Aluminium traders accused over Bahrain fraud

Last updated: November 15, 2013 9:42 pm

Aluminium traders accused over Bahrain fraud

By Caroline Binham, Legal Correspondent

Aluminium traders from GlencoreMitsui and Sojitz made payments to one of Bahrain’s most senior royals who is at the centre of a high-profile corruption trial, a London court heard. Sheikh Isa bin Ali al-Khalifa, the former chairman of Alba, Bahrain’s state-run aluminium producer, and who was also the minister of finance and close to the Gulf state’s influential prime minister, ordered the system as a way “to control the flow of money” to and from Alba, a jury heard on Friday amid the trial of Victor Dahdaleh, a “power broker” accused of creaming 10 per cent off contracts that he negotiated.Mr Dahdaleh stands accused of eight counts of conspiracy, corruption and money-laundering, all of which he denies, in a case of “large-scale” corruption brought by the UK’s Serious Fraud Office. The SFO accuses Mr Dahdaleh of paying £38m to the sheikh to win $3bn of contracts for companies including Alcoa of the US.

When buying aluminium from Alba, the three commodity houses’ traders paid a $18-per-tonne “handling fee” to the sheikh via offshore bank accounts owned by Mr Dahdaleh, his barrister told the jury during cross-examination of Bruce Hall, Alba’s ex-chief executive. In just one of many twists in the long-running case, Mr Hall has pleaded guilty to accepting corrupt payments and is a prosecution witness after cutting a deal with the SFO.

The scheme was put in place by the sheikh after he detected a scam within Alba’s marketing department where employees were “on the take”.

“The one thing that was not tolerated was individuals making money behind the back of the government of Bahrain,” Nicholas Purnell QC, Mr Dahdaleh’s barrister, put to Mr Hall during cross-examination.

“That certainly was true,” Mr Hall replied.

“That, in Bahrain, equates to corruption,” Mr Purnell stated.

“Treason,” Mr Hall corrected.

The more “transparent” system put in place by the sheikh after detecting the marketing scam was “that there would be an $18 handling fee back to Sheikh Isa through one of Mr Dahdaleh’s bank accounts, and $3 went to you,” Mr Purnell put to Mr Hall, with which he concurred.

The sheikh, who is an alleged co-conspirator on the SFO’s indictment of Mr Dahdaleh, is not taking part in proceedings as there is no extradition treaty between the UK and Bahrain to compel him, the jury was told last week.

The court heard on Friday that the payments-agreement was part of a larger system of control exercised by the sheikh over the day-to-day workings of Alba.

During cross-examination of Mr Hall – who, the jury heard had co-operated with authorities not only in the UK but also the US Department of Justice in an attempt to get leniency or immunity from prosecution – Mr Purnell asked him to agree with his description of Bahrain’s system of “waste” or patronage.

“Alba was the government of Bahrain,” he said. “And the government of Bahrain was in fact the prime minister,” Mr Purnell stated.

“That’s my assessment of the situation,” Mr Hall agreed.

A key defence to the bribery laws with which Mr Dahdaleh is charged is so-called principal’s consent: if payments are known about by the so-called principal of an entity – in this case, the government of Bahrain generally and the prime minister in particular – the payments cannot be construed as corrupt.

The trial continues.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: