Alstom at Center of Web of Bribery Inquiries
By CLAUDIO GATTI
Published: March 29, 2010
The detention last week of three executives at the British unit of the French industrial giant Alstom was the latest in a tangle of investigations regarding possible bribes paid by the conglomerate to secure contracts around the world, according to investigators in several countries.
Some cases go back years, while others are still being investigated and prosecuted. At least two arrests were made in Europe this year, while a recent case in Italy resulted in guilty pleas from four Alstom executives and two Alstom business units, as well as fines.
In addition, the fraud division of the Justice Department is looking into the possibility that the Italian case — which involved bribes paid by Alstom for a contract awarded by a division of the state-controlled utility Enel — was one of several incidents in which Alstom Power Inc., an American subsidiary, improperly used agents to acquire contracts around the world, according to investigators who did not want to be identified because the inquiry was not yet public.
The Alstom cases are part of an increasing number of investigations into corporate bribery in recent years. Prosecutors and advocacy groups like Transparency International have stepped up the pressure on multinational corporations after the adoption of an international convention outlawing bribery of foreign officials, which came into force just over a decade ago.
Siemens, the German industrial conglomerate, pleaded guilty in 2008 in the United States and Germany to paying more than $800 million in bribes to foreign officials through a network of fictitious agents. Siemens paid criminal and civil penalties of more than $1.6 billion.
Last week, The New York Times reported that the German carmaker Daimler had agreed to pay about $185 million in fines, and that two subsidiaries would plead guilty to bribing foreign government officials, to settle a multiyear corruption investigation.
Daimler, the maker of Mercedes-Benz and Smart brand cars, cooperated with the investigation and will avoid indictment, said a person with knowledge of the case, who spoke on condition of anonymity because the details of the agreement had not yet been made public.
A hearing in the case is scheduled for Thursday in Federal District Court in Washington.
"At this moment, I know of 345 cases worldwide in different stages of investigation for violation of national and international anticorruption legislation," said Mark Pieth, chairman of the working group on bribery of the Organization for Economic Cooperation and Development in Paris. Five years ago, Mr. Pieth said, about 100 cases were under investigation.
The escalation in bribery investigations "may be seen as a sign of things getting worse," Mr. Pieth said. "But I see the positive of it. I see law enforcement agencies around the world, and not just the United States, that dare to act on suspicion of corruption."
Alstom, a power and transport conglomerate with 80,000 employees worldwide and annual sales of 18.7 billion euros, or $25.2 billion, has been named in connection with investigations in Australia, Europe and South America.
A spokesman at Alstom's corporate headquarters near Paris acknowledged that investigations were under way in Brazil, Britain and Switzerland, but said they had not led to any legal action against the parent company in France.
The settlement in Italy was "not for bribery but for mistakes in the contract process," the Alstom spokesman said. He added that the company had "put in place and reinforced over the past years a very strict ethics and compliance process."
He declined to comment on any cases in Australia, Poland or the United States.
The O.E.C.D. Anti-Bribery Convention, to which 38 countries are now signatories, forbids companies from making even indirect pay-for-play arrangements with governments. Companies, however, have used agents to go around that restriction.
An inquiry in Britain and Australia focuses on the use of one such agent in Europe to secure contracts in Vietnam. The agent, Company for Technology and Development, based in Hanoi, is believed to be a front for government officials in Hanoi, according to law enforcement officials, who declined to be identified because they were not authorized to speak publicly.
In November 2009, the Australian Federal Police opened an investigation into the use of Company for Technology and Development by Securency International, an Australian company that owns a patented formula for polymer-based bank notes, to help win a contract with the Vietnamese national bank.
According to European law enforcement officials, who asked to remain anonymous because they were not authorized to speak, Australia is now coordinating its investigation with the Serious Fraud Office in Britain because evidence was found that the same agent was used by European subsidiaries of Alstom. The three executives of the British unit of Alstom were questioned last week about allegations of bribery, money laundering and false accounting.
Alstom declined to comment on the case.
The Polish investigation involves Bohdan Zun, the former director general of Warsaw MetroProjekt, the capital's transportation authority, a representative for Marius Grzegorowski, the prosecutor investigating the case, said. Mr. Zun was in charge of MetroProjekt when it awarded a 105 million euro contract to Alstom for subway cars.
Mr. Zun was arrested by the Polish police in January and accused of fixing the results of the tender in Alstom's favor. In March a second suspect, a consultant named Tadeus Novak, was arrested by Spanish police in Barcelona and "accused of helping in the distribution of bribes" as the result of "an investigation regarding a contract between Metroprojekt and Alstom," a representative for Marius Grzegorowski said.
The Alstom spokesman said the company had "no information" on the case in Poland.
Another case under investigated in Brazil and Switzerland involves payments from Alstom to executives from Petrobras, the Brazilian state-run oil company, through a consulting firm called Aramza based in Montevideo, Uruguay, according to law enforcement officials, who spoke on condition of anonymity because the investigation was active.
"Several federal and state authorities in Brazil have launched investigations which allegedly concern Alstom among other companies, but none of these investigations has legally concluded on any charge against Alstom," the Alstom spokesman said.
The investigation by Swiss authorities, which may turn out to be the most pervasive, began in 2006 and focuses on a subsidiary called Alstom Prom, which consisted of a single executive, Bruno Kälin, and two secretaries in Baden, Switzerland. Mr. Kälin was arrested by the Swiss police in August 2008 on charges of attempted bribery and mismanagement of company funds.
Three months later, a federal judge in Bellinzona, Switzerland, issued a statement saying that "due to the evidence presented to the court, there is a strong suspicion that the defendant actively participated in the laundering of money out of the Alstom Group for the purpose of corrupt payments."
The Alstom spokesman noted, however, that Swiss prosecutors "so far have not produced any evidence allowing them to charge the company."
Alstom Prom is, however, implicated in a different case in Lugano, Switzerland. It involves reports of payments of bribes to two top executives of EnelPower, a subsidiary of the Italian state-controlled electric conglomerate Enel, which in 2001 awarded Alstom a contract for a boiler at a power plant in Sardinia.
Four Alstom executives, including Mr. Kälin and Fritz Gautschi, the former head of a Connecticut-based subsidiary called Alstom Power Inc., pleaded guilty in the case. The consultant they used to pay the bribes to the Enel executives, a Dubai-based businessman named Hussein al-Nowais, acknowledged his role in the course of the proceedings.
In a deposition submitted to the Italian magistrate, Eugenio Fusco, Mr. Nowais said an EnelPower executive, Luigi Giuffrida, "expected a kickback from part of my fee. He said that there would have been more opportunities to do business."
Alstom Prom and Alstom Power pleaded guilty to an administrative offense.
Each was sentenced by a Milan court to reimburse the Italian state for the amount of the bribe, 597,220 euros, and to pay a fine of 240,000 euros.
Claudio Gatti is an investigative reporter based in New York for the Italian newspaper Il Sole-24 Ore and The International Herald Tribune.
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