U.S. Justice Department launches probe of Alcoa

By Ilaina Jonas

NEW YORK (Reuters) - The U.S. Department of Justice has launched a criminal investigation into whether Alcoa Inc (AA.N: Quote, Profile, Research), one of its subsidiaries and people connected with the unit committed fraud, corruption and bribery in its relations with customer Aluminum Bahrain B.S.C. (Alba).

In a motion filed Thursday with the U.S. District Court in Pittsburgh, the Justice Department asked the court to put a temporary hold on a Alba's civil suit against Alcoa, the world's largest supplier of alumina, the principal raw material used in making aluminum.

The suit also names affiliate Alcoa World Alumina LLC, former Alcoa World Alumina Vice President of Marketing William Rice and Victor Dahdaleh, an agent of Alcoa and Alcoa World Alumina, as defendants.

"The Alba complaint alleges numerous facts which, if true, could be relevant to the government's criminal investigation and a potential criminal trial," the department wrote in its motion.

Last month, Alba, one of the worlds largest smelting firms, filed suit seeking more than $1 billion from Alcoa, accusing the firm of participating in a 15-year conspiracy involving overcharging, fraud and bribery.

In the suit, Alba accused the defendants of steering payments for alumina to companies abroad in order to pay kickbacks to a Bahraini government official.

Alba, which is 77 percent owned by the government of Bahrain, also accuses the defendants of overcharging it for alumina. It did not name the official to whom bribes were allegedly paid.

According to the suit, the bribes were sent through a series of shell companies controlled by Alcoa and resulted in hundreds of millions of dollars in overpayments.