Recently, Alstom S.A., a French multinational power and transportation company, pleaded guilty in the District of Connecticut to a two-count information charging it with violating the accounting provisions of the Foreign Corrupt Practices Act. The penalty levied against Alstom, over $772 million, will be the largest criminal fine that has ever been imposed under an FCPA. Provided that the District Court approves the plea agreement negotiated between Alstom and the Department of Justice, the resolution will rank just under the 2008 Siemens FCPA resolution, which involved combined criminal and civil penalties of approximately $800 million.
According to the information, the corrupt conduct of Alstom personnel and agents, though noteworthy in its breadth and length of time, has the hallmarks of a textbook FCPA case: the use of third party consultants (often referred to by codename) with little documentation corroborating the purposes for their massive fees; a foreign subsidiary subject to insufficient parental supervision; attempts to obtain lucrative contracts for power and transportation projects for state-owned companies; and a failure to respond to red flags.
Alstom was also flagged for failing to self-disclose the corrupt activity to law enforcement officials, and for resisting cooperation in the early stages of the investigation. Assistant Attorney General Leslie Caldwell emphasized, in announcing the plea, that the DOJ "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."
Alstom's travails are not over. Its Swiss subsidiary also pleaded guilty to conspiring to violate the FCPA's anti-bribery provision, and two of its U.S. subsidiaries entered deferred prosecution agreements in which they admitted the same. The U.K.'s Serious Fraud Office has now filed new, related charges against Alstom's U.K. subsidiary for alleged bribes paid to Lithuanian officials. Based on Deputy Attorney General James Cole's statement that Alstom's conduct "was breathtaking in its breadth, its brazenness, and its worldwide consequences," and his lauding of the "remarkable cross-border collaboration" between law enforcement agencies across the globe during the investigation, it appears that there may be more to come.
Alstom to Pay Largest FCPA Criminal Penalty in History
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