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Alstom CEO Kron to Pay Record $772 Million to Settle US Bribery Charges

The French power and transportation company Alstom will pay a record $772.3 million fine and plead guilty to settle U.S. criminal charges that it funneled million of dollars in bribes through sham consultants to win business around the globe.

Using code names such as “Mr. Paris” and “Quiet Man, ” Alstom tried to conceal tens of millions of dollars in bribes by pretending that the consultants it had hired were legitimate, the U.S. Justice Department said on Monday.

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In fact, the consultants were hired to bribe officials in Indonesia, Saudi Arabia, Egypt, Taiwan, and the Bahamas, in a scheme that took place over about 11 years and involved paying more than $75 million to secure $4 billion in projects, the DOJ said.

The DOJ also said Alstom falsified its books to mask the bribes.

“It was astounding in its breadth, its brazenness and its worldwide consequences, ” said Deputy Attorney General James Cole at a press conference on Monday.

The Justice Department’s settlement with the company marks the largest-ever fine levied against a company for violations of foreign bribery laws – a penalty the government said is appropriate because Alstom failed to self-report the violations or cooperate with the criminal probe.

The parent company pleaded guilty to two criminal counts and admitted to wrongdoing in a federal court in Connecticut.

Alstom’s Swiss unit also pleaded guilty to criminal charges that it conspired to violate federal bribery laws, while Alstom’s U.S. power and grid units each entered into deferred prosecution agreements and admitted to conspiring to violate bribery laws, the Justice Department said.

The Justice Department said internal emails and other information it obtained demonstrated just how well company officials knew the bribes were illegal.

In 2003, for instance, an Alstom finance employee sent an email saying she could not process an invoice for a consultant because there was no proof any services were rendered.

A project manager then told her to stop sending such emails unless she “wanted to have several people put in jail” and instructed to delete all emails about the topic, according to the Justice Department.

Earlier on Monday a unit of Alstom and two employees were also charged by the Serious Fraud Office in the United Kingdom with bribing officials from 2002 through part of 2010.

Over the last few years, the company has been plagued by bribery investigations around the world. Previously, the Justice Department has filed criminal charges against five individuals and one Japanese company – Marubeni Corp – in connection with the case.

“There were a number of problems in the past and we deeply regret that, ” said Alstom’s CEO Patrick Kron in a statement.

“This resolution with the DOJ allows Alstom to put this issue behind us and to continue our efforts to ensure that business is conducted in a responsible way.”

The company has ceased hiring outside sales consultants and retained a monitor in 2012, he added.

Prior to Monday’s settlement, Alstom’s power turbines unit had already been under pressure, because of both the looming bribery probe fines and from a drop in orders and a cash crunch.

In June, the company agreed to sell most of the power business to General Electric Co. so it could turn its attention to its smaller rail unit.

Assistant Attorney General Leslie Caldwell said on Monday that the DOJ had insisted that Alstom, and not GE, should pay the fine.

Kron said the fine will not have a “material impact” on the “overall economics” of the deal with GE.



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