Alba seeking $1bn payout from Alcoa
Alba (Aluminum Bahrain BSC in the Kingdom of Bahrain) is seeking more than $1bn (BD378M) in damages from Alcoa (USA) accusing it of corruption.
Alba alleges that it paid exorbitant prices for alumina, amounting to hundreds of millions of dollars and which continue to accumulate today.
They state the ‘outrageous’ 15-year fraud was not discovered until last year because it was concealed by Alcoa Corporation.
It also alleges that Alcoa tried to acquire a controlling stake of Alba at a depressed price and extort excessive fees from Alba by threatening to stop selling the company alumina, thereby threatening Alba’s very existence.
Court papers state that, through a contract signed in 2005 and which runs until 2009, Alba is now paying 16.35% of the three-month aluminium price traded at the London Metal Exchange, which traditionally goes for 11pc to 13pc.
Alba alleged that its 2005 contract was inflated by around 10%, which works out to some $65M a year. The company has already made 80 payments to the offshore firms, most for more than $15M.
Alcoa began operating in Bahrain in 1992 when it set up Gulf Closures, a joint venture between Alcoa Closure Systems International and Al Zayani Investments.
Eight years later, the then Labour and Social Affairs Ministry awarded it a certificate of merit in appreciation of its contribution and ‘unique role’ in the employment of the country’s workforce.
The Alba suit, filed in a federal court in Pittsburgh, alleges that Alcoa steered payments for an aluminium precursor ingredient to a group of tiny companies abroad, in order to pay kickbacks to at least one Bahraini senior official.
It alleges that Alcoa overcharged it for the precursor material, alumina, and that some of the money found its way back to officials involved in granting the contracts.
Bank records and invoices show that more than $2bn in Alba’s payments for alumina passed from Bahrain to tiny companies in Singapore, Switzerland and the island of Guernsey, according to a report in the Wall Street Journal.
Alcoa, the world’s third-largest aluminium company, is reviewing the 34-page lawsuit, and it plans to vigorously defend itself, according to a company spokesman.
Alcoa did not find any employees or representatives who acted in a matter that deviated from the company's values in a fast review conducted upon being informed of the allegations two weeks ago. “Alcoa is completely unaware of any wrongdoing by Alcoa and its employees,” said the spokesman.
The US Department of Justice, which investigates allegations of US companies bribing foreign officials, declined to comment on the lawsuit or whether it would conduct a probe into the claims.