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Alcoa accused of bribery by Bahrain firm; more than $1B sought

Alcoa accused of bribery by Bahrain firm; more than $1B sought

A company majority-owned by the Persian Gulf state of Bahrain has accused aluminum maker Alcoa Inc. of bribing officials through overseas shell companies to secure hundreds of millions of dollars in overpayments.
Aluminum Bahrain B.S.C. is seeking more than $1 billion (euro660 million) in damages from the Pittsburgh-based company and other affiliated defendants, according to a federal lawsuit filed Wednesday.
The Bahrain company, a 30-year Alcoa customer also known as Alba, contacted the U.S. company recently, saying it had two weeks to investigate bribery allegations and settle the matter or face legal action, said Kevin Lowery, an Alcoa spokesman.
Alcoa launched "a very fast review," he said, but found nothing that deviated from its standard practices, which prohibit improper activity by the company's employees, partners and contractors.
"We're not aware of any wrongdoing by Alcoa or its employees," Lowery said. "That said, we intend to vigorously defend this."
Aluminum Bahrain, which buys most of its alumina _ a material used to make aluminum _ from Alcoa and its affiliated companies, alleged that Alcoa and affiliates had conspired in a "massive, outrageous fraud."
Besides Alcoa, the suit targets Alcoa World Alumina LLC, a global joint venture 60 percent owned by Alcoa and 40 percent owned by Australia's Alumina Ltd.
It also names William Rice, an Alcoa World Alumina executive, and Victor Dahdaleh, a Canadian citizen who has acted as an agent for Alcoa and Alcoa World Alumina.
The suit contends the defendants bribed one or more former senior officials of Aluminum Bahrain and the Bahrain government to persuade the company to cede a controlling interest in the company to Alcoa and pay inflated prices for alumina.
"The bribes were sent through a series of shell companies that defendants ultimately controlled," the company alleged.
Aluminum Bahrain says financial records show it paid for alumina through secretive companies in Singapore, Switzerland and the Isle of Guernsey, with some of the money used to bribe officials who approved the contracts.
It allegedly made payments by wire transfer to accounts at Royal Bank of Canada and Chase Manhattan Bank, both in New York.
Aluminum Bahrain said the scheme began in 1993 and is ongoing, but was not discovered until last year, partly because it was concealed by the defendants.
After being contacted by Alba about the allegations, Alcoa offered to conduct a full internal review of its dealings with Aluminum Bahrain over the past two decades, said Lowery, the Alcoa spokesman. "They chose to immediately file a lawsuit," he said.
The Bahrain government holds a 77 percent stake in Alba, which operates one of the world's largest aluminum smelters. Other shareholders include SABIC Industrial Investments and Breton Investments, according to court documents.
In 2005, the Bahrain market absorbed about 45 percent of Alba's aluminum output, while neighboring Gulf markets took 15 percent. The remaining output went to Far East countries.
Alcoa is the world's third-largest aluminum producer. Last month, the company reported 2007 revenue of $30.75 billion (euro20.34 billion), an all-time record.
Shares of Alcoa rose 10 cents, or less than one percent, to $39.12 on Thursday.
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On the Net:
http://www.alcoa.com
http://www.aluminiumbahrain.com/en/default.asp