Victor Dahdaleh corruption case: Billionaire's fraud trial collapses after key SFO witnesses refuse to give evidence

 

A major anti-corruption trial involving a billionaire Labour donor who is a friend of Tony Blair collapsed yesterday following an embarrassing error by the Serious Fraud Office.

Victor Dahdaleh, 70, was found not guilty of paying more than £35m in bribes to former executives at Aluminium Bahrain (Alba), the fourth-largest smelter in the world, in return for contracts worth more than £2bn.

The case was dropped by the SFO yesterday after it received stinging criticism from the judge for “delegating” the Bahraini strand of its investigation to Akin Gump, one of the largest law firms in the world – which is also separately suing Mr Dahdaleh for up to $1bn in the United States.

The news is a fresh blow for the SFO, which has made a series of high-profile mistakes during its attempts to prosecute white-collar crime. In 2006, it was forced by the then Prime Minister Mr Blair to drop an inquiry into the alleged payment of Saudi bribes by BAE Systems to secure a multibillion-pound arms contract. The law enforcement agency is also being sued for £300m by the property tycoon Vincent Tchenguiz for a series of alleged injustices relating to his arrest in connection with the collapse of the Icelandic bank Kaupthing.

Mr Dahdaleh, a Jordanian-born metals magnate, used to lunch with Mr Blair and was once introduced by Lord Mandelson as “Victor, my friend”. He was accused of making payments in connection with Alba contracts with a US company, Alcoa Inc, for supplies of aluminium shipped to Bahrain from Australia.

During the trial, it emerged that one of the witnesses, the former Alba deputy chief executive Jeremy Nottingham, had told the court that Randolph Teslik, a senior partner at Akin Gump, tried to “persuade” him to change his thoughts on some elements of the alleged criminal conspiracy.

Yesterday at Southwark Crown Court, Phillip Shears QC, acting for the SFO, offered no evidence against Mr Dahdaleh and blamed the “unwillingness” of Mr Teslik and another Akin Gump lawyer Mark MacDougall to attend court to give evidence.

But at the end of Mr Shears’ statement, Judge Nicholas Loraine-Smith voiced his anger. He said that an SFO official had “delegated his disclosure duties in Bahrain to Akin Gump and in particular to Mr MacDougall”.

Judge Loraine-Smith added that the law firm was the “defendant’s opponent in a hotly contested, ongoing civil action in America”.

He went on: “Neither Mr MacDougall nor Mr Teslik, both of whom are fully bound witnesses, are prepared to be questioned about their inquiries. In fact they have deliberately absented themselves and remain in America. They state that giving evidence in this case is impossible.”

Finally, the judge asked Mr Shears: “I would like you to consider, with those who instruct you, whether the position is in any way defensible.”

The trial has also featured an intervention from the Deputy Prime Minister of Bahrain, the government of which owns 77 per cent of Alba. Jamel Saleem al-Arayed wrote to the head of the SFO and to the Attorney General, stating all the payments made by Mr Dahdaleh had been approved.

Neil O’May of Norton Rose Fullbright, who represented Mr Dahdaleh, told The Independent: “My client has suffered six years of intensive investigation and prosecution which has put his life and business on hold, whilst he has had to endure accusations over his operations relating to over 10 years ago.

“He is overwhelmed by the acquittal today and very grateful that the English courts system has reached the correct result. However, he is extremely concerned that those supervising the SFO allowed its essential functions as an impartial investigating organisation to be outsourced to an American law firm with a conflict of interest, such that the lawyers themselves refused to attend court to give a full explanation of their part in the investigation.”

As he outlined the SFO’s decision to offer no evidence, Mr Shears said: “I have taken matters up to the highest level in the Serious Fraud Office and consulted the Attorney General yesterday. At the commencement of this trial the SFO was of the view that there was a realistic prospect of conviction in this case and that furthermore the evidence in the case was strong.”

Mr Shears also blamed an alleged change in evidence of one of the prosecution’s witnesses, the former Alba chief executive Bruce Hall, who was extradited from Australia by the SFO and had earlier pleaded guilty to conspiracy to corrupt. Mr Hall admitted the charge of being part of a criminal conspiracy with Mr Dahdaleh and the then-Alba chairman Sheikh Isa bin Ali al-Khalifa, a former Bahraini Petroleum Minister. He will be sentenced at a later date.

Of Mr Teslik and Mr MacDougall, Mr Shears said:  “The attendance of the two American witnesses would have allowed this aspect of the case to be ventilated before  the jury.

“In seeking to secure the attendance of these two witnesses – who have previously attended court on every other occasion when their attendance has been required – the Serious Fraud Office has taken every available step, including a direct telephone conversation between the director of the Serious Fraud Office and the chair of Akin Gump.

“After careful consideration of all of the circumstances of the case the Serious Fraud Office has concluded that there is no longer a realistic prospect of conviction in this case and accordingly we offer no evidence.”

Akin Gump did not respond to requests for a comment.

An SFO spokesperson said: “Alba in Bahrain gave its documents to Akin Gump, the company’s lawyers. The SFO framed specific requests to Akin Gump for that documentation and obtained what was requested.

“The SFO also obtained evidence from other sources including banks and individuals. No aspect of this investigation was outsourced.”

Serious Fraud Office: A catalogue of concerns

Last year the property tycoon Vincent Tchenguiz claimed £100m of damages for a series of alleged injustices relating to his arrest and subsequent investigation in connection with the collapse of the Icelandic bank Kaupthing. The claims included trespass, false imprisonment and malicious prosecution. By July the High Court ruled that search warrants issued to the SFO as part of its investigation into Mr Tchenguiz and his brother were unlawful and obtained by “misrepresentation”.

Chris Ronnie, the former chief executive of JJB Sports, was charged with offences relating to an alleged £1m fraud. But his case was among 30 that faced collapse after a court heard that the SFO had brought prosecutions unlawfully throughout the directorship of Richard Alderman, who oversaw the SFO between 2008 and 2012.

In August the SFO admitted misplacing 32,000 pages of documents, 81 audio tapes and electronic media relating to its inquiry into BAE Systems’ arms deals with Saudi Arabia.

In 2010 Jared Bentley Brook and Lincoln Julian Fraser, former directors of Imperial Consolidated Group, were cleared of causing the collapse of the international investment company in 2002.

In 2002 two trials costing the SFO £40m failed to convict anyone in connection with an alleged £20m fraud at DIY chain Wickes.

The 1992 Blue Arrow case, which is also thought to have cost £40m, was linked to allegations of share rigging during a takeover. But of 14 defendants, just four were convicted by a jury. All were subsequently cleared on appeal.

In the 1990s, the SFO brought four trials linked to allegations of share ramping during the takeover of the Distillers Group by Guinness. Two of the trials collapsed. While four businessmen were convicted, four others were eventually acquitted.

* An earlier version of this article referred to Victor Dahdaleh as a ‘Labour donor’.  in fact, The Independent understands that Victor Dahdaleh, whose anti-corruption trial collapsed on Tuesday, has not donated funds directly to the Labour Party but has made donations to think tanks often associated with the Party, including the IPPR. 

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Sport
Bradford City's reward for their memorable win over Chelsea is a trip to face either Sunderland or Fulham (Getty)
football
News
Lars Andersen took up archery in his mid thirties
video
Voices
Focus E15 Mothers led a protest to highlight the lack of affordable housing in London
voicesLondon’s housing crisis amounts to an abuse of human rights, says Grace Dent
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project