By Inti Landauro And Ted Mann
PARIS-- Alstom SA Chief Executive Patrick Kron said Friday that
he expects to reach a settlement "very soon" with the U.S.
Department of Justice, which is considering whether to levy its
largest fine ever over allegations the company bribed foreign
officials to win contracts.
The French company on Wednesday confirmed media reports that it
is in settlement talks with the Justice Department. According to
people familiar with the case, the talks concern allegations Alstom
engaged in bribery of local officials as it tried to drum up sales
for its power generation business, including at a $120 million
project in Indonesia in 2004.
These people said Tuesday that Alstom is close to a deal with
U.S. prosecutors to pay $700 million to settle the case. Mr. Kron
didn't confirm the amount of the possible settlement, but he did
say it would be manageable.
The confirmation comes the same day that Alstom shareholders
approved the sale of most of the company's energy business to
U.S.-based General Electric Co., in a $17 billion deal struck over
the summer. The deal would preserve Alstom as a maker of trains and
rail systems.
Executives from both companies have said that Alstom will be
required to pay any fines levied by the Justice Department in the
bribery case.
GE Chief Executive Jeff Immelt said this week that the company
had incorporated "any outcome" of the Alstom investigation when it
negotiated the final sale price for the French company's assets
this summer. "We don't see any additional risk there," Mr. Immelt
said.
Mr. Kron, who will step down once the deal is completed, said
most of the cost of the fine will be offset with additional
payments that GE will pay to license Alstom's brand. GE will assume
any future liabilities related to Alstom's power business, said Mr.
Kron who will receive a bonus worth about EUR4 million after the
deal is closed for getting the operation through regulatory
approval.
A person familiar with the transaction said GE always
anticipated that it would pay licensing fees to Alstom to market
the French company's turbines and services for nuclear power plants
in one of the joint ventures that will be established as part of
the acquisition. Those ventures are to be jointly owned by GE and
Alstom, and were negotiated with French government officials to
keep some of the company's patents in French hands after the GE
takeover.
The licensing fees weren't related to Alstom's liability in the
bribery case and aren't being negotiated to defray the cost of any
settlement with the U.S. government, this person said.
GE is still seeking regulatory approval in some countries ahead
of the transaction's close in the middle of 2015, a GE spokesman
said.
Write to Inti Landauro at inti.landauro@wsj.com and Ted Mann at
ted.mann@wsj.com
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