An aluminum company controlled by the Bahrain government filed a federal racketeering claim against Alcoa Inc. (AA).
Aluminum Bahrain BSC filed a Racketeer Influenced and Corrupt Organizations (RICO) document in the US District Court in its nearly 4-year lawsuit against Alcoa.
The company, also known as Alba, is one of the world’s largest aluminum smelters. Alba claimed in court documents that Alcoa reaped more than $400 million in illegal profits by overcharging for alumina, which is used to make aluminum. Further, the profit was used to pay bribes to senior executives of Alba and the Bahrain government.
The case had been on hold until November 2010, when the judge ordered Alba to file an amended complaint detailing its bribery allegations. Alcoa stated that it wished to defend itself and asked the judge to proceed with the case.
Alba claims in court documents that Victor Dahdelah, an Alcoa agent in Bahrain, owned overseas shell companies that were used to funnel kickbacks to Alba officials, bribes to Bahrain officials and $13 million to Dahdelah. Alba also alleges that Alcoa’s executive at the company’s North Shore center made false representations as part of the scheme.
The lawsuit names Alcoa as a subsidiary with Rice and Dahdelah as defendants and seeks damages of more than $1 billion.
Alcoa Inc., a Pennsylvania-based corporation, is among the world’s leading producers of primary and fabricated aluminum and alumina. It mines, refines, smelts, fabricates and recycles aluminum. We believe that Alcoa’s cost reduction efforts are, to some extent, offsetting the negative impact of higher energy and raw material costs on profitability.
Currently, Alcoa has a short-term (1 to 3 months) Zacks #4 Sell rating and a long-term (6 months) Neutral recommendation.
Alcoa faces stiff competition from Aluminum Corporation Of China Limited, or Chalco (ACH) and Rio Tinto plc (RIO).
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