Alcoa to pay $85m to settle Bahrain suit Alcoa of the US is to pay $85m to settle a long-running lawsuit brought by Bahrain's state-controlled aluminium company over alleged corruption, in a case that could trigger other foreign businesses to launch similar actions against US multinationals. The deal - which Aluminium Bahrain said was worth almost $450m once discounts on future contracts with Alcoa were factored in - is thought to be the first over a claim of alleged bribery brought by an overseas business to the US courts. Lawyers say the returns achieved by Aluminium Bahrain are likely to make US litigation more attractive to other companies that claim they are victims of corruption involving US multinationals abroad. "While this is still an emerging trend, I would expect this recovery would encourage other foreign companies to consider this route," said Danforth Newcomb, a corruption specialist at Shearman & Sterling, the US law firm. Alcoa said it would pay the $85m in two instalments to settle fraud and racketeering allegations made by Aluminium Bahrain, known as Alba, in the lawsuit launched in February 2008. The settlement also includes favourable terms on a long-term contract for the supply of alumina, the raw material used to make aluminium, which Alba said took the total value of the deal to $447m. Alcoa said that the sales of alumina, on a price linked to its index for the commodity, would be profitable. Alba alleged Alcoa overcharged it more than $400m for raw materials over a 12-year period, with some of the money being recycled to pay bribes to officials in Bahrain. Charles Carr, head of K2 Intelligence, the company that investigated on behalf of Alba, said the probe had "identified millions in questionable payments involving intermediaries, offshore corporate structures and the abuse of supply contracts to Alba." Alcoa, which contested the case and made no admission of liability, said the settlement was the "best possible outcome" and avoided the "time and expense of complex litigation." Alcoa and Alba had resumed their commercial relationship, and the long-term alumina supply agreement that showed "a mutual desire to work together," Alcoa said. Mahmood Hashim al-Kooheji, Alba's chairman, praised Alcoa's management for the way they dealt with the allegations and said the "landmark" case should encourage other overseas companies to bring similar claims in the US. "It will lead the way for other people to follow suit - and make use of us as an example," he said. The deal was announced a few hours before Alcoa was due to report its third-quarter results, opening the US corporate earnings season. Reporting for the second quarter, Alcoa said it had been "in dialogue" with the US Department of Justice and the Securities and Exchange Commission, the financial regulator, over their investigations into the case. It added: "If a settlement of the government's investigations can be reached, it is probable that the amount would be material in a particular period to Alcoa's results of operations." Alcoa's shares were up 1.3 per cent at $9.24 in afternoon New York trading. While US businesses have long been targeted by the justice department and SEC over alleged corruption in their dealings abroad, the Alba case is an unusual example of a foreign customer bringing a damages case to the US civil courts. Mr Kooheji declined to say how much the near five-year legal battle had cost Alba, disclosing only that the sum was "significantly smaller" than the size of the settlement. The Alcoa case has led to the conviction of two former Alba officials and spawned a criminal investigation in Britain, where Victor Dahdaleh, a British-Canadian businessman, is due to stand trial next year accused of paying bribes to win aluminium contracts linked to Alcoa. He has denied wrongdoing. British prosecutors allege Mr Dahdaleh made corrupt payments of almost $6m in 2003-4 to Sheikh Isa Bin Ali al-Khalifa, a senior member of Bahrain's royal family. Sheikh Isa, who does not face any criminal charges and is not a target of the British investigation, has denied the allegations.