Historic Settlement under the Foreign Corrupt Practices Act

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Alstom S.A., a French power and transportation company, on December 22 pleaded guilty to bribing government officials – in countries including Indonesia, Saudi Arabia, Egypt and the Bahamas – and falsifying accounting records in violation of the Foreign Corrupt Practices Act (“FCPA”).[1] The FCPA makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.[2] In addition, the FCPA’s accounting provision requires companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.[3]

Over the course of a four-year investigation, the Department of Justice (the “DOJ”) discovered that Alstom had employed consultants to make improper payments to foreign officials in various countries around the world.[4] These improper payments assisted Alstom in obtaining projects in the power generation, power transmission, and transportation sectors.[5] For instance, in Indonesia, Alstom paid bribes to a high-ranking member of the Indonesian Parliament and to high-ranking members of one of the state-owned electricity companies.[6] The charges against Alstom also included the payment of tens of millions of dollars in bribes to secure $4 billion in projects, the falsification of books and records, and failure to implement adequate internal controls.[7] By pleading guilty to these charges, Alstom is agreeing to pay a criminal penalty of more than $772 million.[8] This criminal penalty represents the largest penalty ever assessed in a FCPA case.[9]

Through this historic settlement, the DOJ is sending out a clear message to corporations, not just in the United States, but all over the world: “that [it] will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.”[10] With this resolution, the DOJ is announcing that it will zealously investigate and prosecute FCPA violations. The resolution provides insight for corporations acquiring foreign businesses and reassures the public that if corporations are not in compliance with the FCPA, they will be severely fined. This leap forward suggests new themes in the DOJ’s enforcement strategy[11] and demonstrates the DOJ’s willingness to impose penalties. Importantly, it also sheds light on the significance of establishing compliance programs within corporations in order to avoid future FCPA violations.

[1] Dep’t of Justice, Alstom Pleads Guilty and Agrees to Pay $772 Million Criminal Penalty to Resolve Foreign Bribery Charges, U.S. Dep’t of Justice (Dec. 22, 2014), http://www.justice.gov/opa/pr/alstom-pleads-guilty-and-agrees-pay-772-million-criminal-penalty-resolve-foreign-bribery.

[2] Dep’t of Justice, Foreign Corrupt Practices Act: An Overview, U.S. Dep’t of Justice, http://www.justice.gov/criminal/fraud/fcpa/.

[3] Id. (this provision applies only to companies whose securities are listed in the United States).

[4] Debevoise & Plimpton, Alstom’s $772 Million FCPA Settlement: The Wages of Late Cooperation and Other Lessons of the Settlement, FCPA Update: A Global Anti-Corruption Newsletter, Dec. 2014, at 1, 1.

[5] Id.

[6] Dep’t of Justice, supra note 1.

[7] Id.

[8] Id.

[9] Alstom SA to Plead Guilty to Bribery Charges, NEWS.NET (Dec. 22, 2014, 9:14 AM), http://usa.news.net/article/2529274/alstom-sa-to-plead-guilty-to-bribery-charges (no longer available).

[10] Dep’t of Justice, supra note 1.

[11] Debevoise & Plimpton, supra note 4, at 4.

Posted by Maria R. Mendoza on Tue. January 27, 2015 12:11 PM
Categories: Corruption, Criminal Law, France
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