The Feds Circle Alcoa

I suppose we can rest easy now that federal prosecutors are on the case. The target of their attention is Alcoa (NYSE: AA  ) , the Pittsburgh-based major domo of U.S. aluminum production.

About a month ago, I told you that a government-controlled aluminum producer based in the oil-rich country of Bahrain, a company aptly named Aluminum Bahrain B.S.C., or Alba, had filed a more than $1 billion lawsuit against Alcoa. The suit alleged that for about 15 years, the company had bribed officials in its country to gain overpayments for alumina, a key ingredient in the manufacture of aluminum. The bribes were said to have totaled hundreds of millions of dollars.

The two main parties to the suit have agreed to suspend the action while U.S. prosecutors do their thing. One of the key differences between this and other such investigations is that in this case, for obvious reasons, the normal veil of secrecy has been removed. The allegations against Alcoa include mail and wire fraud, along with violations of the Foreign Corrupt Practices Act.

In addition to its U.S. operations, Alcoa, the world's third-largest aluminum producer, is active in such places as Australia, Brazil, and China. It recently teamed up with Aluminum Corp. of China (NYSE: ACH  ) -- a.k.a. Chinalco -- to acquire a stake in industry leader Rio Tinto (NYSE: RTP  ) .

As for the federal investigation, I'm inclined to avoid getting worked up over the possibility that it could affect Alcoa negatively. The company is a huge entity, and operations of its size can be -- and frequently are -- targeted for all manner of perceived misdeeds. Beyond that, it operates in what's now a major sweet spot: the provision of vital metals and resources to the developing world. On that basis alone, Fools would be well advised to monitor Alcoa's progress closely.

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