Akin Gump Strauss Hauer & Feld helped to trigger a worldwide criminal probe back in 2008 when it accused the world’s leading producer of raw aluminum materials, Pittsburgh-based Alcoa Inc., of racketeering and fraud. On Tuesday, the firm beat prosecutors to the punch yet again, wresting a long-awaited settlement from Alcoa on behalf of client Aluminium Bahrain BSC.
Alcoa announced on Tuesday that it would pay Aluminium Bahrain BSC (Alba) $85 million in cash to settle civil claims under the Racketeer Influenced and Corrupt Organizations Act. Alcoa also said it will resume a long-running agreement to supply Alba with raw aluminum materials. In a statement, Alba valued that portion of Tuesday’s deal at $362 million. Alcoa, which is represented by Cravath Swaine & Moore and K&L Gates, will not admit any wrongdoing.
Alba, which is owned by the Bahrainian government, first brought suit in February 2008 in U.S. district court in Pittsburgh, alleging that a bribery scheme perpetuated by Alcoa officials and a billionaire businessman named Victor Dahdaleh had cost it more than $400 million. According to Alba’s complaint, in 1993 Alcoa hired Dahdaleh, a Canadian business magnate of Jordanian descent, to act as a middleman in negotiations with Alba. Alba claimed that Dahdaleh and a group of Alcoa officials paid more than $9 million in bribes to Alba employees and Bahraini officials. Those bribes supposedly caused Alba to overpay for materials and almost allowed Alcoa to gain a large stake in Alba at a discounted rate. Alba’s lawyers at Akin Gump pegged damages at $1 billion.
A month after Alba filed the case, the U.S. Department of Justice launched a criminal investigation into the alleged bribery scheme. At the request of the DOJ, U.S. District Judge Donetta Ambrose stayed discovery in the civil case to facilitate the criminal probe. According to the Pittsburgh Post-Gazette, DOJ lawyers told Ambrose at a hearing in November 2011 that their investigation had reached the highest levels of foreign governments and could implicate foreign leaders. While the DOJ’s ongoing investigation has yet to lead to any charges, Dahdaleh faces corruption charges in Britain. A trial is scheduled for April 2013 in the U.K. matter.
Ambrose finally lifted the stay in the civil case in November 2011, as we reported here. Soon after, Alcoa’s lawyers moved to dismiss on multiple grounds. Their primary argument was that “the enterprise Alba pleads is foreign,” and its claims are therefore barred by the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank. While Morrison limited the extraterritorial scope of U.S. securities law, it’s also been applied to RICO cases. Ambrose rejected Alcoa’s bid to dismiss the case in June, however, finding that the alleged scheme originated out of Alcoa’s Pittsburgh headquarters.
Alba’s legal team was led by Mark MacDougall and W. Randolph Teslik in Akin Gump’s Washington, D.C., office. The company was also represented by lawyers at Buchanan Ingersoll & Rooney in Pittsburgh. In a statement, MacDougall called the settlement “a great result” for his client.
Alcoa counsel Evan Chesler of Cravath did not immediately return a call seeking comment. Alba still has RICO claims pending against Dahdaleh. He’s represented by Allen & Overy.
Note: An earlier version of this story incorrectly reported that a member of Bahrain’s royal family faced charges in the U.K. We regret the error.
