“From this autumn, we will start to see cases adopted by us, under our recalibrated focus on top tier work, coming to trial…we have much in the pipeline.”
David Green CB QC, Director of the SFO, addressing the Cambridge Symposium on Economic Crime on 2 September 2014
One such case is the SFO’s bribery case, being brought on pre-Bribery Act era law, against a subsidiary of the French headquartered engineering company, Alstom.
This month formal charges have been placed against Alstom, in which it has been accused by the Serious Fraud Office of paying bribes to officials in various countries totalling more than €6 million in order to win contracts for the provision of transport in India, Tunisia and Poland.
The charges have been laid against Alstom’s UK arm, Alstom Network UK, who face six counts of corruption and conspiracy, which include allegations that the company hid payments using consultancy agreements.
According to a report in the Financial Times, the SFO alleges that Alstom bribed officials or agents of the Delhi Metro Rail Corporation by paying nearly 20 million Rupees to a company called Indo European Ventures in 2001 and another €3 million to another company, Global King Technology in 2002. The SFO claims that the payments were made “as inducements or rewards for showing favour to the Alstom Group in relation to the award or performance of a contract”.
On a side note following initial reports in Indian media which suggested that both the Indian Government and the Delhi Metro Rail Corporation knew nothing of the charges, the Indian Government is reported to now be approaching the SFO for relevant details concerning the case.
The SFO further alleges that in Poland Alstom paid €824,000 to officials in 2001 in exchange for selling 62 trams to Tramwaje Wasrszawskie, and disguising the bribes as payments that formed part of the consultancy agreements with Fagax Engineering and Kavan.
Prosecutors allege a similar conspiracy in Tunisia where Alstom apparently paid €2.4 million to government officials in order to secure a contract to provide 30 trams and infrastructure work in Tunis, by paying an entity called Construction et Gestion NEVCO.
The current proceedings only involve charges against Alstom Network UK, but the SFO has written to a number of former employees including foreign nationals to inform them that it intends to charge them with corruption offences over the next year.
The SFO has, we are told, been investigating Alstom for five years, which itself emerged from another investigation started by the Swiss Office of the Attorney General in October 2007.
The Swiss AG’s probe concluded in late 2011 with Alstom having to pay a penalty of CHF 38,500,000 for “corporate negligence”. Alstom is also reportedly being investigated in other countries including the United States and India.
While the recent sentencing of Bruce Hall, the former CEO of ALBA, and the Innospec 4 should earn the SFO reprieve from the ‘lack of activity’ critics, there is still some way to go to hush those who voice disapproval over the, arguably unavoidable, length of time which it takes to conclude investigations and bring prosecutions.
Even if the protracted nature of regulatory invesitgations is a fact of life one cannot ignore the impact that they can have on an entire company, especially when conducted all or in part in the public domain.
This fact must also affect companies considering whether to self-report a potential issue, which the SFO encourages, when to do so they have to embrace the prospect of a long and uncertain road to resolution, a 24 hour news-cycle, and the accompanying taint that can be cast over an entire business regardless of the remoteness of the potential issue in the organisation.
In Alstom’s case for all those unconnected with the alleged conduct (the Swiss probe for example considered contracts going back to 1990), they are nonetheless linked with the effect and outcome of the investigation and prosecution. For management, employees, shareholders, business partners as well as potential recruits and sources of business, close to a decade is a long time for such a cloud to be hanging overhead.
As a company responsible for around 96,000 employees globally, and currently experiencing other commercial struggles, they have no doubt been keen for some time to resolve the matter appropriately and move on with the business of business.
We will return further to this story as it develops.