LONDON: One of Britain’s biggest corruption trials in years came to an abrupt halt yesterday when the Serious Fraud Office (SFO) called off the prosecution of businessman Victor Dahdaleh in a further setback for its already tarnished reputation.

The SFO had accused Dahdaleh of paying some US$67 million (RM214.9 million) in bribes to former managers of Aluminium Bahrain (Alba) the world’s fourth biggest aluminium smelter, between 1998 and 2006 in return for a cut of contracts worth over US$3 billion.

The case had involved allegations of corruption at senior levels of government and business in Bahrain, a sensitive issue at a time of political unrest in the secretive Gulf kingdom.

But the SFO’s lead counsel told a London court there was no longer a realistic prospect of conviction after a key witness changed his evidence and two US lawyers who had played a crucial role in the case refused to testify in court.

The sudden collapse of Dahdaleh’s trial, which began on Nov 5 and had been expected to run into 2014, followed costly blunders by the SFO in other high-profile cases that had piled pressure on the agency to deliver notable convictions.

“After careful consideration of all the circumstances of this case, the SFO has concluded that there is no longer a realistic prospect of conviction,” Philip Shears, lead counsel for the prosecution, told Southwark Crown Court.

With the SFO not presenting any evidence, the judge instructed the jury to return verdicts of not guilty on all eight charges. The jury was then discharged.

Addressing the jurors before discharging them, Judge Nicholas Loraine-Smith said he had asked the SFO to reconsider its position last Thursday after becoming concerned about a particular aspect of the case. He reminded them that an SFO witness, case officer Sasi-Kanth Mallela, had told the court that the agency had effectively delegated its investigative duties in Bahrain to lawyers from the US firm Akin Gump, which acts for Alba.

The judge said these lawyers were representing Alba in a “hotly contested” US civil lawsuit against Dahdaleh, raising a potential conflict of interest between their assistance to the SFO and their own interests in the US legal action.

Shears said Dahdaleh’s defence in the British criminal trial had called their motives into question and it was therefore essential to the fairness of the trial that they should make themselves available for cross examination by Dahdaleh’s team.

Shears said the other main reason for the SFO’s decision was that Bruce Hall, a former CEO of Alba who had pleaded guilty to a conspiracy to corrupt with Dahdaleh, significantly changed his evidence in court compared with what he had said in his witness statements to the SFO.

Dahdaleh admitted making payments to Alba managers but pleaded not guilty, citing “principal’s consent”, a defence available under Britain’s Prevention of Corruption Act 1906. — Reuters

This article first appeared in The Edge Financial Daily, on December 11, 2013.