa sold aluminum to Alba through companies set up by Canadian businessman Victor Dahdaleh.

It said Dahdaleh had no expertise in aluminum sales, and his companies did nothing but serve as middlemen, even as he distributed bribes to secure lucrative contracts.

The bribes, it said, were enabled by $13.5 million in what Alba called "unearned 'commissions'" paid by Alcoa. They secured what Alba said it now considers to be unfair contracts that had it paying above-market prices for alumina, the raw material it turned into aluminum.

Alba argued that the arrangement constituted a racketeering influenced corrupt organization. U.S. RICO laws allow for both criminal prosecutions and civil lawsuits, and the latter can bring awards of triple the damages suffered.

Alcoa today cited court decisions saying that RICO doesn't apply when the deeds alleged were entirely overseas.

"Alba's amended allegations continue to complain about alleged fraud by foreign entities and individuals, that took place on foreign soil, and that injured a foreign plaintiff," Alcoa's lawyers wrote.

Alcoa also argued that Alba hasn't been able to point to any meaningful involvement by Alcoa officials in the alleged scheme.

"Even accepting all of Alba's allegations as true, not a single bribe, alleged to have occurred over a two-decade long period, was paid by any of the participants in the enterprise from inside the United States, nor by any U.S. participant in the alleged enterprises," they continued. "In sum, the only U.S. activity that Alba says occurred over this purported two-decade scheme is of the incidental variety that does not permit application of RICO."

Alba can now file a response to Alcoa's motion to dismiss, and U.S. District Judge Donetta W. Ambrose would decide whether the case can proceed.

Mr. Dahdaleh faces fraud charges in London, as does Bruce Hall, a former CEO of Alba who is accused of taking most of the alleged bribes.

Rich Lord: rlord@post-gazette.com or 412-263-1542.

First published on January 27, 2012 at 2:24 pm