ABB, air quality control and monitoring, Alstom, AREVA, Atomenergomash, boilers, Bouygues, Bribery, corruption, Flamanville, France, fraud, GE, nuclear energy, nuclear power, nuclear refurbishment, Russia, Siemens, steam turbines
From the US DOJ:
“Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Friday, November 13, 2015
Alstom Sentenced to Pay $772 Million Criminal Fine to Resolve Foreign Bribery Charges
Represents Largest-Ever Criminal Foreign Bribery Fine
Alstom S.A., a French power and transportation company, was sentenced today to pay a $772,290,000 fine to resolve criminal charges related to a widespread corruption scheme involving at least $75 million in secret bribes paid to government officials in countries around the world, including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson the District of Connecticut and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.
Alstom was sentenced by U.S. District Judge Janet Bond Arterton of the District of Connecticut. Alstom pleaded guilty on Dec. 22, 2014, to a two-count criminal information charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.
In addition, Alstom Network Schweiz AG, formerly Alstom Prom AG (Alstom Prom), Alstom’s Swiss subsidiary, which pleaded guilty on Dec. 22, 2014, to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA, was also sentenced today pursuant to its plea agreement. Alstom Power Inc. and Alstom Grid Inc., formerly Alstom T&D Inc., two U.S. subsidiaries, both entered into deferred prosecution agreements on Dec. 22, 2014, admitting that they conspired to violate the anti-bribery provisions of the FCPA.
According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom T&D, through various executives and employees, 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 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.
Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants who purportedly provided consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the 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 sentence, which is the largest criminal fine ever imposed in an FCPA case, 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 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, including assisting the department’s prosecution of other companies and individuals.
To date, the department has announced charges against five corporate executives for alleged corrupt conduct involving Alstom. Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme. David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA. William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA. Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in an indictment in connection with the Indonesia bribery scheme, and is pending trial in the District of Connecticut in April 2016. The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty. The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year prison term. In addition, Marubeni Corporation, which partnered with Alstom on the Indonesia project, pleaded guilty on March 19, 2014 to a criminal information charging conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced on May 15, 2014, to pay an $88 million criminal fine.
In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, was the fifth individual charge and pleaded guilty on Dec. 4, 2014, in the District of Maryland to mail fraud, conspiring to launder money and tax fraud for accepting kickbacks from Alstom and other companies, and was sentenced on March 23, 2015, to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.
This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut, Resident Agency. The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Switzerland Office of the Attorney General and the United Kingdom’s Serious Fraud Office, as well as authorities in France, Germany, Italy, Singapore and Taiwan.
The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom T&D, and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary. The Criminal Division’s Office of International Affairs also provided substantial assistance.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at http://www.justice.gov/criminal/fraud/fcpa.
Updated November 13, 2015”
“On 24 April 2014, Bloomberg L.P. reported that General Electric (GE) was in talks to acquire Alstom for $13 billion, and claimed the deal had the support of 29%-shareholder Bouygues; as a result, the company’s share price rose 18% in one day.” https://en.wikipedia.org/wiki/Alstom
“By 2003, Alstom was facing a financial crisis due to poor sales and over $5 billion of debt liabilities, with the potential to force the liquidation of the company. The crisis was in part due to $4 billion in costs from a design flaw in the turbines from the 2000 ABB Group acquisition, and from the collapse of customer Renaissance Cruises, and a downturn in the marine market. Alstom’s share price had dropped 90% over two years. European competition commission law required Alstom to sell several of its subsidiaries, including its shipbuilding and electrical transmission assets, when it accepted a €3.2 billion rescue plan involving the French state.
In 2004, the French state took a 21% stake in Alstom and received an EU-approved French government bailout worth €2.5 billion. The company sold its electrical transmission and distribution (“grid”) activities to Areva, the diesel locomotive manufacturer Meinfesa to Vossloh AG, and Alstom Power Rentals to APR LLC. Alstom also delivered the Queen Mary 2, the world’s largest ocean liner, to Cunard during 2004.
In 2006, Alstom sold its Marine Division to the Norwegian group Aker Yards, with a commitment to retain 25% of the shares until 2010. It also sold Alstom Power Conversion, which became Converteam, in a leveraged buy-out deal funded by Barclays Private Equity France SAS. In June, Bouygues group acquired the French government’s 21% holding for €2 billion. Later in the year, Bouygues increased its shareholding to 24%.
In 2007, TGV Est set the world speed record for rail vehicles of 574.8 kilometres per hour (357.2 mph). In March, Alstom acquired Power Systems Manufacturing LLC (Florida, USA) a manufacturer of gas turbine components from Calpine Corporation for $242 million. In June, Alstom acquired the Spanish wind turbine manufacturer Ecotècnia, renamed as Alstom Ecotècnia (since 2010 Alstom Wind). The company also adopted a new graphic chart (logo, corporate identity) using “alstom” as its trading name, reserving “Alstom SA” for legal documents.
In 2009, Alstom acquired 25% of Russia’s Transmashholding. In 2010, Alstom re-acquired the electric power transmission division of Areva SA, which had previously been sold in 2004; the re-acquisition became a new operating division named “Alstom Grid”.… In 2011, Alstom and the Iraqi government signed a memorandum of understanding regarding the construction of a new high-speed rail line between Baghdad and Basra.” https://en.wikipedia.org/wiki/Alstom
Former Alstom businesses:
Alstom power activities, collectively called Alstom Power Systems, include the design, manufacturing, services and supply of products and systems for the power generation sector and industrial markets. The group covers most energy sources, including gas, coal, nuclear, hydro, wind. Power Systems provides components for power generation including: boilers, steam turbines and gas turbines, wind turbines, generators, air quality control systems and monitoring and control systems for power plants, as well as related products. It has a special focus on boilers and emissions control equipment.
Power Systems also provides services such as product retrofitting for nuclear and fossil steam turbines and refurbishment of existing power plants. It performs maintenance and servicing under long-term agreements for its own turbines, as well as those manufactured by GE and Siemens. In Russia, the company services nuclear equipment under a join agreement with Atomenergomash. In Brazil, Alstom, together with Bardella, run a joint venture called Indústria Metalúrgica e Mecânica da Amazônia to build hydroelectic power plants throughout the Amazon and Latin American regions. In India, Alstom has a joint venture with Bharat Forge to manage power production from start to finish.
A third business section based on power transmission was formed on 7 June 2010 with the acquisition of the transmission business of Areva SA. The division manufactures equipment for the entire chain of electrical power transmission, including ultra-high voltage transmission lines (both AC and DC). Alstom Grid is headquartered at La Défense, the business district west of Paris, and has four main businesses: electrical transmission system products, power electric system, automation, and service. Alstom Grid has roughly 10% of the global market share.” https://en.wikipedia.org/wiki/Alstom
Bouygues was fined for using illegal workers on Flamanville Nuclear construction site: https://fr.wikipedia.org/wiki/Centrale_nucléaire_de_Flamanville
“Bouygues S.A. (French pronunciation: [bwiɡ]) is an industrial group headquartered in the 8th arrondissement of Paris, France. Bouygues is listed on Euronext Paris exchange and is a blue chip in the CAC 40 stock market index. The company was founded in 1952 by Francis Bouygues and since 1989 has been led by his son Martin Bouygues. In 2011 it had over approximately 130,000 employees in 80 countries, generating €32.7 billion in revenue.
The group specialises in construction (Colas and Bouygues Construction), real estate development (Bouygues Immobilier), media (TF1 Group), and telecommunications (Bouygues Telecom).” https://en.wikipedia.org/wiki/Bouygues
Emphasis added throughout.