Alcoa Says RICO Lawsuit Is Too Foreign

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Written By admin at Sunday, January 29th, 2012

Aluminum maker Alcoa asked a federal judge Friday to toss a long-running civil racketeering lawsuit accusing the company of paying bribes in Bahrain to win business with its state-owned aluminum company.

The case, as we’ve detailed here, is proceeding alongside a criminal investigation of Alcoa over possible violations of the Foreign Corrupt Practices Act, which bars companies from paying bribes to foreign officials.

To recap, the civil lawsuit alleges Alcoa paid tens of millions of dollars in bribes, through an agent, to officials at the state-owned company, Aluminum Bahrain, in return for inflated contracts. Aluminum Bahrain, also known as Alba, filed the lawsuit in 2008 in Pittsburgh federal court. Alba alleges that Alcoa reaped $ 400 million in illegal profits through the scheme and is seeking more than $ 1 billion in damages.

An Alcoa spokeswoman said that “Alba’s claims are not supported by law or by fact” and that the state-owned company “mischaracterizes any number of normal business transactions through overdrawn inferences and innuendo.”

Lawyers for Alcoa said in court filings Friday that the lawsuit involves a foreign dispute beyond the scope of the civil racketeering law, aka the Racketeer Influenced and Corrupt Organizations Act.

They point to the Supreme Court’s 2010 decision in Morrison v. National Australia Bank, which held that if  a “statute gives no clear indication of an extraterritorial application, it has none.” Well, RICO has none. (For all you Morrison junkies, click here for the full brief.)

Alba’s allegations “complain about alleged fraud by foreign entities and individuals, that took place on foreign soil, and that injured a foreign plaintiff,” the filing says.

The brief goes on,

In truth, Alba’s pleadings are a strained attempt to force what are allegations of essentially foreign enterprises and foreign acts of racketeering into the paradigm set forth by Morrison and recognized by this Court…Even accepting all of Alba’s allegations as true, not a single bribe, alleged to have occurred over a two-decade long period, was paid by any of the participants in the enterprise from inside the United States, nor by any U.S.participant in the alleged enterprises. And while Alba describes more than a dozen meetings that were allegedly in furtherance of the “scheme to defraud,” all but one alleged meeting occurred overseas.

Lawyers for Alba have said U.S. executives signed the contracts and directed the scheme. They could not be immediately reached Friday.

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