US fines French industrial giant Alstom record $1 billion in bribery case

The Alstom plant during its inauguration in Montoir-de-Bretagne, near Saint Nazaire, where it will produce its Haliade offshore wind turbines. The French industrial giant will plead guilty and pay a record US$772.3 million penalty in a wide-ranging f
The Alstom plant during its inauguration in Montoir-de-Bretagne, near Saint Nazaire, where it will produce its Haliade offshore wind turbines. The French industrial giant will plead guilty and pay a record US$772.3 million penalty in a wide-ranging foreign bribery case, the US Justice Department announced on Monday. -- PHOTO: AFP

WASHINGTON (AFP) - French industrial giant Alstom will plead guilty and pay a record US$772.3 million (S$1 billion) penalty in a wide-ranging foreign bribery case, the US Justice Department announced on Monday.

Alstom admitted to bribing officials to win power and transportation projects from state-owned entities around the world, including Indonesia, Taiwan, the Bahamas, Egypt, and Saudi Arabia.

In total, Alstom paid more than US$75 million in bribes to secure US$4 billion in projects around the world with a profit of approximately US$300 million, US prosecutors said.

"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 fine, if approved by a US court, would be the highest ever for foreign bribery under the US Foreign Corrupt Practices Act.

The Justice Department said the penalty reflected Alstom's failure to voluntarily disclose the conduct, its refusal to cooperate with Justice's probe for several years, the breadth of the misconduct, the lack of an effective compliance program and its history of prior criminal conduct.

Under the settlement, the charges will be dismissed after three years if Alstom fulfills its obligations under the deferred prosecution agreement.

"There were a number of problems in the past and we deeply regret that," said Alstom chief executive Patrick Kron.

"However, 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, consistent with the highest ethical standards."

Alstom said it had stopped employing consultants to work with its commercial teams. It also hired a monitor to oversee its compliance efforts.

The penalty comes as General Electric (GE) nears the completion of a deal to buy most of Alstom's energy assets for 12.4 billion euros (S$20 billion).

Alstom said its agreement with GE requires that none of the fine can be passed onto the US company.

"We had considered the DOJ investigation and its potential liabilities in our due diligence," said a GE spokesman.

"We're happy Alstom has resolved the issue. As Alstom has stated, the plea agreement does not materially change the overall economics of the deal."

On Friday, Alstom's shareholders overwhelmingly approved the agreement with GE.

The deal is expected to close in the middle of 2015.