RICO suit being pursued in the US, relating to the charges brought against Victor Dahdaleh by the Serious Fraud Office
It has been reported this week in the United States including at LAW.COM here that Alba (Aluminium Bahrain) is pursuing a Racketeer Influenced and Corrupt Organisation Act suit against Alcoa (“RICO” Suit).
It is alleged by Alba that Alcoa directed the bribery of Bahraini officials and business leaders from its office in America which resulted in $400 million in profits for Alcoa, a global aluminium giant.
This week Alcoa lost a motion to dismiss the claim. Alcoa tried to persuade the Judge to throw the case out on jurisdictional grounds, arguing that if the business was foreign then the RICO Act would not properly apply.
It is alleged by Alba that Mr Dahdaleh established a series of offshore shell companies which were intended to pose as subsidiaries of Alcoa in order to resell alumina from Alcoa to Alba at inflated prices but that the same companies had been used to funnel bribes to members of the Bahrain government, which itself owns a majority stake in Alba.
The US Securities Exchange Commission has since 2008 been investigating the same subject matter and it is reported that Alcoa is cooperating with, the US Department of Justice and the SEC.
It is clear from media reports that the US prosecutors are very concerned that the civil RICO claim will interfere with their own criminal investigation.
Successful RICO claims can lead to an award of triple damages, which is of course an extremely punitive award by any stretch of the imagination.
In the meantime the UK Serious Fraud Office is pursuing corruption charges against Mr Dahdaleh which they brought at the end of last year. We have previously blogged on this story here.
The RICO suit, which is likely to take several years to come to trial, reinforces our view that (whatever the merits of the RICO suit or the charges being pursued in the UK in this case), when defendants become involved in allegations of corruption, they may have to face multiple sets of criminal proceedings around the world as well as civil suits and the threat of public procurement debarment in the United States and the European Union. Winning contracts by illegal means can lead to the perfect legal storm.
We will continue to blog on this story as it progresses.