Victor Dahdaleh accused of 'large scale' corruption

Victor Dahdaleh, a Canadian-British businessman, made corrupt payments of £40m to a member of Bahrain's ruling family and to a Bahraini company's chief executive to win around $3bn of contracts for companies including Alcoa, according to British prosecutors at Mr Dahdaleh's criminal trial in London.

The UK's Serious Fraud Office is accusing Mr Dahdaleh, 70, of eight counts of corruption, conspiracy and transferring criminal property in a landmark and long-running case whose jury trial began on Tuesday.

The SFO alleges that between 1998 and 2006 Mr Dahdaleh paid Sheikh Isa bin Ali al-Khalifa, a member of Bahrain's ruling family and an adviser to the Gulf state's influential prime minister, as an inducement for ALBA, the Bahraini aluminium smelting company of which Sheikh Isa was the chairman, to show favour to companies Mr Dahdaleh represented, the jury heard on Tuesday.

Alcoa, over the relevant period, was the key supplier to ALBA of alumina, a raw material required for the production of aluminium. Mr Dahdaleh participated in the negotiation of the renewal and extension of Alcoa's supply contract, the jury was told.

The SFO also accuses Mr Dahdaleh of corruptly paying Bruce Allan Hall, the former chief executive of ALBA, on three occasions in 2004.

Mr Hall has pleaded guilty to receiving corrupt payments from Mr Dahdaleh, the jury heard. He has entered a co-operation deal and will testify against Mr Dahdaleh as the SFO's first witness in the trial, Philip Shears QC, for the SFO, said.

"This case is about corruption. It's corruption, we will suggest, on a very large scale," said Mr Shears. "These payments were corruptly made in order to win business for companies that hoped to trade with ALBA." Mr Dahdaleh had an interest in these companies, Mr Shears added.

Mr Dahdaleh set up a string of offshore companies that he then "inserted into the supply chain" to ALBA, taking a percentage of as much as 10 per cent of contracts' value, the SFO alleges.

In one instance, his British Virgin Islands-registered company, AAAC - which ALBA's board of directors believed was a part of Alcoa during negotiations - beat Glencore to a 10-year alumina-supply contract worth $3.1bn in 2004 because Mr Dahdaleh had "inside information" as to what Glencore had bid, the jury heard.

While Mr Dahdaleh does not deny making the payments to Sheikh Isa and Mr Hall, he maintains they are not corrupt. He declined to comment on the nature of the payments during his "lengthy" interviews with the SFO, Mr Shears said.

Mr Dahdaleh was so close to ALBA and Sheikh Isa that Mr Hall's interview for the chief executive position, which he took up in 2002, was conducted at Mr Dahdaleh's house, with him there, the court heard.

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Mr Dahdaleh then offered to pay Mr Hall an additional $100,000 "out of his own pocket" if the salary terms of the chief-executive role did not meet Mr Hall's expectations.

"But why should he be so generous?" Mr Shears said. "They needed someone who was likely to fit into that arrangement. Well, ladies and gentlemen of the jury, they got their man."

Mr Dahdaleh, whose primary residence the SFO says is in London's Belgravia, denies the charges. His lawyers will later begin their defence arguments.

No extradition treaty exists between the UK and Bahrain, and therefore there is no way of compelling Sheikh Isa to take part in the trial.

The trial continues.

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