“Mr. Geneva” … “Quiet Man” … “Old Friend” … These mysterious names were part of a shady scheme by Alstom, a French energy/transportation giant, to facilitate bribes in countries like Indonesia, Egypt and Taiwan, among others. The names referred to consultants that Alstom used as go-betweens when making illicit payments to government and business officials in those countries. It was an attempt to keep the corruption at arm’s length – and, more importantly, keep it a secret.
The scheme was discovered, however, and now Alstom is having to pay for it. Under a deal with the U.S. Department of Justice, who is prosecuting Alstom under the Foreign Corrupt Practices Act (FCPA), the company has admitted guilt and agreed to pay a $772 million penalty to the U.S. The news is detailed in this New York Times article, which notes that the fine is “the largest ever levied by the United States for foreign bribery.”
When you read about the case, it quickly becomes clear that this wasn’t just a few bad actors whose actions tarnished the Alstom name (and are now costing it money). On the contrary, the schemes appear to be very brazen and endorsed by the highest level of the company itself. The following from the NYT article stands out:
When some officials expressed concern that one consultant had provided only pocket money, Alstom retained a second consultant to ensure that the officials were satisfied, recounted Leslie Caldwell, assistant attorney general. In Saudi Arabia, Alstom retained at least six pseudo-consultants, including two close family members of high-ranking government officials, to bribe officials at a state-owned electricity company to secure about $3 billion in contracts.
They also knew what was taking place was illegal. Apparently, at least one internal question about the shady dealings was met with an immediate cover-up:
At one point, a member of Alstom’s finance department sent an email that questioned an invoice for “consultant services” tied to a contract in Egypt. She was informed that her inquiry could have “several people put in jail” and was told to delete all previous emails regarding the consultant, Ms. Caldwell said.
It is worth noting that at least one journalist has questioned whether it is proper for the U.S. to be levying fines in a case such as this, in which the bribes were paid to foreign companies, by a foreign company. None of the illicit acts touched U.S. jurisdiction, at least in a traditional way. But that’s the catch with the FCPA: a company need only be doing business with the U.S. in order to be subject to enforcement, regardless of where the crime occurs.
One thing seems certain – this won’t be the last such prosecution. And with the UK Bribery Act and other countries following suit with their own regulations, committing brazen bribery schemes just became a little riskier. Is your company protected from employees or third-party partners who might be secretly conducting unethical business? CRI Group’s Anti-Corruption and Regulatory Investigations can help you assess your risks and proactively address any problem areas that could affect your business.