By Brent Kendall and Joel Schectman
WASHINGTON--French engineering giant Alstom SA pleaded guilty
and agreed to pay $772 million to resolve criminal charges it paid
tens of millions of dollars in a "widespread" bribery scheme to win
energy contracts around the globe, U.S. prosecutors said on
Monday.
That amount represents the largest-ever criminal penalty the
U.S. Department of Justice has gotten from a company on
bribery-related charges. The settlement comes after more than six
years of investigations into Alstom from law enforcement in the
U.S., Switzerland and Indonesia.
"Alstom's corruption scheme was sustained over more than a
decade and across several continents," said Deputy Attorney General
James Cole. "It was astounding in its breadth, its brazenness and
its worldwide consequences."
The record criminal penalty reflects in part what prosecutors
say was as an initial failure of the company to fully cooperate.
Among the factors the plea agreement cites is "Alstom's failure to
voluntarily disclose the misconduct" as well as it's "refusal to
fully cooperate with the department's investigation for several
years."
Alstom didn't immediately respond to a request for comment.
U.S. authorities have ramped up overseas bribery enforcement in
recent years, often investigating foreign companies that have a
subsidiary located within the U.S. The Foreign Corrupt Practices
Act makes it a crime to bribe a government official in exchange for
business.
Alstom pleaded guilty to a two-count criminal information filed
today in the U.S. District Court for the District of Connecticut,
charging the company with violating the Foreign Corrupt Practices
Act by falsifying its books and records and failing to implement
adequate internal controls.
Alstom's Swiss subsidiary, Alstom Network Schweiz AG, pleaded
guilty to a criminal information charging the company with
conspiracy to violate the antibribery provisions of the FCPA. Two
U.S. subsidiaries, Alstom Power Inc. and Alstom Grid Inc., both
entered into deferred prosecution agreements, admitting they
conspired to violate the antibribery provisions of the FCPA.
The Alstom settlement ends one lingering uncertainty in the
pending sale of most of the French company's energy assets to
U.S.-based General Electric Co.
A GE spokesman said the company had evaluated Alstom's potential
liability from the FCPA investigation before the $17 billion deal
was struck this summer. The potential cost of the fine was included
in GE's purchase price, company officials have said.
The plea agreement "does not materially change the overall
economics of the deal," the spokesman said Monday.
Alstom CEO Patrick Kron said last week that the full price of
the fine would be covered by Alstom, not GE.
Other facets of the deal are still being negotiated, however.
Alstom expects to recoup some funds through a joint venture with
GE, in which the American company will pay a licensing fee to use
the Alstom brand in future sales of equipment and services for
nuclear power station turbines, Mr. Kron said.
--Ted Mann contributed to this article.
Write to Brent Kendall at brent.kendall@wsj.com and Joel
Schectman at joel.schectman@dowjones.com
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