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Bahrain's Alba settles bribery suit with Alcoa

Aluminum Bahrain (Alba) and U.S. aluminum maker Alcoa said on Tuesday they had settled the Bahraini firm's racketeering and fraud suit against Alcoa in return for $85 million in cash plus long-term raw material supply contracts.

Alba put the value of the contracts at $362 million. Alcoa declined to give a value.

Alba had accused Alcoa of conspiring with a businessman to orchestrate bribes in Bahrain and to overcharge it for alumina, the crucial material used to make aluminum.

The Bahraini firm filed a lawsuit in U.S. federal court in Pennsylvania - Alcoa is based in Pittsburgh - in 2008 and sought damages in excess of $1 billion and punitive damages.

"We are very happy with this settlement, this is great news for Alba and Bahrain," Alba Chairman Mahmood Hashim al-Kooheji, who is also chief executive of Bahrain's sovereign wealth fund Mumtalakat, said in an interview from Manama.

(Additional reporting by Steve James in New York; Writing by Amran Abocar; Editing by Tim Dobbyn)