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Cablegate: Alba V. Alcoa; Crown Prince Vs. Prime Minister

VZCZCXRO2770
PP RUEHDE RUEHDIR
DE RUEHMK #0192 0841248
ZNY CCCCC ZZH
P 241248Z MAR 08
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC PRIORITY 7704
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY
RHBVAKS/COMUSNAVCENT PRIORITY

C O N F I D E N T I A L MANAMA 000192

SIPDIS

SIPDIS

COMMERCE FOR 4520/ITA/MAC/ONE/HOFFMAN

E.O. 12958: DECL: 03/24/2018
TAGS: PGOV ECON BA
SUBJECT: ALBA V. ALCOA; CROWN PRINCE VS. PRIME MINISTER

REF: MANAMA 89

Classified By: Charge d,Affaires a.i. Christopher Henzel, reasons 1.4(b ) and (d).

1.(C) Summary: Bahraini parastatal Alba's lawsuit against Alcoa may help Bahrain's Crown Prince discredit cronies of his uncle, the Prime Minister. End Summary. ------------------------ BAHRAINI FIRM SUES ALCOA ------------------------

2.(U) Aluminum Bahrain (Alba), the world's tenth largest aluminum manufacturer, filed a lawsuit February 27 in U.S. District Court in Pittsburgh against U.S. firm Alcoa, the world's largest producer of alumina, a key aluminum precursor. The U.S. Department of Justice announced March 21 that it was opening a criminal probe into Alba's allegations. Alba was founded as a state enterprise during the British period, and the GOB's holding company, Mumtalakat, still owns 77 percent of Alba. Alcoa has contracted to provide alumina to Alba since 1992. Alba's suit alleges that from the beginning Alcoa overcharged Alba, with the connivance of unnamed Bahraini officials who allegedly received kickbacks from agents of Alcoa. Alba's suit claims roughly USD one billion in damages.

3.(SBU) According to press reports, the alleged scheme came to light as the result of a Kroll investigation commissioned by Mumtalakat to root out corruption in government companies. (Kroll uncovered another, apparently unrelated scam that resulted in Bahraini criminal charges against senior Alba officials in September 2007.)

4.(C) Alba's (AmCit) CFO told PolEcon Chief March 22 that he and the other company officers only learned of the suit when they read an account published in the Wall Street Journal. "Only the CEO knew about it." The CFO discounted the possibility that Alba failed to understand that the discovery process is likely to embarrass some Bahraini officials. "They knew what they were doing when they filed in the U.S." ------------------------------- CROWN PRINCE vs. PRIME MINISTER -------------------------------

5.(C) Prominent local attorney Qays Zu,ubi told DCM March 16 that he had asked Mumtalakat CEO Talal al Zain whether the cabinet had approved Mumtalakat's decision to file this lawsuit. Zain replied no, it had gone up the "other chain", i.e. through Economic Development Board (EDB) Chief Executive and Mumtalakat board member Sheikh Mohammed Bin Isa Al-Khalifa and presumably the Crown Prince. However, Sheikh Mohammed told the Ambassador March 2 that he had been surprised that the case had gone to court. "We really thought Alcoa would respond to our concerns before it reached this point."

6.(C) Many in Bahrain view the lawsuit as another attempt by the Crown Prince to score more points against his uncle the Prime Minister (reftel). The Bahraini officials who stand to be embarrassed are most likely in the camp of the Prime Minister. Although published accounts have not named the suspected Bahraini officials, many Bahrainis believe that former Alba Chairman Sheikh Isa Bin Ali Al Khalifa is at the center of the allegations. (Note: Sheikh Isa is also a former Minister of Oil. End Note.)

7.(C) Bahraini Tender Board Chairman Dr. Abdul Hussein Ali Mirza told the Ambassador March 10 that he recognized that Alba's lawsuit had both a positive and a negative side. "If you want to stop corruption, you must set examples." Although Mirza claimed not to be privy to the decision-making process that led Alba to sue Alcoa, he opined that Alba's action would send a clear message that the Bahraini government is working sincerely to root out corruption. However, Mirza acknowledged that the suit could also embarrass Bahrain. "It could be like opening Pandora's box." ********************************************* ******** Visit Embassy Manama's Classified Website: XXXXXXXXXXXX********************************************* ******** HENZEL

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