Financial Times
Alcoa to pay $85m to Alba to settle lawsuit
Edited by : AL CIRCLE
2 min read
Alcoa of the US is to pay $85m to settle a long-running lawsuit brought by Bahrain’s state-controlled aluminium company over alleged corruption, in a case that could trigger other foreign businesses to launch similar actions against US multinationals.
The deal – which Aluminium Bahrain said was worth almost $450m once discounts on future contracts with Alcoa were factored in – is thought to be the first over a claim of alleged bribery brought by an overseas business to the US courts.
Lawyers say the returns achieved by Aluminium Bahrain are likely to make US litigation more attractive to other companies that claim they are victims of corruption involving US multinationals abroad.
Alcoa said it would pay the $85m in two instalments to settle fraud and racketeering allegations made by Aluminium Bahrain, known as Alba, in the lawsuit launched in February 2008.
The settlement also includes favourable terms on a long-term contract for the supply of alumina, the raw material used to make aluminium, which Alba said took the total value of the deal to $447m.
Alcoa said that the sales of alumina, on a price linked to its index for the commodity, would be profitable.
Alba alleged Alcoa overcharged it more than $400m for raw materials over a 12-year period, with some of the money being recycled to pay bribes to officials in Bahrain.
Alcoa, which contested the case and made no admission of liability, said the settlement was the “best possible outcome” and avoided the “time and expense of complex litigation”.
Alcoa and Alba had resumed their commercial relationship, and the long-term alumina supply agreement that showed “a mutual desire to work together”, Alcoa said.
Mahmood Hashim al-Kooheji, Alba’s chairman, praised Alcoa’s management for the way they dealt with the allegations and said the “landmark” case should encourage other overseas companies to bring similar claims in the US.
The deal was announced a few hours before Alcoa was due to report its third-quarter results, opening the US corporate earnings season.
Reporting for the second quarter, Alcoa said it had been “in dialogue” with the US Department of Justice and the Securities and Exchange Commission, the financial regulator, over their investigations into the case.
The deal – which Aluminium Bahrain said was worth almost $450m once discounts on future contracts with Alcoa were factored in – is thought to be the first over a claim of alleged bribery brought by an overseas business to the US courts.
Lawyers say the returns achieved by Aluminium Bahrain are likely to make US litigation more attractive to other companies that claim they are victims of corruption involving US multinationals abroad.
Alcoa said it would pay the $85m in two instalments to settle fraud and racketeering allegations made by Aluminium Bahrain, known as Alba, in the lawsuit launched in February 2008.
The settlement also includes favourable terms on a long-term contract for the supply of alumina, the raw material used to make aluminium, which Alba said took the total value of the deal to $447m.
Alcoa said that the sales of alumina, on a price linked to its index for the commodity, would be profitable.
Alba alleged Alcoa overcharged it more than $400m for raw materials over a 12-year period, with some of the money being recycled to pay bribes to officials in Bahrain.
Alcoa, which contested the case and made no admission of liability, said the settlement was the “best possible outcome” and avoided the “time and expense of complex litigation”.
Alcoa and Alba had resumed their commercial relationship, and the long-term alumina supply agreement that showed “a mutual desire to work together”, Alcoa said.
Mahmood Hashim al-Kooheji, Alba’s chairman, praised Alcoa’s management for the way they dealt with the allegations and said the “landmark” case should encourage other overseas companies to bring similar claims in the US.
The deal was announced a few hours before Alcoa was due to report its third-quarter results, opening the US corporate earnings season.
Reporting for the second quarter, Alcoa said it had been “in dialogue” with the US Department of Justice and the Securities and Exchange Commission, the financial regulator, over their investigations into the case.
Previous article
LME aluminum should move between USD 2,020-2,065/mt on 10th Oct: SMM Morning Review
Next articleStudy questions the credibility of power concession for Rio Tinto Alcan and Century smelters
Grow with
AL Circle
