Alcoa said Tuesday it has reached a settlement with Aluminium Bahrain B.S.C. ('Alba') to end a civil lawsuit that accused Alcoa of bribing Alba officials and overcharging for the supply of raw materials.
Entries in Bahrain (18)
Great post Tuesday by our cousins at thebriberyact.com.
Alcoa's former agent Victor Dahdaleh and the one-time head of Aluminium Bahrain B.S.C. ('Alba') appeared Monday in criminal court in London.
Aluminum Bahrain BSC ("Alba") said last week it should be allowed to sue for damages in a U.S. court because it was victimized by alleged bribery and fraud that was 'home-cooked . . . conceived, orchestrated, and directed in and from the United States.'
An Australian executive who once served as CEO of state-owned Aluminium Bahrain B.S.C. ("Alba") was charged on Wednesday in the U.K. with taking bribes.
The Serious Fraud Office on Monday said Victor Dahdaleh, Alcoa's former agent for sales to Bahrain, was arrested and charged with corruption.
Alcoa and Sojitz are on our watch list for 2011. Here's why.
Aluminium Bahrain BSC -- known as Alba -- has filed a $31 million civil suit in federal court in Houston against Japanese trading company Sojitz Corp. and its U.S. subsidiary, Sojitz Corporation of America. The suit alleges that from 1993 to 2006, Sojitz paid $14.8 million in bribes to two of Alba's employees in exchange for access to metals at below-market prices. Alba is majority-owned by the government of Bahrain.
There's no private right of action under the Foreign Corrupt Practices Act. So Alba's claims against Sojitz are based on RICO (18 U.S.C. § 1962(c)), conspiracy to violate RICO (18 U.S.C. § 1962(d)), fraud, and civil conspiracy to defraud. The complaint alleges that Sojitz used bribes to buy underpriced product and then "resold the aluminum it bought from Alba at below-market rates to U.S. companies including Enron Corp."
In September, the Wall Street Journal reported the U.S. Justice Department's investigation into "payments that Bahraini prosecutors allege were made by units of Japanese commodities-trading giant Sojitz Group to employees of an aluminum producer in Bahrain." The DOJ has never commented on the story. See our post here.
This is the second civil action Alba has filed in U.S. courts with allegations about potential FCPA violations. In March 2008, Alba sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The suit in federal court in Pittsburg alleged that Alba paid $2 billion in overcharges during a 15-year period. The money, according to the suit, first went to overseas accounts controlled by Alcoa's agent and some was then used to bribe Alba's executives in return for supply contracts.
Just weeks after Alba sued Alcoa, the Justice Department intervened in the case. It asked the court for a stay while the government investigates possible criminal violations of the FCPA and other laws by Alcoa and its executives and agent. The DOJ said the stay was needed to protect potential witnesses against civil discovery. The stay the court granted is still in effect. The DOJ hasn't commented on the status of its criminal investigation. Alcoa denied wrongdoing and said it is cooperating. See our post here.
Will the DOJ also intervene in Alba's suit against Sojitz? It needed the stay in the Alcoa case, it said, because:
The public is "an unnamed party in every lawsuit." United States v. Reaves, 636 F.Supp. 1575, 1578 (E.D. Ky. 1986) Here, the Complaint alleges that the defendants arranged for Alcoa, a public corporation, through its affiliates and agents, to make payments in violation of the anti-bribery provisions of the FCPA, among other crimes. The proposed stay enables the government to investigate these charges without potential prejudice to its investigation resulting from civil discovery . . . This would thus enable the government to vindicate the paramount public interest in the enforcement of federal criminal laws and resolution of the federal criminal investigation, should the government's investigation reveal evidence that federal criminal laws were violated. . . .
Sojitz Corp.'s website says that as of September 2009, its business consists of 555 companies including 165 subsidiaries and affiliates in Japan and 390 overseas, with 17,147 employees. Sojitz's U.S. subsidiary is headquartered in New York. The parent company's ADRs trade in the over-the-counter pink sheets under the symbol SZHFF.PK.
Download a copy of the December 18, 2009 federal civil complaint in Aluminium Bahrain B.S.C v. Sojitz Corporation and Sojitz Corporation of America here.
The Wall Street Journal reported yesterday (here) that the Justice Department is "investigating payments that Bahraini prosecutors allege were made by units of Japanese commodities-trading giant Sojitz Group to employees of an aluminum producer in Bahrain." The story says $8.7 million in alleged bribes to employees at Aluminum Bahrain BSC, or Alba, were paid into secret accounts they controlled in Liechtenstein banks. Some of the payments reportedly passed through U.S. banks.
Sojitz acts as a broker for Alba's products, including aluminum billet and alloys. It allegedly enjoyed lower prices in exchange for the payments. The DOJ investigation of Sojitz, which does some business in the U.S., is reportedly based on information provided by Bahraini authorities. The Journal said they "have shared their findings with U.S. Justice Department prosecutors, according to people briefed on the investigation." The payments were allegedly made by units of Nissho Iwai, which merged with Nichimen in 2004 to form Sojitz.
