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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Alstom pays $772 million for FCPA settlement, SFO brings new charges

Alstom Chief Executive Officer Patrick Kron (Image courtesy of Alstom)Paris-based Alstom pleaded guilty Monday to bribing officials in Indonesia, Saudi Arabia, Egypt, and the Bahamas. It will pay $772 million in criminal penalties to settle the charges, the DOJ said.

The penalty is the biggest criminal fine ever levied for FCPA offenses and the second biggest FCPA enforcement action overall.

Alstom SA pleaded guilty to a two-count criminal information in federal court in Connecticut. The DOJ charged the company with violating the Foreign Corrupt Practices Act by falsifying its books and records and failing to implement adequate internal controls.  Alstom admitted its criminal conduct.

U.S. District Judge Janet B. Arterton scheduled a final sentencing hearing for June 23, 2015 at 3pm.

In addition, Alstom Network Schweiz AG, a Swiss subsidiary, pleaded guilty to a criminal information charging it with conspiracy to violate the antibribery provisions of the FCPA.

Two U.S. subsidiaries — Alstom Power Inc. and Alstom Grid Inc. —  both entered into deferred prosecution agreement with the DOJ. They admitted that they conspired to violate the antibribery provisions of the FCPA. 

Alstom Power is headquartered in Windsor, Connecticut, and Alstom Grid, formerly Alstom T&D, was headquartered in New Jersey.

“In total,” the DOJ said, “Alstom paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of approximately $300 million.” 

In London Monday, the UK Serious Fraud Office charged a British subsidiary of Alstom and two employees with bribing officials at a state-controlled Lithuanian energy company. The bribes were intended to help sell equipment to a power plant in Elektrenai, west of the capital Vilnius.

Monday’s FCPA settlement removes an obstacle for GE’s acquisition of Alstom’s energy assets for €12.4 billion ($15.6 billion). The companies agreed to the deal in June. On Friday, Alstom’s CEO Patrick Kron said the DOJ would require Alstom to pay the criminal penalty and not GE.

“Alstom’s corruption scheme was sustained over more than a decade and across several continents,” U.S. Deputy Attorney General James Cole said. “It was astounding in its breadth, it’s brazenness and its worldwide consequences.”

Alstom Power Ltd is the second Alstom unit to face bribery charges in the UK. The SFO charged Alstom Network UK in July with six offenses of corruption and conspiracy to corrupt. The SFO said Alstom Network paid $8.5 million in bribes between 2000 and 2006 for work on the Delhi Metro and tram and infrastructure projects in Warsaw and Tunis.

A preliminary hearing is scheduled on the fresh charges against Alstom Power Ltd for January 5 at Southwark Crown Court in London.

In 2008, Siemens paid the DOJ a $450 million criminal fine. And it paid the SEC $350 million to resolve civil FCPA charges. That $800 million enforcement action ranks first on the FCPA Blog top ten list.

So far in 2014, ten companies have paid about $1.5 billion to resolve FCPA offenses. It’s the most money collected by the DOJ and SEC through FCPA enforcement actions since 2010, a record year when 23 companies paid $1.8 billion.

Alstom isn’t subject to SEC enforcement because it has no shares trading on U.S. exchanges and isn’t an issuer. Its shares trade on the Paris Stock Exchange under the symbol ALSO.PA.

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Three Alstom executives have pleaded guilty in the United States to bribing officials in Indonesia to win a power project contract. Charges are pending against a fourth executive.

Earlier this month, a former Bechtel executive pleaded guilty to mail fraud, conspiring to launder money, and tax fraud. Asem Elgawhary admitted accepting kickbacks from Alstom and other companies when he worked in Egypt for a Bechtel venture with the Egyptian Electricity Holding Company. In his plea agreement, Elgawhary agreed to serve 42 months in prison and forfeit $5.2 million.

Marubeni Corporation, Alstom’s consortium partner on the Indonesia project, pleaded guilty in March this year to one count of conspiracy to violate the Foreign Corrupt Practices Act and seven counts of violating the FCPA. The Japanese trading company paid a criminal fine of $88 million.

In 2008, Swiss police arrested a former Alstom manager and searched for evidence as part of a corruption and money-laundering investigation. Offices near Zurich and in Baden were raided, along with homes in several cantons. The Swiss attorney general fined Alstom about $40 million in 2011 for corporate negligence for failing to stop overseas bribery.

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The DOJ said Monday Alstom failed to voluntarily disclose the FCPA violations even though it knew about related misconduct at a U.S. subsidiary.

Other factors cited by the DOJ for the huge criminal fine were:

  • Alstom’s refusal to fully cooperate with the department’s investigation for several years
  • The breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials
  • Alstom’s lack of an effective compliance and ethics program at the time of the conduct, and
  • Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.

Alstom began cooperating only after the DOJ publicly charged several of its executives, the government said.

The DOJ said it had help from counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Switzerland attorney general’s office, the UK Serious Fraud Office, and authorities in Germany, Italy, Singapore, Saudi Arabia, Cyprus, and Taiwan.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. I am so very happy to hear about these charges, god bless the authorities and entities who are "leading the charge" , citizens suffer when corruption happens, and we suffer twice when it seems as if nothing can or will be done about it. Best Christmas gift ever!

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