Foreign Corrupt Practices Act Violations Lead to Expensive Penalties

Foreign Corrupt Practices Act Violations Lead to Expensive Penalties

| Nov 18, 2015 | International Business, Regulatory Compliance |

international business regulatory compliance

FCPA Violations are leading to high fines.

Alstom S.A. (Alstom) is a French power and transportation company.  It was charged with violating the Foreign Corrupt Practices Act, and pleaded guilty to the charges.  Alstom was charged with paying bribes to government officials in exchange for energy contracts. Over the past decade, the company was involved in paying bribes in the range of tens of millions of dollars in countries throughout the world. These countries include Indonesia, the Bahamas, Egypt, and Saudi Arabia. They have also been charged with falsifying their record book and failing to execute sufficient internal controls.[1]

After an intensive investigation that spanned many years and with the help of the FBI, the Department of Justice was able to uncover just how corrupt Alstom was. Both employees and executives were involved with carrying out the scheme. The company went as far as to hire a consulting firm to assist in paying out the bribes and then used codes and false names to cover it up. In Indonesia a high ranking government official was bribed along with high ranking official of the state owned electric related services which were valued at $375 million. At the conclusion of the investigation, it was estimated that Alstom paid out $75 million in bribes, allowing it to secure $4 billion worth of projects throughout the world. This earned Alstom approximately $300 million in company profits.[2]

The penalty that Alstom is being required to pay and has agreed to pay for their corruption is a record breaking $772,290,000. These monies will be paid to the Department of Justice. It is the hope of the DOJ that by charging Alstom such a high penalty, the DOJ will demonstrate to companies around the world that it is serious about enforcing penalties for FCPA violations due to bribes and all other corporate corruption.  The Department of Justice intends to not only find corrupt companies but also to put a stop to the corruption.[3]

The DOJ is encouraging all companies to implement and uphold compliance programs. All companies are expected to willingly divulge and eliminate misconduct as soon as it is discovered and cooperate with any type of investigation that the government conducts. The Department of Justice will not wait for companies to act responsibly. Its new plan of action is to investigate companies and identify criminal activity. It will use every means available to it to discover corruption and to eliminate it. If companies fail to comply they will be charged extremely high penalties. The federal authorities have made themselves clear.  The price of corruption has just gone up.

References:

[1] Alstom Sentenced to Pay $772 Million FCPA Fine Jaclyn Jeager November 15, 2015
[2] http://www.justice.gov/opa/pr/alstom-pleads-guilty-and-agrees-pay-772-million-criminal-penalty-resolve-foreign-bribery
[3] http://www.justice.gov/opa/pr/alstom-pleads-guilty-and-agrees-pay-772-million-criminal-penalty-resolve-foreign-bribery