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Alstom fined €31m in bribery probe

24 Nov 11 A Swiss investigation has cleared Alstom of having a system to bribe foreign officials to win contracts but has imposed €31m (£26.8m) in fines and compensation in respect of three incidents.

The UK’s Serious Fraud Office has also been investigating Alstom and three directors were arrested last year.

The Office of the Attorney General (OAG) has sanctioned the company for corporate negligence in the three cases, imposing a fine of some €2m (£1.7m), to which is added the payment of an amount corresponding to the estimated profits of the order of €29m.

In the summary punishment order, Alstom Network Schweiz AG was convicted of not having taken all necessary precautions to prevent bribery of foreign public officials in Latvia, Tunisia and Malaysia. As well as the £1.7m fine, it has to pay a compensatory claim of CHF36.4m (£25.4m) plus the costs of the proceedings. Alstom Network Schweiz AG has renounced to appeal this summary punishment order, which as a consequence thus has become legally binding.

In two out of these three cases, Alstom said that it appeared to be a victim of the actions of some employees, who would have benefited from kickbacks. In the third one, Alstom was simply a subcontractor of a consortium.

According to the OAG, the investigation showed that consultants engaged by Alstom on the basis of consultancy agreements in the mentioned three countries had forwarded a considerable part of their success fees to foreign decision makers and thereby had influenced the latter in favor of Alstom.

A statement from Alstom said that it noted with satisfaction that, after thorough investigations, the Office of Attorney General has concluded the absence of any system or so called slush funds used for bribery of civil servants to illegally obtain contracts. Alstom said that since the onset of the case, it has constantly stated that the company had never organised, authorised or allowed any act of bribery or any breach of the rules and current laws. Considering the conclusions of the investigations and the demonstrated absence of any bribery system, Alstom has decided not to challenge the decision of the Office of Attorney General.

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The Swiss Office of Attorney General has now closed its investigations into whether the Alstom Group and some of its entities had violated rules prohibiting bribery of foreign civil servants to win commercial contracts. The investigations were opened in October 2007. Swiss federal prosecutors examined several hundred contracts signed by the company with commercial agents and consultants. The investigated contracts covered the period from the 1990s up to the present time.

The Office said that the company “introduced progressively, and continually adapted and improved” internal processes and organisation to prevent infringements of the rules of compliance set up by the group. This included a decision taken in 2000 to centralise the management of commercial agents' contracts to ensure a more comprehensive control.

It noted that “considerable efforts to observe the applicable rules” were undertaken by Alstom. In its conclusions, it said that the process set up to control the relationship with commercial agents was considered as best in class in a certification granted in 2009 by an independent agency.

However, it noted that, during a certain period, the efforts undertaken to prevent a breach of rules were insufficient. It identified three cases in which it concludes that improper payments were made to civil servants in Latvia, Malaysia and Tunisia. In two out of these three cases, Alstom itself would appear to be a victim of the actions of some of its employees, who would have benefited from kickbacks, “enriching themselves at the expense of the company”. In the third one, Alstom was simply a subcontractor of a consortium.

Regarding any potential additional proceedings, the Office of Attorney General has issued a dismissal order acquitting the Alstom group and its entities of any additional wrongdoing, fully closing its investigations.

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