December 24, 2014

DOJ Catch of the Week — Alstom S.A.

Photo Credit: Alstom

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to French power and transportation company Alstom S.A. On Monday, the company pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA) and agreed to pay a whopping $772 million to resolve charges of a widespread international bribery scheme. According to DOJ Deputy Attorney General James M. Cole, Alstom’s corruption scheme “was astounding in its breadth, its brazenness and its worldwide consequences.”  See DOJ Press Release

According to the company’s admissions, Alstom paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.  In total, Alstom made more than $75 million in illicit payments to secure $4 billion in projects, with a profit to the company of approximately $300 million.  Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants purportedly to provide consulting services but who actually served as conduits for corrupt payments to the government officials.  Internal company documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”

In addition to going after the company, the government also has gone after the top Alstom executives involved in the scheme, securing guilty pleas for violating the FCPA from Frederic Pierucci, Alstom’s former vice president of global boiler sales, David Rothschild, Alstom Power’s former vice president of regional sales, and William Pomponi, Alstom Power’s former vice president of regional sales. Lawrence Hoskins, Alstom’s former senior vice president for the Asia region is currently pending trial. In addition, a high-ranking member of Indonesian Parliament was convicted in Indonesia of accepting bribes from Alstom, and is currently serving three years in prison. And Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, is currently serving 42 months in prison for accepting bribes under the scheme.

In announcing the settlement, the government went out of its way to highlight how seriously it takes foreign bribery and how companies that violate the FCPA will be prosecuted to the fullest. In this regard, Deputy Attorney General Cole warned,

“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.” Assistant Attorney Leslie Caldwell of the DOJ’s Criminal Division echoed this strong admonition: “we will not wait for companies to act responsibly.  With cooperation or without it, the department will identify criminal activity at corporations and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool, and considering all possible actions, including charges against both corporations and individuals.”


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