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Alstom to Pay Largest FCPA Criminal Penalty in History - Foreign Corrupt Practices Act

Earlier this week, Alstom S.A., a French multinational power and transportation company, pleaded guilty in the District of Connecticut to a two-count information charging it with violating the accounting provisions of the Foreign Corrupt Practices Act.  The penalty levied against Alstom, over $772 million, will be the largest criminal fine that has ever been imposed under an FCPA.  Provided that the District Court approves the plea agreement negotiated between Alstom and the Department of Justice, the resolution will rank just under the 2008 Siemens FCPA resolution, which involved combined criminal and civil penalties of approximately $800 million.

According to the information, the corrupt conduct of Alstom personnel and agents, though noteworthy in its breadth and length of time, has the hallmarks of a textbook FCPA case: the use of third party consultants (often referred to by codename) with little documentation corroborating the purposes for their massive fees; a foreign subsidiary subject to insufficient parental supervision; attempts to obtain lucrative contracts for power and transportation projects for state-owned companies; and a failure to respond to red flags.

Alstom was also flagged for failing to self-disclose the corrupt activity to law enforcement officials, and for resisting cooperation in the early stages of the investigation.  Assistant Attorney General Leslie Caldwell emphasized, in announcing the plea, that the DOJ “will not wait for companies to act responsibly.  With cooperation or without it, the department will identify criminal activity at corporations and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool, and considering all possible actions, including charges against both corporations and individuals.”

Alstom’s travails are not over.  Its Swiss subsidiary also pleaded guilty to conspiring to violate the FCPA’s anti-bribery provision, and two of its U.S. subsidiaries entered deferred prosecution agreements in which they admitted the same.  The U.K.’s Serious Fraud Office has now filed new, related charges against Alstom’s U.K. subsidiary for alleged bribes paid to Lithuanian officials.  Based on Deputy Attorney General James Cole’s statement that Alstom’s conduct “was breathtaking in its breadth, its brazenness, and its worldwide consequences,” and his lauding of the “remarkable cross-border collaboration” between law enforcement agencies across the globe during the investigation, it appears that there may be more to come.

© 2019 Proskauer Rose LLP.

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About this Author

Sigal P. Mandelker, White Collar Defense Attorney, Proskauer Law Firm
Partner

Sigal Mandelker is a Partner in the New York office. She is a member of the firm’s White Collar Defense & Investigations, Appellate, International Practice, and Privacy Groups. Sigal represents individual and corporate clients in connection with government investigations and prosecutions, including white collar criminal defense, the FCPA, anti-money laundering matters, SEC and related enforcement matters, internal investigations, public corruption, and cyber security. She has a broad range of experience in domestic and international enforcement matters, appellate litigation,...

212-969-3360
Phillip J. Caraballo-Garrison, Litigation Attorney, Proskauer Law Firm
Associate

Phil Caraballo is a senior Associate in the Litigation Department, resident in the New York office, where he also represents the Litigation Department on the Associate Council. His practice focuses on white collar criminal defense and corporate investigations, appellate litigation, and complex civil litigation at both the state and federal levels.

As a member of the White Collar Defense & Investigations Group, Phil represents clients in prosecutions involving a broad array of federal and state crimes, including insider trading, racketeering, tax evasion, money laundering, and antitrust charges. He frequently guides corporate clients through internal investigations conducted in cooperation with law enforcement and regulatory agencies, and internal investigations and due diligence processes focused on resolving potential anti-corruption issues under the FCPA.

212-969-3382