Once, Victor Dahdaleh was known as a Canadian metal magnate who chummed with Bill Clinton and Tony Blair and who was among the guests at a dinner for the Queen and Prince Philip at Canada’s High Commission in London.
Now Mr. Dahdaleh is at the centre of an international bribery scandal. Earlier this week, he was charged with bribing officials at Bahrain’s state-owned aluminum manufacturer. The next day, U.S. metal giant Alcoa Inc. asked that a long-dormant civil suit be reactivated so the company can attempt to dismiss it. The lawsuit involves the Bahraini firm, which claims it was defrauded of hundreds of millions of dollars by Mr. Dahdaleh and Alcoa.
The civil suit had been suspended since 2008 because the U.S. Justice Department didn’t want it to interfere with a criminal probe into allegations that Mr. Dahdaleh and Alcoa overcharged the Bahrainis and paid kickbacks.
The racketeering statutes invoked by the Bahraini firm don't have an extra-territorial reach and thus don't apply to the allegations in the case, the Alcoa lawyers said in a motion filed Tuesday.
Mr. Dahdaleh, who lives in London, surrendered at the Bishopsgate police station Monday after the U.K. Serious Fraud Office charged him with two corruption-related offences and one count of acquiring criminal property.
The Serious Fraud Office said it had been in touch with Swiss authorities as it investigated Mr. Dahdaleh.
“Mr. Dahdaleh believes [that]the investigation into his affairs was flawed and that he has done absolutely nothing wrong. He will be vigorously contesting these charges at every stage,” his lawyers said in a statement.
Mr. Dahdaleh is a 68-year-old McGill University alumnus of Jordanian origin. His personal fortune stems from a private investment firm founded in 1915 by his grandfather – Dadco Group.
He lives in the exclusive Belgravia district of London and is known as a philanthropist and supporter of Britain’s Labour Party. He is a past president of the Canada/UK Chamber of Commerce. In 2009, he arranged for Mr. Clinton to make a free appearance at McGill.
On his website this week, Mr. Dahdaleh made a point of saying that he “interrupted his busy scheduled business commitments” when he had to go to the police station. He is now free on bail.
The allegations against Alcoa and Mr. Dahdaleh stem from the unusual civil suit the Bahraini aluminum smelter Alba filed in Pennsylvania district court. That suit alleges that Alcoa used companies controlled by Mr. Dahdaleh to bribe “one or more senior officials” in Bahrain and to sell aluminum oxide to Alba at inflated prices.
For example, the lawsuit says, when Alba agreed in 2001 to extend its contract to buy raw material from Alcoa’s Australian subsidiary, the paperwork arrived on Alcoa letterhead, though the address was in reality that of a Dadco office in Perth.
Alba was told to communicate with one David Dabney, a purported Alcoa officer, via a confidential Australian fax number.
In fact, the lawsuit alleges, the fax belonged to Dadco and Mr. Dabney was working for Mr. Dahdaleh.
And tens of millions of dollars that the Bahraini firm paid ended in Royal Bank of Canada accounts in the U.S. controlled by Mr. Dahdaleh, the court filing says.
The lawsuit says that Mr. Dahdaleh registered companies in Singapore, the British Virgin Islands and Switzerland to camouflage his role as a middleman in the transactions.
“Plaintiff seeks damages in excess of $1-billion, including punitive damages, for this massive, outrageous fraud,” the suit says.