ABB Ltd, a Switzerland-based corporation that provides power and automation products and services globally, and two of its subsidiaries, ABB Inc. and ABB Ltd – Jordan, resolved allegations of FCPA violations with the DOJ and SEC. ABB Ltd and its subsidiaries will pay more than US$58 million in criminal and civil penalties, disgorgement and interest.
With respect to the DOJ action, ABB Inc. admitted that one of its business units, ABB Network Management, paid bribes from 1997 to 2004 that totaled approximately US$1.9 million to officials at the Comisión Federal de Electricidad (CFE), Mexico’s state-owned utility company. The bribes were paid through various intermediaries, including a Mexican company that served as ABB Network Management’s sales representative in Mexico. ABB Ltd admitted that its subsidiary, ABB Ltd – Jordan, made payments to former Iraqi government officials in connection with contracts to sell vehicles to Iraq under the OFFP. From 2000 to 2004, ABB Ltd – Jordan paid or caused to be paid more than US$300,000 to former officials in Iraq to secure contracts with regional companies of the Iraq’s Electricity Commission, a government agency.
The SEC alleged that ABB Ltd failed to conduct due diligence on the sales agent used to bribe government officials in Mexico. With respect to the OFFP kickback scheme, the SEC alleged that ABB Ltd – Jordan acted as a conduit for ABB subsidiaries and made kickback payments on their behalf. Examples of the alleged payments include check and wire transfers to foreign officials’ relatives, cash to foreign officials, payment of a cruise for foreign officials and their spouses, and bank guarantees. According to the SEC, the bribes were improperly recorded as “commissions” and “service fees” on ABB Ltd’s books and records, and ABB Ltd lacked adequate internal controls to prevent and detect such payments.