Prosecutors probe Alstom for contract corruption

6th May 2008, Comments 2 comments

The builder of power stations and high-speed trains is suspected of bribing foreign officials to win contracts, says judicial source.

6 May 2008

PARIS - French prosecutors suspect engineering giant Alstom, builder of power stations and high-speed trains, of bribing foreign officials to win contracts, a judicial source said Tuesday.

Prosecutors started an investigation on November 7 into suspected "corruption of foreign public agents" and "abusive use of assets," the source said.

The source spoke after The Wall Street Journal newspaper reported evidence that the company had "paid hundreds of million dollars in bribes to win contracts in Asia and South America between 1995 and 2003".

Alsom told the paper its offices had been searched by French authorities but that no charges had been laid.

The company told AFP on Tuesday that the newspaper report was based on "hypotheses and speculation" and that "there is no judicial procedure accusing the company of corruption".

Brokers however took the allegations seriously and the price of Alstom shares fell 2.17 percent to EUR 147.03 at mid-day.

The French judicial source said the investigation was the result of information provided by Swiss judicial authorities in May, but no-one had yet been charged.
 
The WSJ said its report that Alstom was under investigation in Switzerland and France was based on information from people involved in the matter.

The report was also based on findings by auditing firm KPMG which, it said, came across evidence by chance while working for the Swiss Federal Banking Commission on an audit of a small private Swiss bank.

The auditors allegedly found evidence that Alstom had circulated about EUR 20 million to "shell companies" in Switzerland and Liechtenstein, which was transferred to marketing people working for Alstom in Singapore, Indonesia, Venezuela and Brazil, "in stacks of 100-dollar bills".

The audit found that Alstom also set up accounts in Liechtenstein, Switzerland, the United States, Singapore, Hong Kong, Bahrain and Thailand.

These were used "to transfer more than USD 12 million dollars (EUR 7.74 million) to individuals in Venezuela, Singapore, Thailand and China," the report alleged, referring to the audit.

The newspaper noted that paying "commissions" to foreign officials was legal and even tax deductible in many European countries until the Organisation for Economic Cooperation and Development began a campaign against the practice in 1997.

France made such payments illegal in July 2000.

Until then, French law permitted tax deduction of commissions of up to 7.5 percent if they were declared to local tax authorities.

Alstom was saved from bankruptcy in 2004 by state intervention orchestrated by the then finance minister Nicolas Sarkozy, now French president.

One probe concerned a budget of USD 200 million (EUR 129 million) for suspected commissions of 15 percent to win a contract for a power plant in Brazil which was completed in 2001.

Another probe concerned a 45-million-dollar contract for the Sao Paolo subway, and others covered payments of about 200 million dollars for projects in Brazil, Venezuela, Singapore and Indonesia, the report alleged.

The newspaper said some of the projects concerned had also involved financing from the World Bank, which had declined to comment.

In Paris, Credit Mutuel-CIC brokers commented in a client note with a reference to an investigation in Germany into alleged suspicious payments by German engineering group Siemens.

It said that although it was too early to know the facts of the matter at Alstom, the Siemens case "leads one to think that we may be set for a media-judicial saga lasting years".

Natixis brokers said that some investors "may fear that this is only the tip of the iceberg" but that others might consider this to be an old story concerning a previous management.

The newspaper interviewed one former Alstom consultant, named as Michel Mignot, who said: "I never took a cent for myself." He said: "I didn't think the transactions were illegal, because they were done to get civil engineering contracts around the world."

[APF / Expatica]

2 Comments To This Article

  • Akram Sherif posted:

    on 22nd October 2008, 14:15:57 - Reply

    I am an x-employee of Alstom, and I’ve been layed-off by Alstom Management when I’ve realised illegal issues i.e. bribes in Metro lline 3 in Egypt, bank loans signed with un-authorised persons, .. etc. requested by Alstom Management in Paris.
    Unfortunately, when I’ve reported that to Alstom Management –Legal Department- in Paris that I disagree concerning such behaviour and they must reconsider their situation as I am their legal representative in Egypt they have sent me an e-mails asking me the following:
    “Anyway, there will be no action against internal collaborators or the bank.
    In order to be on safe side, prepare and sign (before the deal signature) a power of attorney to be kept in a safe authorizing the guys to sign the lease in the name of the company.”
    When I’ve rejected, as I may expose myself to a legal action, and I’ve reported that to the Government, Alstom Management in Paris have signed an agreement with me in January 2008 to give me my rights with Alstom during the past 12 years providing to withdraw all claims against Alstom Employees and banks.

    After we have signed agreement, they have asked me to sign a resignation back-dated (before the date of my report to the government).

    I’ve all supporting documents which can prove that if required.

    Best regards,
    Akram Sherif
  • Akram Sherif posted:

    on 22nd October 2008, 14:15:56 - Reply

    I am an x-employee of Alstom, and I’ve been layed-off by Alstom Management when I’ve realised illegal issues i.e. bribes in Metro lline 3 in Egypt, bank loans signed with un-authorised persons, .. etc. requested by Alstom Management in Paris.
    Unfortunately, when I’ve reported that to Alstom Management –Legal Department- in Paris that I disagree concerning such behaviour and they must reconsider their situation as I am their legal representative in Egypt they have sent me an e-mails asking me the following:
    “Anyway, there will be no action against internal collaborators or the bank.
    In order to be on safe side, prepare and sign (before the deal signature) a power of attorney to be kept in a safe authorizing the guys to sign the lease in the name of the company.”
    When I’ve rejected, as I may expose myself to a legal action, and I’ve reported that to the Government, Alstom Management in Paris have signed an agreement with me in January 2008 to give me my rights with Alstom during the past 12 years providing to withdraw all claims against Alstom Employees and banks.

    After we have signed agreement, they have asked me to sign a resignation back-dated (before the date of my report to the government).

    I’ve all supporting documents which can prove that if required.

    Best regards,
    Akram Sherif