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Tuesday, December 23, 2014


Original Story: bloomberg.com

Alstom SA (ALO) executives won several billions of dollars worth of business in Saudi Arabia a decade ago by making at least $49 million in illegal payments in part through middlemen the company called “Mr. Paris” and “Quiet Man.”

The bribes were among those the French power company made in five countries over more than 10 years, prosecutors in Washington said. Alstom pleaded guilty to those charges today and agreed to pay $772 million to end the investigation, representing the largest criminal penalty paid to the Justice Department under the Foreign Corrupt Practices Act. A Washington DC Foreign Corrupt Practices Act lawyer is reviewing the details of this case.

The prosecutors’ statements, laid out in dozens of pages of charging documents, contained new details about Alstom’s attempts to buy influence in Egypt, Saudi Arabia, Taiwan and the Bahamas, including one executive’s effort to quiet an employee who questioned the payments. The documents also covered bribery in Indonesia, which had already served as a basis of criminal charges against former Alstom executives and business partner in federal court in Connecticut.

The U.S. corruption case is one of several against Alstom, which General Electric Co. (GE) is buying in its biggest acquisition ever. The Fairfield, Connecticut-based manufacturer agreed in June to buy most of the assets for 12.4 billion euros ($15.2 billion), and the purchase should close next year. An Atlanta RICO lawyer represents clients involved in racketeering cases.

Earlier Monday, Alstom’s London-based power unit and two of its employees were charged by the U.K.’s Serious Fraud Office for alleged bribe payments in Lithuania. Lawyers for the men declined to comment at the hearing. Alstom is also facing a corruption investigation in Brazil.

‘Corruption Scheme’

The documents released by the Justice Department outlined how Alstom paid more than $75 million in bribes between 2000 and 2011 to win $4 billion in projects from state-owned companies, relying on consultants who prosecutors said funneled payments to officials in five countries.

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

“There were a number of problems in the past and we deeply regret that,” Patrick Kron, Alstom’s chief executive officer, said in a statement. The Levallois-Perret-based company has changed its compliance practices, he added. An Atlanta RICO lawyer is following this story closely.

In Saudi Arabia, where Alstom was seeking $3 billion in contracts, company executives spread bribe money among a half a dozen consultants around the turn of the millennium, prosecutors wrote. These people were identified, in company documents, by code names that also included “Mr. Geneva” and “Old Friend.”

‘Action Plan’

Alstom collected details on officials of the country’s state-owned electric company to improve its chances of securing business, prosecutors wrote. They cited a January 2000 “action plan” for an upcoming bid that identified Alstom’s perceptions of decision-makers at the Saudi Electricity Co. (SECO), as well as the “most important concerns” for dealing with each.

“Honest reputation,” the action plan read, referring to one official who it said had a majority voice in awarding contracts. “Son has been known to deal.”

To ensure the official’s support, Alstom turned to one of his close relatives -- who internal company documents referred to as Mr. Paris -- who was paid $4 million to bribe the executive, prosecutors said. An Atlanta Racketeering Litigation Attorney represents both plaintiffs and defendants in cases involving racketeering.

Alstom made $2.2 million in donations to a U.S.-based Islamic education foundation associated with the Saudi official, prosecutors said. They didn’t identify the official.

$800 Million

Several countries have opened probes into Alstom since 2004, when auditors for the Swiss Federal Banking Commission unearthed documents they said showed possible corrupt payments. Since then, the company has paid more than $53 million over claims its employees bribed officials.

The U.S. fine, which eclipsed the $450 million paid by Siemens AG in 2008, would bring Alstom’s tab to above $800 million. Kron said on Dec. 19 that the company will pay the fines connected to its energy businesses as its shareholders voted in favor of their sale to GE.

The U.S. investigation, led by Daniel Kahn of the fraud section and Assistant U.S. Attorney David Novick in Connecticut, included at least 49 hours of recordings made by government cooperators about allegations of bribery in Indonesia, according to federal court records in Connecticut.

Investigators initially had to build their case using informants and charges against former Alstom executives when the company refused to cooperate, prosecutors said.

Indonesia Allegations

The Connecticut prosecution centered on a $118 million contract to provide boiler services at a power plant in Tarahan, on the southern coast of Sumatra. Alstom executives, together with Marubeni Corp. (8002), a Japanese commodity-trading company, used middlemen to funnel hundreds of thousands of dollars to a member of Indonesia’s parliament and officials at Perusahaan Listrik Negara PT, a state-controlled electricity company known as PLN, according to court papers filed by the Justice Department in related cases.

Marubeni pleaded guilty to bribery violations in March and paid an $88 million fine.

On Monday in the Connecticut federal court, Alstom pleaded guilty to two charges related to their activities in the five countries -- one for violating bribery laws by falsifying records and the other for failing to have adequate controls. Alstom’s Swiss subsidiary pleaded guilty to conspiracy. Two U.S. subsidiaries entered into deferred prosecution agreements.

Internal Conflicts

The documents released Monday also pointed to internal conflicts over payments, as Alstom executives allegedly attempted to hide transactions related to the company’s bids for power contracts in Egypt.

In December 2003, an Alstom finance employee said by e-mail that she was rejecting an invoice from one of the company’s consultants in Egypt because there weren’t enough details to justify the payment, according to the documents released Monday.

The finance employee received a phone call from a U.S.- based project manager, who told the official that if she “wanted to have several people put in jail,” she should continue to send e-mail messages questioning payments, according to the prosecutors’ documents. The project manager ordered the finance official to delete all e-mails about the consultant, prosecutors wrote.