American Shipper

Alstom tagged with record fine for FCPA violation

The French company and its U.S. units agree to pay $772 million for bribery scheme.

   Alstom S.A., a French conglomerate with business in power generation and railroad manufacturing, pleaded guilty Monday and agreed to pay a $772.3 million fine to resolve charges related to a widespread scheme to bribe officials in Indonesia, Saudi Arabia, Egypt, Taiwan and the Bahamas, the U.S. Department of Justice announced. 
   The fine is more than five times the amount Avon Products was fined last week for similar types of corruption charges and represents the largest fine ever levied by the U.S. government for violations of the Foreign Corrupt Practices Act.
   “Alstom’s corruption scheme was sustained over more than a decade and across several continents,” said Deputy Attorney General James M. Cole, in a statement. “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 that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.” 
   Alstom pleaded guilty to violating the Foreign Corrupt Practices Act by falsifying its books and records and failing to implement adequate controls. Alstom Power and Alstom Grid Inc., two U.S. subsidiaries, entered into deferred prosecution agreements.
   A significant amount of the bribery scheme was organized from Alstom Power’s offices in Windsor, Conn. 
   According to the charges, Alstom and its subsidiaries paid bribes to foreign officials in various countries to win power contracts. In Indonesia, for example, Alstom paid bribes to government officials — including a high-ranking member of the Indonesian Parliament and the state-owned electricity company — in exchange for assistance securing several contracts to provide power-related services valued at about $375 million. In total, Alstom paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of about $300 million.
   The bribes were concealed by retaining consultants who actually served as conduits for under-the-table payments to government officials. Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”
   The Justice Department said Alstom failed to voluntarily disclose the misconduct even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the Department in connection with a power project in Italy. Alstom also refused to fully cooperate with the Justice Department’s investigation for several years. Those factors, plus Alstom’s history of previous corruption and lack of an effective compliance program, played into the decision to set the record fine, the agency said.
   Alstom began to cooperate after four officials were criminally charged. Two of them have pleaded guilty to violating the Foreign Corrupt Practices Act.
   Several logistics and transportation companies have been caught in the past for bribing foreign officials. Trade lawyers recommend that companies establish strict policies and training programs to ensure that employees do not engage in corruption.