On 9 September 2014, an English magistrates’ court reviewed the charges brought by the Serious Fraud Office (“SFO”) against Alstom Network UK Ltd (“Alstom UK”), the UK subsidiary  of French train and turbine manufacturer Alstom S.A. The magistrates’ court forwarded the case on to be heard by Southwark Crown Court.

The initial hearing before the Crown Court, likely to cover administrative and timetabling matters, will take place on 6 October 2014.  Although months of proceedings may well ensue, the potential consequences of a conviction could be severe: not only would Alstom UK face a substantial fine, it would also be liable to debarment from competing for public contracts in the European Union, under the Public Sector Procurement Directive.

The treatment of Alstom UK by the English criminal courts will be relatively instructive as it will be one of the first bribery cases to be decided under the UK’s new sentencing guidelines, which were published in January of this year.  Under those guidelines, any fine against Alstom UK may be calculated as a multiple of the gross profit made by the company.

Background of the Alstom UK Charges

In July of this year, the SFO’s Director, David Green, said that the SFO would file corruption charges “imminently” against Alstom UK following a five-year investigation.  The charge sheet against Alstom UK was filed by the SFO in  July 2014.

Alstom UK has been charged with six offences of corruption and conspiracy: three offences of corruptly giving or agreeing to give payments to an official or officials or other agents under section 1 of the Prevention of Corruption Act 1906 (“PCA 1906”), and three offences of conspiracy to give corrupt payments.  The charges relate to payments of approximately $8.5 million in respect of projects in India, Poland and Tunisia. The PCA 1906 was the UK’s principal anti-corruption statute before the adoption of the Bribery Act in 2010.  Allegations of corruption occurring before July 2011 generally fall to be prosecuted under the PCA 1906.

Charges Related to Conduct in India

Major aspects of the case relate to Alstom UK’s conduct in India.  Alstom UK is charged with having paid approximately $4.3 million in corrupt payments to the Delhi Metro Rail Corporation Ltd to secure a contract to provide a train control, signalling and telecommunications system for a metro system in Delhi.  Alstom UK  is charged with having made the payments between August 2000 and August 2006 and having disguised those payments by the use of two consultancy agreements with two separate entities.

Charges Related to Charges in Poland

Other aspects of the matter relate to Alstom UK’s conduct in Poland. Specifically, Alstom UK is charged with having made payments of approximately $1.1 million to Tramwaje Wasrszawkie to win a contract to supply 62 trams for the Warsaw tram system. As with respect to its conduct in India, Alstom is charged with having disguised these payments through agreements with  two separate consultants.  The payments are alleged to have been made between June 2000 and June 2004.

Charges Related to Conduct in Tunisia

Alstom UK is also charged with having made corrupt payments to Tunisian public officials to secure contracts to supply 30 trams for the Tunis tram network and to provide certain infrastructure work in Tunis. The payments, which are said to have been made between April 2003 and November 2006, are calculated at more than $3 million on the charge sheet. Again, Alstom UK is accused of having disguised the payments through the use of a consultancy agreement.

Charges Against Alstom Employees

The instant matter involving Alstom UK takes place against a backdrop of criminal proceedings against individuals. In March 2010, the SFO arrested three Alstom UK board members.  However, one of those board members has since died and the investigations against the other two have been terminated, after both had failed with applications for Judicial Review relating to warrants used by the SFO to search their homes.  The 9 September 2014 hearing before the magistrates’ court involved only charges against Alstom UK, but the British press has reported that the SFO has written to former employees of Alstom UK and other Alstom group companies to inform them that they will be charged in the next year.

These reports are plausible because the charges filed against Alstom include charges of conspiring with its directors and others. The involvement of Alstom UK directors is key because of the general English law principle (overridden in certain respects in the Bribery Act) that states that criminal liability of a company for an offence can  be established only if a person who is sufficiently senior so as to be the “directing mind” of the company, is involved with  the offence.  Directors of a company are generally considered to be part of the “directing mind.”

Conclusion

The SFO’s most recent criminal prosecution of Alstom UK signifies clearly that, despite setbacks in its anti-corruption prosecution efforts in recent years, the SFO remains committed to bringing wide-ranging cases with significant potential ramifications for multinationals. As the Alstom UK matter unfolds, it will be perhaps one of the more important anti-corruption prosecutions globally in the next year.