ABB books USD 850mn provision for corruption probes
The Swiss engineering group has set aside the pretax charges for possible charges related to price-fixing and bribery investigations.ZURICH – Swiss engineering group ABB Ltd announced Friday it has set aside USD 850 million (CHF 920 million) to prepare for possible costs related to price-fixing and bribery investigations.
The company said the pretax charges are also linked to a pending tax dispute, asset writedowns and restructuring charges. They will be booked to its fourth quarter.
EU antitrust regulators said last week they had charged several unnamed makers of electricity generation equipment with forming a price-fixing cartel.
Germany's Siemens AG, France's Areva and Swiss engineering group ABB confirmed they had received the charges.
EU cartel fines can cost a company up to 10 percent of its global yearly revenue for each year it broke antitrust rules, often running into hundreds of millions of euros.
ABB has separately launched a USD 1 billion cost-cutting drive in anticipation of weaker business due to the international financial crisis.
"Given the uncertainty surrounding the global economy, we must be sensible and prudent from an early stage and ensure that ABB's cost base is in line with weaker market conditions," said the company's chief executive, Joe Hogan.
In a separate case, ABB disclosed last year that it informed the US Department of Justice and the US Securities and Exchange Commission about suspect payments made by employees of company subsidiaries in Asia, South America and Europe.
In 2004, ABB paid USD 15.5 million in fines to American authorities after pleading guilty to violating anti-bribery and internal accounting rules.
[AP / Expatica]