The Canadian-British businessman Victor Dahdaleh is now on trial for large scale corruption, in Southwark Crown Court in London. We have previously blogged on this story in the past when Mr Dahdaleh was charged. This is one of the most high profile cases the Serious Fraud Office is currently prosecuting. Even though the charges relate to pre Bribery Act events, and is therefore under the “old” corruption laws, this is nevertheless a very serious and high profile case for the SFO to be pursuing. It should put an end to the frequent accusations which are made both in the media, and by British and foreign businessmen privately, that the British government is not serious about tackling corruption and that the Bribery Act is mere wallpaper.
This frequently made comment is apparently based on the fact that the SFO has not yet prosecuted a corporation under the Bribery Act, although it has recently brought charges against four individuals which we have blogged on here. People often forget that the Bribery Act has only been in force for a little over two years and that it is only acts (or omissions) that have taken place after 1 July 2011 that could constitute an offence or offences under the Bribery Act. Clearly it takes time for such offences to be discovered, or reported, and investigated. With the best will in the world investigations can often take a year to two years before the SFO is in a position to make a decision whether or not to prosecute and then trials may take another year to reach the courts.
In any event, the Dahdaleh case demonstrates that the SFO does have the will and resources to take on very wealthy and high profile defendants who, it alleges, have been using complex schemes and very large sums of money in order to win business overseas.
As reported recently in the Financial Times it is alleged by the SFO that Mr Dahdaleh paid bribes of £38 million to a senior member of the Bahraini Royal Family in order to win contracts worth at least £3 billion between the Gulf States National Aluminium Company and Western Companies. It is further alleged that Mr Dahdaleh made the corrupt payments through a web of offshore companies and employing Liechtenstein and Swiss bank accounts in order to pay the money to the senior Bahraini Royal, in order to help seal the deals awarded to various international companies.
Mr Dahdaleh is accused of eight counts of corruption, conspiracy and money laundering in a trial which began on 5 November 2013.
The SFO also alleges that Mr Dahdaleh bribed Bruce Hall, the former chief executive of Alba, Bahrain’s state controlled aluminium smelting company. It is reported that Mr Hall has pleaded guilty to corruption charges and he is giving evidence as a witness against Mr Dahdaleh. The SFO’s barrister, Philip Shears QC, alleges that Mr Dahdaleh
“devised the necessary mechanics to generate funds from these contracts, either by taking a percentage of the supply contracts or by creating his own parallel contract. Either way, the rewards to Mr Dahdaleh were enormous”.
In one particular instance, it is alleged that one of Mr Dahdaleh’s companies beat the mining giant Glencore to a 10 year alumina supply contract worth $3.1 billion in 2004 because Mr Dahdaleh had obtained inside information on Glencore’s bid.
The Bahraini Royal is not a co-defendant in this trial. The Financial Times reports that no extradition treaty exists between the United Kingdom and Bahrain which could compel the Bahraini Royal to take part in the trial.
The trial continues and we will blog on it further in due course. This case contradicts the naysayers who claim that the Bribery Act is meaningless and damaging to British business. On the contrary, it shows that the SFO is prepared to prosecute very wealthy and powerful defendants, and in circumstances where there are international political interests at stake. This should help restore the public’s faith in the rule of law following the international debacle in 2006 when Tony Blair, the former British Prime Minister, under pressure from the Saudi government, intervened in the SFO’s investigation into allegations of corruption by BAE Systems, on the grounds of national security interests.