Alstom to pay record $772 mn to settle US bribery charges
23 Dec 2014
French engineering giant Alstom yesterday pleaded guilty and agreed to pay $772 million in criminal penalties to the US Justice Department (DoJ) to settle corruption charges related to paying bribes in order to win business in several countries.
The settlement is the largest-ever criminal fine levied by the US against a company for violations of foreign bribery laws.
The settlement comes at a tricky time for the Paris-based company, which in June agreed to sell most of its power business to US conglomerate General Electric for $16.9 billion. The deal was this week approved by Alstom shareholders, but still requires regulatory approval from several countries.
Alstom pleaded guilty to a two-count criminal information filed today in the US District Court for the District of Connecticut for violating the US Foreign Corrupt Practices Act (FCPA), by falsifying its books and records and failing to implement adequate internal controls.
In addition, Alstom's Swiss subsidiary, Alstom Network Schweiz AG, (formerly known as Alstom Prom), also pleaded guilty to criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA. Alstom Power Inc and Alstom Grid Inc, two US subsidiaries, both entered into deferred prosecution agreements, admitting that they conspired to violate the anti-bribery provisions of the FCPA.
Alstom, Alstom Prom, Alstom Power and Alstom Grid admitted to paying bribes to government officials and falsifying books and records related to securing power, grid and transportation projects from state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.
The DoJ said that Alstom paid a total of more than $75 million to secure $4 billion in projects around the world, and profited around $300 million.
''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. And it is both my expectation – and my intention – that the comprehensive resolution we are announcing today will send an unmistakable message to other companies around the world.''
The SFO yesterday charged Alstom Power for bribing agents to secure contracts in Lithuania over an eight-year period.
Alstom's British subsidiary Alstom Network UK Ltd is also under a probe by Britain's Serious Frauds Office (SFO) for having paid around $8.5 million in bribes over a six-year period to win transport contracts in India, Poland and Tunisia. (See: Alstom paid bribes to win Delhi Metro contract, finds UK probe)
The British investigation was initiated after information from the Swiss attorney general, which ordered Alstom to pay 38.5 million Swiss francs ($41 million dollars) for corporate negligence in 2011 because it had failed to stop bribery.
In India, Alstom companies have a turnover of about Rs940 crore, and employ about 2,600 people. It is a majority shareholder in Alstom Projects India Ltd and has a joint venture with Bharat Heavy Electricals Ltd in India.
Alstom group has won four major orders worth Rs330 crore for equipment supplies and Renovation & Modernization (R&M) work on four power plants in India.
These orders were from National Thermal Power Corporation Limited (NTPC), TATA Power, NALCO and GEA Energy Systems (India) Ltd.
Alstom Projects India makes nuclear reactors and rotors. Alstom is a world leader in conventional nuclear projects. It makes turbines for nuclear power stations.