In March 2008, Alba -- majority owned by the government of Bahrain -- sued Alcoa Inc., its long-time raw materials supplier, for corruption and fraud. The federal court suit in Pittsburg alleged that Alba paid $2 billion in overcharges during a 15-year period. The money, according to the suit, first went to overseas accounts controlled by Alcoa's agent and some was then used to bribe Alba's executives in return for more supply contracts. The Justice Department quickly intervened in the case, asking the court for a stay while the government investigates possible criminal violations of the Foreign Corrupt Practices Act and other laws by Alcoa and its executives and agent. Alcoa has denied any wrongdoing and said it is cooperating with the DOJ.
The Wall Street Journal said Bahrain filed a money-laundering indictment against two former Alba employees accused of taking kickbacks from Sojitz.
The Justice Department hasn't commented on the Alcoa investigation or the Wall Street Journal's story naming Sojitz.
Read prior posts about Alba and Alcoa here.
Last February, Aluminum Bahrain BSC, or Alba for short, made big headlines by filing an explosive federal lawsuit against Alcoa. Bahrain-owned Alba accused its long-time U.S. supplier of overcharging for raw materials during a 15-year period, and using some of the money to bribe Alba's executives for more contracts. "Defendants’ conspiracy," Alba said in a complaint filed in Pittsburgh, "succeeded in exacting hundreds of millions of dollars in over payments, which continue to accumulate to this day. Among other things, Plaintiff seeks damages in excess of $1 billion, including punitive damages, for this massive, outrageous fraud."
Commercial disputes between multinational companies and overseas, government-linked customers are arbitrated in private or settled behind closed doors -- they're rarely decided in open court. And while the public brawl was unusual, what happened next was stranger still.
The Justice Department intervened in the case, asking the court to stay all discovery. It said the facts of Alba's allegations, if true, might violate the Foreign Corrupt Practices Act and mail and wire fraud statutes. Therefore, the DOJ said, it wanted to conduct a criminal investigation into Alcoa and its executives. But it couldn't do that if discovery in the civil suit was steaming ahead. Alcoa, meanwhile, denied all wrongdoing, and neither it nor Alba opposed the government's request. So for nearly a year now, the blockbuster lawsuit has been completely dormant.
Why did the government need to stop the discovery? Why couldn't the DOJ investigate Alba's allegations while the parties continued their battle in civil court? The Justice Department answered those questions in its memo arguing for the stay. The court, as we said, granted the government's request, and the stay remains in effect. Here's some of what the DOJ had to say about the handling of witnesses:
[W]itnesses identified through such civil discovery could be intimidated. See, e.g., Campbell, 307 F.2d at 487. This is of particular concern in FCPA investigations, in which witnesses often reside overseas, where legal protections for witnesses may not be readily available. Thus, commencement of full civil discovery in this case could substantively harm the interests of the United States in investigating and prosecuting the criminal case. De Vita v. Sills, 422 F.2d 1172, 1181 (3d Cir. 1970) (recognizing policy of "preventing defendants in criminal cases from using civil process to obtain information from the government's file which would in the criminal case be privileged.")(Some footnotes omitted.)
Compelling information from potential grand jury and trial witnesses by requiring them to sit for depositions, answer interrogatories or answer requests for admission in the civil action would impede the United States' ability to investigate these matters relating to Alcoa's alleged conduct. In an investigation such as this, numerous witnesses are interviewed whose statements would never be revealed to potential subjects and targets prior to indictment, but for the existence of the civil action. In sum, for all these reasons, the proposed stay is necessary to avoid prejudice to the government's criminal investigation and any potential prosecution.
The public is "an unnamed party in every lawsuit." United States v. Reaves, 636 F.Supp. 1575, 1578 (E.D. Ky. 1986) Here, the Complaint alleges that the defendants arranged for Alcoa, a public corporation, through its affiliates and agents, to make payments in violation of the anti-bribery provisions of the FCPA, among other crimes. The proposed stay enables the government to investigate these charges without potential prejudice to its investigation resulting from civil discovery . . . This would thus enable the government to vindicate the paramount public interest in the enforcement of federal criminal laws and resolution of the federal criminal investigation, should the government's investigation reveal evidence that federal criminal laws were violated. Further, disposition of the criminal action could potentially result in more effective vindication of the public's interest than disposition through a private civil action, particularly given the importance of the government's FCPA enforcement program. . . . Under these circumstances, the public interest is best served by the proposed stay.
No word yet from the government about the status of its almost year-old criminal investigation. Alba and Alcoa have also been quiet about the civil suit and whether they might settle their differences out of court.
Download Alba's complaint here.
Download the government's memo in support of the stay here.