This might be the largest-ever foreign bribery Scam
All is not clean and clear with the Company that produces close to 25% of the world’s power to generate electricity equivalent to the needs of around 1.2 billion homes worldwide.
Alstom S.A, one of the biggest power producers is involved in the largest-ever foreign bribery Scam. The Company stands accused of paying tens of millions of dollars in bribes all over the world in countries as far away as Indonesia, Saudi Arabia, Egypt and the Bahamas for more than a decade. It will now have to shell out a record $772 million ($772,290,000) as fine after pleading guilty of violating the Foreign Corrupt Practices Act.
Alstom’s Swiss subsidiary Alstom AG and two of its U.S. subsidiaries Alstom Power, Connecticut, and Alstom Grid Inc. headquartered in New Jersey allegedly violated the provisions of the FCPA.
Alstom, Alstom Prom, Alstom Power and Alstom Grid’s executives and employees reportedly paid bribes to government officials. Apart from this they falsified books and records in connection with power, grid and transportation projects with state-owned entities in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.
In Indonesia, Alstom officials bribed high-ranking government officials, members of Parliament and officials of Perusahaan Listrik Negara, the state-owned electricity company-to secure several power-related contracts worth around $375 million. In total, Alstom paid more than $75 million to secure $4 billion in projects which resulted in around $300 million as profit to the company.
A high-ranking member of Indonesian Parliament convicted of accepting bribes from Alstom in Indonesia, is currently serving a three-year imprisonment term.
Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, earlier this month pleaded guilty in the District of Maryland of accepting kickbacks from Alstom and other companies as well as mail fraud, money laundering and tax fraud. Elgawhary agreed to serve 42 months in prison and forfeit approximately $5.2 million in proceeds in connection with a corruption scheme in Egypt.
Alstom and its subsidiaries attempted to conceal the bribery by retaining consultants. These consultants actually served as conduits for corrupt payments to the government officials in the name of providing consulting services on behalf of the companies. Internal Alstom documents would refer to the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”
“This investigation spanned years and crossed continents, as agents from the FBI Washington and New Haven Field Offices conducted interviews and collected evidence in every corner of the globe,” said FBI Executive Assistant Director Robert Anderson, Jr. “The record dollar amount of the fine is a clear deterrent to companies who would engage in foreign bribery, but an even better deterrent is that we are sending executives who commit these crimes to prison.” he added.
“Alstom’s corruption scheme was sustained over more than a decade and across several continents,” said Deputy Attorney General Cole. “It was astounding in its breadth, its brazenness and its worldwide consequences.”
Alstom’s executives allegedly falsified books and records and failed to implement adequate internal controls. “A significant part of this illicit work was unfortunately carried out from Alstom Power’s offices in Windsor, Connecticut. I am hopeful that this resolution, and in particular the deferred prosecution agreement with Alstom Power, will provide the company an opportunity to reshape its culture and restore its place as a respected corporate citizen,” the First Assistant U.S. Attorney Gustafson said.
Alstom in spite of being aware of the misconduct of its U.S. subsidiaries in connection with a power project in Italy and other countries around the globe; initially refused to cooperate with the investigation for several years.
Five individuals, including four corporate executives of Alstom and its subsidiaries, including Frederic Pierucci, Alstom’s former vice president of global boiler sales (Indonesia bribery scheme), David Rothschild, Alstom Power’s former vice president of regional sales, William Pomponi, Alstom Power’s former vice president of regional sales, Lawrence Hoskins, Alstom’s former senior vice president for the Asia region are alleged to have been involved in the bribery. The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty.
This case was investigated by the FBI’s Washington Field Office, with assistance from Komisi Pemberantasan Korupsi (Corruption Eradication Commission) Indonesia, Office of the Attorney General in Switzerland, Serious Fraud Office in the United Kingdom and authorities in Germany, Italy, Singapore, Saudi Arabia, Cyprus and Taiwan.
The case was prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey and Assistant U.S. Attorney David I. Salem of the District of Maryland. The Criminal Division’s Office of International Affairs also provided substantial assistance.
Commenting on the episode Alstom CEO Patrick Kron said, “There were a number of problems in the past and we deeply regret that. However, this resolution with the DOJ allows Alstom to put this issue behind us and to continue our efforts to ensure that business is conducted in a responsible way, consistent with the highest ethical standards.”