Alstom – a double whammy

Reports in the papers today tell us that Alstom, a French-owned engineering group, have been fined £27 million by the Swiss authorities in order to settle a bribery investigation against them.  This is embarrassing enough on its own, but there’s a sting in the tail, which is well expressed in this quote from The Daily Telegraph:

the SFO is understood to be looking for a significantly higher settlement as the bribes are alleged to have been co-ordinated from the UK

Three British Alstom executives (one of whom has subsequently died) were arrested and bailed in March 2010, over suspicions that the UK arm of Alstom had organised bribes of approximately £80 million in order to win overseas contracts and it’s clear that the SFO regard Alstom as constituting legitimate prey, in spite of what has happened in Switzerland, and will continue to pursue their investigations.  A quote from the SFO, indicating that it is always open to “sensible and constructive proposals” for a settlement, indicates either that Alstom are planning to tough it out in court, or that they are in negotiations with the authorities but haven’t reached an agreement yet.  Multinational companies should take heed of this, and consider the possibility that one high-profile investigation could lead to others, from other jurisdictions.  There’s a tendency to think that the example of BAe – where the UK and US authorities worked together to reach a settlement with the company – will be replicated in other such cases.  The Alstom scenario clearly indicates that several governments may want a bite of the cherry, and that it might be premature to heave a sigh of relief when you settle in one territory.

All of this is a bit embarrassing for Alstom.  If you visit their UK website, you are greeted with links to “Clean power solutions” and a lengthy section on Corporate Social Responsibility although, tellingly, a link to further information about their code of ethics was returning “page not found” this morning.   In time-honoured fashion, it appears that the bribes were paid via intermediaries who received large success fees, big chunks of which were then passed on as bribes to secure contracts.  Alstom’s spin on the story breaking today is that the instances of bribery that have got them into trouble in Switzerland are isolated events and that the company is not institutionally corrupt. I do wonder, nevertheless, how a company – even a large international group – can spend £80 million on bribes without someone noticing it.  Hopefully we will hear more about this story in due course.

Meanwhile, Down Under, the authorities are launching a consultation on whether or not to make facilitation payments illegal.  At present, Australian law allows such payments to be made where: (a) the payment was of a small value; (b) it was made to expedite a routine official process of a minor nature and (c) a record was made of the transaction.  In many ways this is a sensible and pragmatic approach to the situation, but – to return to a particular bee in my personal bonnet – it makes for an uneven playing field when the law in the UK specifically and totally bans such payments.  There will be no chance of stamping out petty corruption until all governments take a consistent approach to this problem, so let’s hope that the Australian Government does the right thing, and that it acts as a stimulus to other countries, including the US, who allow facilitation payments under certain circumstances.

Is that a pig that I can see, gracefully gliding past the window?

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