McGill and York need better 'due diligence' after accepting donations from embattled tycoon, critic says
By Zach Dubinsky, CBC News Posted: May 25, 2016 5:00 AM ET Last Updated: May 25, 2016 5:00 AM ET
Now, a joint CBC/Toronto Star investigation based on the Panama Papers provides the closing chapter in a years-long saga involving Canadian tycoon Victor Dahdaleh, which saw him battle criminal charges and a billion-dollar lawsuit on two continents over an international bribery scandal — all the while forging close ties with a trio of Canadian universities.
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The settlements between the U.S. government and Alcoa describe "Consultant A" as follows:
- Starting in 1989, Alcoa's Australian subsidiary hired Consultant A to help secure a long-term contract to supply an aluminum ingredient called alumina to Bahrain's national aluminum-smelting company, Alba. "The relationship with the consultant was designed to generate funds that facilitated corrupt payments to Bahraini officials," according to agreed findings in the case.
- By 2002, instead of invoicing Alba directly, Alcoa of Australia was routing the paperwork through two offshore companies controlled by Consultant A called AAAC and Alumet. AAAC marked up the price of the alumina to Alba by $79 million US between 2002 and 2004.
- Beginning in 2005, Consultant A's companies bought alumina from Alcoa of Australia and sold it onward to Alba, pocketing a mark-up of $188 million US through 2009, though never actually handling any of the material.
- Consultant A used some of the mark-up revenues "to enrich himself" and some to make "$110 million in corrupt payments to Bahraini officials." Recipients included a senior Bahraini official, directors and management of Alba, and a senior member of Bahrain's royal family.
At one point, a judge found he had breached his bail terms by meeting with a prosecution witness (the Crown alleged witness intimidation), and Dahdaleh had his bail temporarily revoked and was sent to jail for a month.
Ultimately, he was acquitted in 2013 when the case against him collapsed. Unrelated to the earlier witness meeting, two key prosecution witnesses failed to show up to testify and another changed his evidence.
Dahdaleh's defence never denied he paid the inducements but, under a U.K. criminal doctrine known as "principal's consent," said the payments weren't corrupt or illicit because they were known about and approved by Bahraini officials and were part of normal business practice at the time in the country.
In response to questions from CBC and the Toronto Star, Dahdaleh's spokesman Timothy Bell called the outcome of the British court case "final" and said the U.S. plea deals involving Alcoa "do not detract from" it. He added that names were anonymized in the plea deals "for sound reasons of fairness and justice," but did not answer specific questions about Dahdaleh's identity as Consultant A.
"Mr Dahdaleh has never been convicted of any offence in any court in the world," Bell said in an email.
Under a new British law passed in 2010, however, Dahdaleh would not have been successful with the "principal's consent" defence, said Julian Knowles, a British lawyer and expert in commercial crimes.
"It's clear under the 2010 act, even if a public official has the OK from his higher-ups, it's a crime," Knowles told the Star in an interview. "His case is an example of why we changed our law, because there were so many loopholes."
Universities honour embattled magnateWhile the legal drama over the Alcoa bribery scandal was playing out in U.S. court since 2008 and in Britain since 2011, Canadian universities continued to honour Dahdaleh.
He personally arranged for former U.S. president Clinton to receive an honorary degree from McGill University in 2009 and was a dignitary on stage during the ceremony, in which he placed the doctoral sash over Clinton's shoulders and then hugged him.
Dahdaleh has also sat on the board of the McGill University Trust, the school's British fundraising arm, since 1995 without interruption and has been a significant financial supporter.
McGill did not reply to questions about when it first learned of the allegations against Dahdaleh and whether it was appropriate for him to have been a dignitary at the Clinton ceremony while facing bribery accusations. The university also did not say whether it has considered dismissing Dahdaleh from the McGill University Trust.
The same month, York University in Toronto announced it would create a new Dahdaleh Institute for Global Health after he donated $20 million.
Neither St. Francis Xavier nor York replied to multiple queries about what they knew of the allegations against Dahdaleh and how that might have shaped decisions to honour him.
"There was clearly in this particular case some serious questions about the ethical behaviour of this individual ... I think all the institutions have to practise a bit more due diligence," said David Robinson, executive director of the Canadian Association of University Teachers, which represents 68,000 university professors and academic staff in Canada.
"If there's any concerns about violation of ethical standards or any other legal issues, donations should be rejected. I think it sullies the name of a university or college if it's associated with an unsavoury business or character."