U.S. District Judge Janet Bond Arterton of the District of Connecticut this week sentenced French power and transportation giant Alstom to pay a record $772 million criminal penalty to the Department of Justice to resolve charges over violations of the Foreign Corrupt Practices Act, making it the largest criminal fine ever imposed in an FCPA case.
As Compliance Week previously reported, Alstom pleaded guilty in December 2014 to a two-count criminal information charging the company with violating the FCPA by falsifying its books and records and failing to implement adequate internal controls and agreed to pay the $772 million criminal penalty. The criminal fine resolves charges that Alstom paid tens of millions of dollars in bribes to government officials in several countries in exchange for energy contracts, including in Indonesia, Saudi Arabia, Egypt, the Bahamas, and Taiwan.
As part of the settlement, Alstom’s Swiss subsidiary, Alstom Network Schweiz AG (formerly Alstom Prom), also pleaded guilty to conspiring to violate the FCPA. Additionally, the company’s two U.S. subsidiaries—Alstom Power and Alstom Grid—entered into deferred prosecution agreements in December 2014 and admitted that they conspired to violate the anti-bribery provisions of the FCPA.
In Indonesia, for example, Alstom, Alstom Prom, and Alstom Power paid bribes to government officials—including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia—in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million. In total, Alstom paid more than $75 million to secure more than $4 billion in projects around the world, with a profit to the company of approximately $300 million, according to the Justice Department.
The sentence reflects a number of factors, including:
Alstom’s failure 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’s refusal to fully cooperate with the Justice 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.
“After the Department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation,” the Justice Department said, “including assisting the Department’s prosecution of other companies and individuals.”